How to pay international contractors in France
France’s highly educated and skilled workforce is quickly making this nation a favorite choice among global businesses looking to open a branch in France and hire French independent contractors.
But when it’s time to pay your contractors, what steps do you need to take to comply with French laws?
This step-by-step guide will explain how to correctly classify contractors, fulfill their invoices, and remain compliant with the French Labor Code.
Step #1: Classify your workers correctly
Classification laws vary from country to country, and you want to ensure your contractors can work legally, no matter where you hire. French workers are protected under a wide variety of laws, and when you’re hiring workers in France, one of the first steps you need to take before you onboard them is to classify them correctly as either an employee or an independent contractor.
There are numerous governing bodies and pieces of legislation you need to be aware of when hiring in France. Governing bodies include the URSSAF, a network of private organizations created in 1960 that collects social security contributions from employees and employers. Relevant legislation includes not only the French labor code but also EU laws and collective bargaining agreements.
A quick note before we move to the series of tests that will help you determine the correct classification: French laws permit independent contractors to classify themselves as either self-employed or micro-entrepreneurs. The contractor will have different tax obligations depending on which category they choose. However, this does not affect you as an employer. Your responsibility is to correctly categorize them as either an independent contractor or an employee.
The penalties in France for worker misclassification are quite severe. They may include:
- Back payment of redundancy pay, holiday, working time, minimum wage, and other benefits
- Penalties for non-withholding of income tax, plus interest
- Back payment of social security, plus penalties and interest
- Back payment of pensions, plus penalties and interest
- Criminal charges and jail time
According to French case law, there are four signs a contractor might actually have an employment relationship with a company:
- If the contractor is under the company's direct control—for example, they receive orders and instructions from the company, and the company monitors their work performance and may discipline them.
- If the contractor is paid hourly rather than on a per-project basis.
- If the company provides tools and equipment, rather than the contractor owning their own.
- If the contractor's work does not require specific expertise or skills that the company doesn't have internally.
Additionally, independent contractors in France must provide each of their clients with an "attestation de vigilance," a statement that certifies payment of their social security charges.
Step #2: Determine the best way to pay your contractors
After you’ve taken the necessary steps to properly classify your new hire as an independent contractor, it’s time to decide on a method of payment. The gig economy has exploded in popularity over the last few years, as has remote work, leaving employers with more choices than ever about how they’d like to handle payments.
Here are a few options you can explore for paying your international contractors:
- Bank wires. If you have a physical branch in France, you can open a French bank account and do direct deposit. If you only have a bank account in your own nation, you have the option to do a global wire transfer.
- International money orders. This is a time-tested way of sending money internationally, but often comes with fees and maximums that can be inconvenient to businesses that work with many global contractors.
- Digital wallets or payment platforms. Many employers and independent contractors now opt to use digital wallets as their method of payment. This is a great option, but you may have difficulty finding a digital wallet or payment platform that’s available in both countries. Since you can’t, say, use PayPal on your end to put money in a contractor’s Venmo account, this issue could prove extremely frustrating.
- Global payroll services. Typically, contractors aren't included in payroll, since they aren't subject to the same withholdings as employees—instead, they invoice for their services, which goes through accounts payable for many companies. But with Rippling, you can pay French employees and French contractors around the world in one system.
Step #3: Use global payroll software to process payments
As you saw in Step #2, there are multiple ways to pay contractors in France. But the fastest and simplest way is paying contractors through global payroll software.
With Rippling, you can pay employees and contractors across the world in one place. Here’s a preview of how Rippling’s global payroll system works:
Step #4: Keep accurate records for legal purposes
Employers aren’t legally obligated to deduct taxes or offer benefits to independent contractors; the latter are responsible for paying their own taxes and pension plans.
However, it’s still crucial to keep accurate records of each contractor’s information, as well as the contract you both signed, in case you find yourself in legal trouble.
Effortlessly manage contractors around the world
Expanding your global workforce has never been easier. With Rippling, you can pay contractors in France and around the world in one system.
FAQs about paying contractors in France
Do you need to withhold taxes when paying contractors in France?
No. In France, independent contractors are expected to deduct tax and social security contributions from their pay themselves.
Does the French minimum wage apply to independent contractors in France?
No. French minimum wage laws do not apply to independent contractors.
Do French contractors get benefits?
No, independent contractors in France do not receive benefits from their employers. Only workers classified as employees do.
Can you pay contractors in France in your home currency?
While you must pay workers who are classified as employees in euros, independent contractors can be paid in whichever currency you and they agree on. But this needs to be documented in writing. If the contractor doesn’t want to deal with conversion rates and other, similar hassles themselves, it's your responsibility to pay them in the currency of their choice.
Many international payment providers, like Rippling, support contractor payments in either euros or your currency.
Can you manually pay contractors in France?
Yes, and it's common for small business owners to manually process contractor payments in an attempt to cut costs. But this can be time-consuming, especially as your business grows and if you work with multiple contractors in France or across borders.
It's also important to note that manually processing payments comes with some risks:
- Compliance. Running payroll manually means assuming the risk of human error and omission. Protect yourself and your business with Rippling, which automatically enforces compliance with any applicable local laws—no matter where your contractors live.
- Security. Manual payroll processing also poses security risks, especially if you use spreadsheets or paper records. Sensitive contractor information can be lost, stolen, or misused.
- Contractor experience. Manual payments are slow and lack transparency for when a contractor can expect their payment (or what they're even being paid for). This can be really frustrating for contractors trying to understand their earnings.
Make payroll automatic by using Rippling. Rippling syncs all your business's HR data with payroll, eliminating the need for manual data entry entirely. Employees and contractors all over the world get paid quickly (and compliantly) in one place.
How do you turn a contractor into an employee in France?
When transitioning contractors to employees, employers should decide on the best employment model for their business. While hiring independent contractors over full-time employees can be more flexible or have financial benefits, sometimes you do need a full-time employee.
The challenge is making sure all the legal requirements are in order: French employees are protected under national minimum wage laws, for instance, and they are also entitled to benefits. Companies are likely to employ through their own entity if they already have one in France. However, companies can still hire employees in France without a French entity through an employer of record service.
With Rippling, you can effortlessly manage contractors—as well as quickly transition contractors to full-time employees—with legally compliant paperwork, benefits administration, payroll, and more. Rippling handles it all, so you stay compliant from onboarding to offboarding.
Rippling and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.
