French companies may need to hire foreign workers, but the hiring of foreign workers is regulated and requires caution. For example, if the worker is not from the European Economic Area and does not reside in France, a hiring authorization procedure must be initiated. In return for this authorization, the employer must pay a tax to the French Office for Immigration and Integration (OFII), commonly known as the OFII tax. This tax has recently changed - read on for more details.
The OFII tax payable by employers of foreign workers changes in 2023
Who pays what taxes in an employer-employee relationship can be complicated. Under the OFII regulations, the taxpayer is the employer who hires:
- a foreign worker; or
- an employee temporarily posted by a company not established in France.
The OFII tax is not payable on the recruitment of European foreign workers under the freedom of movement rules.
Previously managed by the French Office for Immigration and Integration (OFII), which gave the tax its name, its management has been transferred to another organization. Since 1 January 2023, the Direction Générale des Finances Publiques (DGFIP) has been responsible for managing and collecting the tax provided for in Article L.436-10 of the Code de l'entrée et du séjour des étrangers et du droit d'asile (CESEDA).
How are employers taxed in France through the OFII?
OFII tax is now declared and paid once a year. The way in which the tax is declared and paid depends on the employer's VAT tax regime:
- Employers subject to the normal taxation scheme must declare their tax for 2023 in Annex No. 3310 A of the VAT return to be submitted in January 2024 or in the first quarter of the following year, i.e. in the first quarter of 2024;
- Employers subject to the simplified VAT scheme or the simplified agricultural VAT scheme must declare their tax for 2023 on form 3517, to be filed in the year in which the tax is due;
- Employers who are not subject to VAT must declare their tax for 2023 by 25 February of the following year, i.e. by 25 February 2024, by means of Annex No. 3310 A to the VAT return;
In this way, the tax will be due for hires made during the year, declared, and paid with the VAT return for the following year. The first steps for 2023 hires will take place in February 2024.
The amount of the OFII tax varies according to the length of the employment contract and the salary, based on the current SMIC, which has been increased in 2023. The amounts are as follows:
For contracts of 3 to 12 months:
- If the salary is less than or equal to €1709.28 : €74
- If the salary is between €1709.28 and €2563.92: €210
- If the salary is higher than €2563.92: €300
For contracts of more than 12 months:
- If the salary is less than €4273.21 : 55% of the gross monthly salary
- If the salary is equal to or higher than €4273.21 : €2350.26
A calculation sheet is also available to help you determine the amount of tax to be declared on the VAT form.
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