Our Glossary

Portable document certifying the legislation applicable to an employee working in several European Union countries, issued by the authorities of the employee’s country of residence (article 13 of European Regulation EC 883/2004 of 29 April 2004).

Portable document attesting to the legislation applicable to an employee who remains covered by the social security scheme of his/her country of origin as an exception to the principle of affiliation in the country in which the activity is carried out, issued by the authorities of the country to which the employee belongs prior to the secondment (Article 12 of European Regulation EC 883/2004 of 29 April 2004).

Subsidiary criterion, in relation to the fixed place of business, defined by Article 5, 5 of the OECD Model Convention as part of the definition of permanent establishment. The dependent agent is a person who (1) acts in a Contracting State on behalf of an enterprise and who (2) habitually concludes or negotiates contracts in the ordinary course of the enterprise’s business, not limited to operations of a preparatory or auxiliary character.

Concept defined by the domestic law of each country, which defines the extent of a person’s tax obligations to that country. In the case of France, article 4 B of the French Tax Code states that a person is considered to be domiciled in France for tax purposes if he or she has his or her home or main place of abode in France, if he or she carries on a professional activity in France, whether salaried or not (unless he or she can prove that this activity is carried on on an ancillary basis), or if he or she has the centre of his or her economic interests in France.

Immediate taxation for income tax and social security contributions of unrealised capital gains, receivables arising from an earn-out clause and capital gains carried forward for tax purposes in the event of a transfer of tax residence outside France since 3 March 2011 for taxpayers who have been resident in France for tax purposes for at least six of the ten years preceding the transfer.

Scheme under which an employee sent outside his or her country of origin ceases to be affiliated to the social security scheme of that country and becomes subject to the scheme of the country of employment.

Salary increase that may be exempt from French personal income tax provided certain conditions are met, paid to employees required to travel abroad to carry out their professional activity (article 81 A I of the CGI).

An employee or corporate officer called upon from abroad to carry out their professional activity in a company established in France, likely to benefit from the regime set out in article 155 B of the French tax code, which provides for exemption from income tax on part of their business income and certain passive income. Conditions of application: no tax residence in France during the 5 years prior to taking up the position in France and transfer of tax residence to France as from the same date.

Transaction whereby an employer makes employees available to a third party. The management and control of these employees is transferred to the third party for the duration of the loan and the employer does not enter into any obligation towards the third party other than the simple provision of the personnel in question, regardless of the classification given to the contract by the parties. Not-for-profit labour lending operations are authorised (section L. 8241-2 of the French Labour Code). Non-profit labour loans between companies require the agreement of the employee concerned, a loan agreement between the lending company and the user company, which defines the duration of the loan and specifies the identity and qualifications of the employee concerned, as well as the method for determining the salaries, social security charges and professional expenses to be invoiced to the user company by the lending company.

A withholding tax rate applicable when the debtor does not have a rate calculated by the tax authorities or when the data available to the tax authorities is too old to be used to calculate a personalised rate. This rate is similar to the tax scale applicable to single taxpayers with no dependants.

Compulsory online declaration, subscribed monthly by all employers of salaried or similar staff falling within the scope of the DSN to transmit information relating to their employees to the tax and social security authorities (Urssaf, Pôle emploi, Cpam), online at net-entreprises.fr or by transmission via an API.

A fixed place of business located in a State, through which a company having its registered office in another State carries on all or part of its business. In the alternative, an agent of the enterprise who has authority to bind the enterprise in the territory of another State may constitute a permanent establishment. The activity carried on through a permanent establishment situated in a State or territory other than that in which the head office of the enterprise is situated gives rise to taxation in the State in which the establishment is situated.

Withholding tax rate calculated on the basis of the information contained in the most recent tax returns available to the tax authorities for a given tax household. It takes into account all household income and is the same for each spouse. If no action is taken by the taxpayer, the tax authorities use the standard rate.

Declaration sent by the employer prior to the posting of an employee in France, to be completed online on the “SIPSI” website (https://www.sipsi.travail.gouv.fr/auth/login), in which the employer provides information relating to the identification of seconded employees, the company employing them, and the dates and conditions under which the service is to be provided in France.

Annual tax payable by individuals whose real estate assets, assessed at the level of the tax household on 1st January of the tax year, exceed €1,300,000, according to a specific declaration no. 2042-IFI appended to their overall income tax declaration no. 2042.

When an employer who is legally established in one country and carries out substantial activities there sends his employees to work in another country for a specific purpose and for a limited period of time. The legal framework for posting is defined by Directive 96/71/EC on the posting of workers in the framework of the provision of services at European level. In France, the Labour Code distinguishes between four posting situations: posting within the framework of the provision of services, intra-group posting, posting of temporary employees and posting outside the framework of the provision of services (own-account posting).

Scheme under which an employee sent abroad remains affiliated to the social security scheme of his home country, in application either of European social security regulations (Coordination Regulation EC 883/2004 of 29 April 2004 and its Implementation Regulation EC 987/2009 of 16 September 2009), or of bilateral social security agreements for countries outside the EU-EEA-Switzerland zone, or of the French Social Security Code (Section L 761-2).

Obligation for a taxpayer to pay all taxes due in the year of transfer of tax residence outside France, abolished since 1 January 2005 in France.

Allocation of a number certifying that a person is identified by the French tax authorities as being subject to a tax obligation, in principle after an initial tax return or when a first payment obligation arises for individuals (tax number or tax reference number) and on their creation, after registration in the SIRENE register for companies (SIREN number).

A concept defined by bilateral tax treaties, the main criterion for determining tax residence being tax liability in a signatory state. The criteria successively applicable differ depending on whether the taxpayer is an individual (permanent dwelling place, centre of vital interests, place of habitual residence, nationality, mutual agreement procedure) or a legal entity (seat of effective management).

Provisional method of paying income tax. A deduction made by a collector – the employer in the case of professional income – at the time of payment of taxable income falling within the scope of the deduction to taxpayers resident in France or outside France. Withholding tax takes the form of a deduction at source or an instalment, depending on the income to which it applies.

Method for declaring taxable remuneration received by persons who do not fall within the scope of the DSN, in particular employers not established in France whose employees who are French tax residents are not affiliated to the French social security system and carry out part of their activity in France.

Provisional method of payment of income tax applicable to French-source income received by non-French tax residents. The withholding is carried out by the debtor of the sums. It may be in full discharge of income tax (paid definitively) or constitute a simple advance payment (inclusion of the corresponding income in the progressive income tax base and deduction of the withholding tax already paid from the amount of this tax).