What is the change?
Pursuant to the Finance Law n°2022-1726 dated December 30th, 2022, for 2023, the transfer of the management and collection of “employer tax” from OFII (Immigration Office) to the tax authorities (DGFIP) took effect on January 1, 2023.
As a reminder, the liable party is an employer who hires foreign workers or hosts seconded employees to France for a salaried professional activity. The tax applies upon their first admission to France. The hiring of EU nationals is exempted from this employer tax.
Since the tax is to be declared and paid annually in arrears, the first formalities will take place in February 2024 for Calendar year 2023. This transfer of responsibilities has been accompanied by changes in the reporting process.
In accordance with Article D. 436-2 of the CESEDA, the reporting process for the tax due by employers of foreign nationals (“employer tax”) now follows the rules applicable to value-added tax (VAT). The corresponding forms have been updated on the impots.gouv website.
However, the calculation method for the “employer tax” remain unchanged.
Indeed, the tax is based on the amount of the gross monthly salary paid to the foreign worker and the duration of their presence in France (Article L. 436-10 of the CESEDA):
- Duration ≥ 12 months: 55% of the gross monthly salary, taken within the limit of 2.5 times the gross monthly minimum wage.
- 3 months ≤ duration < 12 months: between 50 euros and 300 euros depending on the salary level.
Additionally, the 2023 Finance Law introduces a new exemption for private employers and provides that the tax for hiring language assistants is nil.
Furthermore, the Official Bulletin of Public Finances-Taxes (BOFIP), in its publication of July 5, 2023 (article 60), has clarified the categories of hiring activities not subject to tax, including foreigners holding “Passport – Talent” and “ICT Posted worker ” residence permits, these residence permits including an automatic right to work.
Deloitte’s view
Considering this change, employers of non-EU nationals should not have received invoices issued by the Immigration Office in 2023. As this is the first year of implementation, a specific attention has to be taken to avoid double taxation.
French employers are encouraged to maintain a list of the concerned foreigners to declare them in accordance with the new procedures in force. This also implies that HR managers or international mobility teams are in contact with the services responsible for VAT declarations.
Finally, the new exemptions applicable to Talent Passport and ICT permits increase the attractiveness of these immigration statuses.
