Deductions Account for 5.8% of Payouts versus 9% in the EU: Social Benefits Taxation Has Risen in France but Remains Low Compared to Neighbors

Taxes levied directly on social benefits (pensions, daily sick leave allowances, unemployment benefits, etc.) have increased in France since 2010 but remain among the lowest in Europe, indicates a study by the Drees published this Tuesday. Certain social benefits are subject to compulsory deductions, notably via income tax, the general social contribution (CSG) or certain social contributions, which contribute to the financing of public administrations but reduce the amount paid to policyholders, recall the statistical services of the social ministries in this study.

In 2023 in France, these deductions represented 51.6 billion euros, or 5.8% of the total gross amount of benefits paid (889.5 billion euros), specify the authors. The old-age-survival risk - mainly pensions - constitutes the majority of the levies: 41 billion euros or 78.9% of the total, which can be explained by "the significant weight" of these benefits (around 400 billion euros) and a higher tax rate than on other benefits. Next comes the health risk (4.7 billion euros, mainly in daily allowances) and the unemployment risk at 3.8 billion euros.

Other benefits are exempt, such as the RSA, healthcare reimbursements, or only subject to the CRDS (contribution for the repayment of the social debt, at the low rate of 0.5%) such as the activity bonus or family allowances. An average withholding rate of 9% in the EU Between 2010 and 2023, the average withholding rate increased from 5.1% to 5.8% of the gross amount paid. In particular, the rate of old age-survival risk increased from 9.1% to 10.2% and that of unemployment from 6.8% to 7.6%, underlines the study.

Various reforms explain this: establishment of the Casa in 2013, creation in 2019 of a CSG rate of 8.3% applicable to the highest retirement and disability pensions, increase in the CSG rate on certain benefits, modifications to the income tax scale... French policyholders, however, remain better off than their neighbors: across the European Union, the average levy rate on social benefits amounted to 9% in 2023 (compared to 5.8% in France), with particularly high rates in the Netherlands (18%) or Denmark (15.2%), and rates "almost zero in Bulgaria", and "very low in Czechia and Slovakia", notes the Drees. “The average levy rate on old age risk amounts to 14.5% in the EU.

It varies greatly from one country to another: low in Eastern Europe, it exceeds 20% in several countries in Western, Northern or Southern Europe,” she adds.

Machine-translated from French