An insight into employee vacation incentives in France.
Why should you offer employee vacation incentives ?
Incentives and Employee Benefits in France are a great way to increase the motivation and loyalty of your employees. They can also attract new talent. Highly qualified employees will not only consider the salary of a new job. Incentives and benefits can make a difference.
Especially vacation incentives can set your company apart as not many employers in France offer them. They can improve the well-being of your employees and the overall work culture. They are also an interesting option from a financial point of view as they are to some extend tax free if the conditions are respected. With Payroll Taxes in France being very high, this cannot be neglected.
What are employee vacation vouchers ?
Employee vacation incentives come in the form of paper vouchers or a virtual budget managed via a mobile app. They are issued by ANCV. They can be used to pay for services related to leisure and holidays. They are partially financed by the employee and the employer (or the company’s works council if applicable). There is no legal obligation to set them up.
Who can set the employee vacation incentives up ?
In companies without a work council, the employer can decide to set them up. If a work council exists in the company they can decide to set them up without a contribution from the employer. They will then allocate them to the employees based on non-discriminatory criteria.
When are employee vacation incentives tax-free ?
If the vacation vouchers are set up by the employer, his financial contribution can be exempt from most social contributions. This is subject to the following conditions that have to be met cumulatively.
Conditions related to the company:
– Staff headcount of less than 50 employees
– Absence of a work council or similar body for social activities
Conditions related to the attribution
The employer’s contribution must:
– be fixed in a collective agreement
– be attribuated based on wage levels;
Lastly, the employee vacation incentive must not replace another salary element.
Conditions related to the employer’s contribution
For the vacation incentives to be exempted, they have to respect several conditions. The most important are a maximum amount and a minimum participation from the employee.
Maximum amount per employee
The amount of the employer’s contribution eligible for a tax exemption is limited to 30% of the monthly minimum salary SMIC. So as of 1st of May 2022, this is 494 Euro.
Maximum contribution of the employer in percentage
Both, the employee and employer have to contribute to the vacation vouchers.
The employer’s contribution must not exceed:
| Salary level | Employer’s maximum contribution |
|---|---|
| up to the monthly social security ceiling (3428 Euro in 2022) | 80 % |
| exceeding the monthly social security ceiling | 50 % |
These percentages are increased by 5% per dependent child (10% if child is disabled), up to a limit of 15%.
Exemple:
Employee with a salary of 3000 Euro per month, 4 children
Nominal value of the vacation voucher: €500
| Employer’s maximum contribution % | Employer’s maximum contribution amount | Employee’s minimum contribution % | Employee’s minimum contribution amount | Total value of the vacation vouchers |
|---|---|---|---|---|
| 95 % (80 %, plus 5 % per child up to 15 %) | 475 Euro | 5 % | 25 Euro | 500 Euro |
What can be paid with employee holiday incentives ?
Vacation vouchers can be used all year round in France, but also for stays in member countries of the European Union. ANCV provides a complete list of services accepting vacation vouchers on their website. All services are classified by categories and it is possible to find out whether it is possible to pay on site or on the Internet.
leguide.ancv.com
Accommodation: hotels, holiday villages, campings,…
Transportation: train, plane & boat tickets, motorway tolls, travel agencies & websites
Catering
Sight-seeing & cultural activities: entrance fees to historical monuments and museums, tickets for theaters, concerts, operas, festivals,…
Leisure and sport: amusement parks, zoos…
How to use the holiday vouchers?
Initially employee vacation incentives came in the form of paper vouchers. They are now replaced by electronic dematerialized vouchers. These are managed in an app via a smartphone. Electronic vouchers can be used to pay for travel services on the internet or in stores.
In order to use them, the employee has to create and activate his account and his credit with his email adress and phone number. After entering his information and confirming his identity, the vacation credit can be activated after a security check.
For online payments, the employee has to select the payment option ‘vacation vouchers’ at the time of checkout. The payment must then be confirmed via the mobile app.
For on site payments, the employee will have to scan a QR payment code.
How long are vacation vouchers valid ?
The employee vacation incentive vouchers are valid for 2 years after the year of issue (a voucher issued in 2021 is valid until 31st of December 2023). At the end of its validity period, the employee can request an exchange of unused vouchers (subject to conditions).
How My Payroll Pro France can assist
Consulting in tax optimization and incentives is our expertise and part of our Payroll Services in France. Learn more about incentives such as meal vouchers, culture vouchers and tax-free corporate fitness incentives in France. Please feel free to contact us if you need assistance to set up vacation vouchers or other incentives.