Gross to Net: The French Calculator! 2024

Why is there a Difference Between Gross and Net Salary in France?

The difference between gross and net salary in France primarily lies in the employer’s collection of employee social security contributions on behalf of the state:

Net Income = Gross Income - Employee Social Security Contributions.

In the private sector, a company pays a "super gross" salary, which, after deducting employer social security contributions, becomes the gross salary. The net salary is then obtained by subtracting employee social security contributions from the gross salary.

For civil servants (agents titulaires) in the public sector, the social security contributions are notably different from those in the private sector. In addition to the General Social Contribution (CSG) and the Contribution for the Repayment of Social Debt (CRDS), a contribution to the Civil and Military Pension Fund (CNRACL) at a rate of 11.10% is applied, along with another contribution for supplementary retirement at a rate of 5%. This ultimately results in a lower overall contribution rate for public sector employees.

Minimum Wage in France

The minimum wage for a job in France is determined based on various factors, such as a percentage of the statutory minimum wage (SMIC), the minimum set by the applicable collective bargaining agreement, or by reference to a public sector pay scale.

The SMIC (Salaire Minimum Interprofessionnel de Croissance) is defined by regulation issued by the President of the Republic. For the year 2024, the SMIC is specified in Decree No. 2023-1216 of December 20, 2023, which sets out an hourly SMIC. From this, the daily SMIC is calculated based on a 7-hour workday, the monthly SMIC on the basis of 151.67 hours, and the annual SMIC by multiplying the monthly amount by 12.

Here are the estimated gross and net SMIC figures:

Why Do Managers or Executives Contribute More?

Previously, non-managerial employees contributed to the ARRCO scheme, while managers (cadres) contributed to both ARRCO and AGIRC, which provided significantly more advantageous retirement benefits.

Since January 1, 2019, both managerial and non-managerial employees contribute to the AGIRC-ARRCO scheme for their supplementary retirement.

The merger of AGIRC and ARRCO was accompanied by an alignment of contribution rates between managers and non-managers.

However, older contracts may still adhere to the previous system. The distribution of contributions between the employer and the employee may also vary depending on the specific terms of the agreements.

For these reasons, we have temporarily decided to maintain a differentiated contribution rate for managerial employees.

What is the Applicable Regime for Self-Employed Professionals?

Self-employed professionals must pay numerous social contributions and taxes, which apply to all income derived from their independent activity during the previous calendar year.

The system's functioning explains why the first two years of activity are unique for the self-employed: Since the administration cannot assess real income when starting a business, it applies flat rates that may be more or less significant and sometimes discouraging.

In addition to the General Social Contribution (CSG), Contribution for the Repayment of Social Debt (CRDS), basic and supplementary pensions, contributions for family allowances and health insurance are also applied to the income of the self-employed worker.

The variety of contribution types and the multiple tax brackets result in a significant threshold effect as income reaches a certain level. For this reason, IdeoLegis has opted to prioritize a higher bracket in its estimator, with a rate of 45%.

Interns

To calculate the amount of social contributions applied to internship stipends, it is necessary to determine the intern's minimum monthly remuneration. Contributions are only due on the portion that exceeds the legal minimum stipulated by law.

This legal minimum is calculated on an hourly basis, not monthly, which means that a distinction must be made based on the number of working days: For a month with 22 working days, the amount will be 154 x €3.90 (22 x 7) = €600.60.

Since the average number of working days per month is 21 throughout the year, IdeoLegis uses a deduction of €573.3 [21 (days) x 7 (hours) x €3.90] before applying social contributions at a rate of 15%.

However, these rates may vary depending on the company and any special collective agreements that may have been concluded.