Companies seeking to expand their operations to the European Union can register an entity in France. This nation has the third-biggest economy in the EU, a reliable transportation infrastructure for companies that expect employees to commute to work, and considerable consumer buying power.
France is an excellent choice for an overseas branch, but setting up your business, hiring employees, and running payroll can be challenging.
This comprehensive guide to running payroll for employees in France will walk you through the process of registering your business, hiring employees, and putting them on the payroll to ensure your expansion goes smoothly.
Table of Contents
- Step #1: Register as an employer with the URSSAF
- Step #2: Pick a global payroll software solution
- Step #3: Determine your workers’ employment status
- Step #4: Collect information from your employees for payroll
- Step #5: Set the employee’s salary in Euros
- Step #6: Run payroll
- Step #7: File your monthly and annual taxes
- Frequently asked questions about running payroll in France
Step #1: Register as an employer with the URSSAF
To operate a business and hire employees in France, you’ll need to register as an employer with the URSSAF, which is the agency responsible for collecting Social Security contributions. You’ll get a 14-digit identification number, called the SIRET, from INSEE, the French National Institute of Statistics of Economic Studies.
Once you file the relevant applications, receive all the appropriate information, and are a registered business in the French Commerce Register, you can hire and pay your first employee.
Can I use an EOR instead?
Yes, it’s perfectly okay to use an Employer of Record (EOR) instead of trying to expand an independent branch of your company to France yourself. Many companies who decide to operate in France utilize EORs like Rippling to complete the multiple registrations required of new entities, run payroll, issue benefits, and navigate international compliance issues. Setting up a business in France requires a significant time investment, and most smaller companies don’t have the resources to spare.
Better still, when you use Rippling, you won’t have to switch your systems as you expand your company. Rippling’s EOR is built on top of our native payroll rails, which means that when the time comes, you can move from our EOR to Global Payroll through your own entities—in minutes.
If you decide to register your own entity and hire your own employees, you’ll need to fill out a Pre-Employment Declaration (DPAE) for each new person 48 hours before they’re hired. The DPAE is necessary to open an account with the URSSAF, which will manage the employee’s health insurance and mandatory retirement pension.
With Rippling, you can hire and pay French employees with either method:
- Rippling offers a native global payroll system, which allows you to pay employees who work in France—and around the world—in a single pay run.
- We also have our own native EOR service, which allows you to hire and pay employees in France even if you haven’t set up an entity there.
Step #2: Choose a global payroll software solution
First, it’s vital to understand the two kinds of international payroll solutions: global payroll processors and global payroll aggregators. You can learn about both in our guide.
- Global payroll processors, like Rippling, actually process your payroll, transmit funds, and calculate and file taxes in every country through their own software. Put simply: global payroll processors allow you to pay your international employees just as easily as your local employees: together in a single pay run.
- Global payroll aggregators, like Deel and Papaya Global, aggregate local payroll providers in every country and manually transmit your payroll files to them. These come with many limitations: You’re forced to submit payroll up to 30 days in advance. You can’t track, and automatically sync, employees’ time in the same system.
Remember: Payroll aggregators can’t process payroll through companies that use their own entities. But with native global payroll providers, like Rippling, you won’t have to switch systems as you scale. You can move employees from our EOR to your own local entity, without ripping out and replacing systems to accomplish this.
Step #3: Determine your workers’ employment status
Before you onboard new workers and start running payroll, you need to classify the workers you hire as either employees or independent contractors. Classifying team members correctly is crucial to staying compliant with French laws.
There are specific criteria for employers to use when they’re classifying a worker. These include:
- Mutuality of obligation: Whether there is a binding commitment on the company to offer work and on the consultant to provide work.
- Personal service: An employee is required to provide their services personally, and if there is a right to appoint a substitute, this will typically be qualified such at the employer’s discretion.
- Control: The degree of control which the employing entity has over a worker’s hours and place of work.
- Other activities: Whether the worker can undertake other work outside of the employing entity and if so, to what extent.
