In October 2021 the French Prime Minister announced an inflation compensation of 100 € referred to as ‘l’indemnité inflation’ for lower-income groups. The bonus is intented to mitigate the recent rising energy prices. Helping the most modest income households to cope with it.
The tax-free inflation compensation must be paid under the following conditions.
Inflation bonus amount :
The government announced an inflation bonus of 100 €.
Eligible groups :
Employees, self-employed workers, job seekers, students among others.
Payment date of the inflation compensation:
For private sector employees the payout was planned to be made in December. The bonus should be paid by the company that employed the employee in October 2021, even if the employee is no longer with that employer. The bonus will be mentioned on the French Payslip as ‘indemnité inflation – aide exceptionnelle de l’état’.
Administrative procedure :
The employees do not have to formally request it. Employers are obliged to pay this bonus to their employees who meet the conditions.
Exception: Part-time employees who worked less than 20 hours in October 2021. In this case, it would be up to the employee to report to his “main” employer.
Net salary condition :
Net salary of less than 2000 € per month per person
The bonus is planned to be paid individually, meaning that a couple can receive 200 € if both earn less than 2000 €.
Basis for the calculation of the 2000 € threshold:
The inflation compensation should be paid to individuals with an average net salary before tax of less than 2,000 € per month. To calculate the average the period from January 2021 to October 2021 is taken into account.
Social contributions on the inflation bonus:
The inflation bonus is exempted from contributions and taxes for both employee and employer.
Refund by the government :
The cost of the bonus will be fully beared by the government and declared with the monthly social data to URSSAF.