Early and Flexible Release of Company Bonus

New Inflation Measure: Early and Flexible Release of Company Bonus

With soaring consumer prices that are climbing at their fastest pace in about 40 years, the French government introduces new measures to help households to scope with it. Several of which affect the French payroll: exemption on overtime hours up to €7500, tripling of PEPA bonus to €6000, and new ceilings for meal vouchers.

Early and Flexible Release of Company Bonus

Another measure is the possibility of an early and flexible release of funds of a company bonus plan allocated to a savings plan. Up to €10000 can be released early.

Company bonus plans: ‘intéressement’ and ‘participation’

In France, a profit sharing plan, referred to as ‘participation’ is mandatory in companies with 50 employees or more. In smaller companies, an optional bonus plan ‘intéressement’ can be set up. Both company bonus plans are to a large extend exempt from contributions. As such, they can help to optimize social contributions and payroll taxes in France.
Employees who choose to place the bonus into a company savings plan can now release funds in advance.

Flexible, early release for purchase of goods or services

In addition to the existing anticipated releases of funds in the event of a contract termination or a personal event like a birth of a child, the new provision now allows an early and flexible release of the company bonus for the simple reason to purchase goods or services.
The employee does not have to provide proof of these expenses in advance. However, at the request of the tax authorities, the employee must provide supporting documents attesting the use of the sums released.

Maximum amount and deadline of early release

The employee can request a release of up to €10,000. The amount is exempt from social security contributions and from income tax.
The request can only be made once, until 31 December 2022 latest. To be noted that there are no set deadlines for making the purchases of goods or services after the release.

Employer obligation to inform the employee

The employer is obliged to inform the employee of his rights within 2 months of the promulgation of the law.