- Pay and benefits: An employee will be paid a fixed amount on a regular payment date according to their hours worked, and irrespective of performance targets or project completion.
- Integration: How involved a worker is in the company and its management and how they are perceived by third parties.
- Facilities and equipment: An independent contractor will usually provide their own equipment and materials in order to perform the services while an employee will rely on the employer to provide the same.
- Financial risk: Which party has liability for any losses arising from the agreement. An employee will be paid even where there is insufficient work to keep them occupied and will assume no financial risk in working for the employer.
- Taxation: Which party bears the liability for tax arising from the engagement. A self-employed independent contractor will be responsible for the payment of their own income tax and social security contributions whereas the employer will account for these in the case of employees.
Step #4: Collect information from your employees for payroll
To put employees on the payroll in France, you’ll need to collect the following information from them:
- Your employee’s name, DOB, and address
- Their French Social Security Number
- Their date and start time
- The type of contract you have with them and the duration of the contract
Step #5: Set the employee’s salary in euros
Because France is a member of the Eurozone, if your company hires French employees, regardless of where you are headquartered, you must pay them in euros.
With Rippling, you can pay everyone in euros, in minutes, without waiting on transfers or conversion.
Step #6: Run payroll
You have an entity (either your own or via an EOR), you’ve set up your global payroll system, and you’ve ensured your employees are correctly classified under French law.
Time to run payroll! Here’s a preview of how Rippling’s global payroll system works:
Frequently asked questions about running payroll in France
What are payroll taxes in France?
Employers are responsible for paying the correct amount of payroll tax to the French government and for adhering to the correct payment schedule, which is monthly, quarterly, or annually, depending on how much payroll tax you owe per employee.
Payroll taxes in France include:
- French income tax
- Social Security contributions
- Supplemental pensions
- CEG (Contribution d’Equilibre Générale)
What are the late tax filing penalties in France?
The French government penalizes employers who don’t complete their taxes by the required deadlines. The penalties differ based on whether you filed your tax return late or if you missed the payment deadline.
If you filed your tax return late, you will have to pay a penalty at the rate of 0.4% for each month you exceed the deadline, up to 10%.
If you make your payment late, you’ll be subject to an additional fine of 0.4% for each month you exceeded the due date, up to 5%.
What is the average annual salary for employees in France?
The average annual salary for employees in France in 2022 was just under €40,000.
What is the minimum wage in France?
The minimum wage in France in 2023 is €11.27 per hour.
How much does it cost to run payroll in France?
The exact amount it will cost your company to run payroll depends on a variety of factors, including the number of employees you have and which features you want your software to include.
Can I manually run payroll for employees in France?
Some small business owners decide they’d rather run payroll themselves in an attempt to cut down their overhead costs. However, running payroll is a time-consuming process, and the complexity of French employment law will require a serious investment of your resources. If you go it alone, there are potential risks to keep in mind, such as:
- Compliance: Running payroll manually in France, without using native global payroll software, puts you at risk of manual errors and omissions, which can result in hefty penalties. Rippling handles your compliance work for you, including calculating and deducting the correct amounts of each type of payroll tax.
- Security: Processing payroll manually can pose security risks, especially if you are using spreadsheets or paper records. This increases the risk of sensitive employee information being lost, stolen, or misused.
Rippling syncs all your business’s HR data with payroll so you never have to use a calculator or manually enter data, like hours and payroll deductions. Rippling also handles your tax and compliance work. Plus, we’re an authorized payroll provider in France.
How do you pay independent contractors in France?
- First, ensure you’re correctly classifying this individual as an independent contractor (you can use Rippling’s free Worker Classification Analyzer).
- Next, agree on the payment terms with the contractor: the hourly or project rate, the payment cadence, and the method of payment (direct deposit, virtual wallet, etc.).
- Collect their payroll information, including their name, DOB, contact information, and bank account information.
- Use your chosen payroll software to pay the contractor in euros. With Rippling, you can pay both contractors and employees in euros, in a single pay run, without waiting on transfers or conversion.
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 advise. You should consult your own tax, legal and accounting advisors before engaging in any related activities or transactions.