CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.

France Enhances COVID-19 Tax-Free Bonus Scheme

Monday, September 14, 2020

The French tax authority has announced that it will modify and extend a scheme that allows employers to pay workers tax-free bonuses.

As part of the Government's fiscal response to COVID-19, firms can pay an exceptional bonus to workers that is exempt from income tax and social security contributions. The scheme, which expired on June 30, 2020, will be extended to bonuses paid out until December 31, 2020.

Subject to complying with the rules, firms can offer a tax-exempt bonus of EUR1,000 (USD1,180) to employees. Under changes to the scheme, this cap has been increased to EUR2,000 if a profit-sharing arrangement is established by the end of the year and before any payment is made.

A tax-free bonus may be paid only to those employees whose average monthly income in the past 12 months was not more than three times the minimum wage.

Among other conditions, the exceptional bonus must also not replace pay and must be paid in addition to any bonuses agreed as part of a salary agreement or employment contract.