Up until March 2016, according to the Tax Authorities guidelines, all the wages of directors mentioned in article 80 ter of the French Tax Code had to be included in the basis of the payroll tax. This doctrine had been modified, following a decision of the French Administrative Supreme Court on January 21st, 2016, so that only “wages paid to directors mentioned in article 80 ter of the French Tax Code and in article L.311-3 of the French Social Security Code” (BOI-TPS-TS-20-10, n° 40 du 3 mars 2016) would be included in the basis of this tax, thus excluding wages of the members of the executive board.
Yet, the French Administrative Supreme Court just reversed its position considering that, when aligning the basis of the payroll tax with that of the Social Security contributions, the objective was to include the wages of the people mentioned in articles L.311-2 and L.311-3 of the Social Security Code and also those of the people who are equivalent to those directors, as it is the case for members of the executive board.
As regards directors non-affiliated to the Social Security regime (article L.31-2 of the French Social Security Code), their wages remain excluded from the basis of the payroll tax. This is notably the case for the remuneration paid to members of the executive board or of the supervisory board of a limited company with a dual governance structure (“SA à gouvernance duale”).
