Cesu: how to apply the withholding tax on wages?

Are you one of those individuals who employ people at home via the Cesu device? Find out how to apply the withholding tax, which will come into effect next January.

Cesu: how to apply the withholding tax on wages?

Are you one of those individuals who employ people at home via the Cesu device? Find out how to apply the withholding tax, which will come into effect next January.

[Updated June 4, 2018 at 5:35 p.m.] As of January 1, 2019, the withholding tax will replace the collection method by income tax notice. All employers, including individual employers, will now be required to deduct the portion of income tax due from the wages of their employees. For large companies, the process should be managed without too much difficulty by HRDs and other pay slip experts. For individuals who, for example, employ a home helper for the household, and who take advantage of the Cesu system to pay them, the process is however more complex. Fortunately, the Cesu seems to have anticipated these difficulties. Software has thus been developed to calculate, on behalf of the employer, the amount of tax to be deducted from the monthly net salary.

Aware of the difficulties that the transition to withholding tax represents for individual employers, the French administration is also working to put in place an "all-in-one" solution. The objective: to simplify the declaration on the part of the employer and to transfer the responsibility for levying wage tax to the various organizations (Cesu, but also Pajemploi, etc.). The employer, on the other hand, continues to pay the salary to his employee, as before. The Cesu center then distributes this salary between the employee and the tax authorities. With this method, the employer does not need to interact with the tax authorities.

Individuals employing a person at home and using the universal service employment check must apply labor law. The drafting of an employment contract is strongly recommended when employing a person for a regular service, even if the weekly working time is less than 8 hours. The Urssaf site can provide you with answers if you have any doubts.

The declarative Cesu is a device that simplifies the procedures for declaring an employee's remuneration. Its use implies that the individual employer is a member of the National Cesu Center (CnCesu). Membership can be done online, on the Urssaf website, or by means of a form previously obtained from Urssaf or a bank. It allows you to create your employer space and entitles you to your first notebook of "Cesu social components", which you use to declare your employee. You must then fill out and sign a SEPA direct debit mandate, so that Urssaf can collect the social security contributions.

The employer is thus exempted from some of the constraints related to hiring a person from home: declaration of hiring, establishment of payslips, calculation of social security contributions, etc. Everything is automatically managed by the CnCesu, which also sends a certificate of employment to the employee, equivalent to a payslip. However, you must declare your employee's remuneration within 15 days of the end of the month during which he worked for you. If this work is regular, the declaration is made at the end of each month. The process is done either directly online (if you have joined the Cesu declarative via the internet), or thanks to the Cesu sections that you have received, following an affiliation via form. For this second option, all you have to do is fill in the social section, giving the identity of your employee (surname, first name, social security number, address, etc.). You will also indicate the number of hours worked, the net hourly wage and the total amount paid. To know: even if you have opted for a declaration via social shutters, you can always change your mind and switch to the Cesu online.

It is possible to use the declarative Cesu in the context of personal services. These fall into different categories:

It is not possible to use the declarative Cesu for the employment of childminders or for childcare at home. To declare such benefits, you will have to turn to Pajemploi.

The declarative Cesu leaves you the choice of the method of remuneration of your employee: transfer, cash, check. You can also pay your employee using the pre-financed Cesu (see below). If you decide to opt for cash settlement (all or part), you will need to ask your employee for a receipt.

Please note that the employer and the employee must agree on the amount of remuneration and the method of payment. The salary must be at least equivalent to the conventional salary and must be increased by 10%, in respect of paid leave. For your information, a simulator is available on the Urssaf website, indicating the nature and amount of contribution rates, depending on the department.

Another Cesu system, the pre-financed Cesu titles constitute a means of payment for the individual employer. They come in the form of a nominative check book, comparable to catering vouchers. They can also be financed by the company of the individual employer, his works council, his mutual or his pension fund. Attention ! The pre-financed titles have nothing to do with the social components. The pre-financed Cesu is a means of payment, the social components allow you to declare the remuneration of your employee.

The pre-financed Cesu therefore allows you to pay for services to the person in direct employment (childcare and maternal assistance included), but also for the services of an organization or an approved structure (nursery, drop-in daycare, kindergarten). child, etc.). It is subject to the same rules as the Cesu declaratif, with regard to the declaration of your employee's remuneration. You must therefore join the CnCesu (online or by form) or the Pajemploi national center (in the case of childcare or if you employ an approved childminder). A SEPA direct debit mandate is also required, in order to collect your social security contributions. Your employee must for his part register with the Cesu reimbursement center (CRCesu), in order to be reimbursed for the Cesu titles.

Once the employee's affiliation to the CRCesu has been recorded, all they have to do is send their pre-financed Cesu titles there. This can be done by post, online (on your CRCesu personal space) and even in a bank branch. The process is free, except for online direct deposit (0.45 euros is charged per deposit, with no limit on securities). The employee is then credited by bank transfer, within 48 hours of receipt by La Poste and within 24 hours for an online deposit. If the securities have been delivered to an agency, the transfer takes place within the same timeframe as for a bank cheque. Please note: pre-funded Cesu titles have a limited validity. An employee has until February 28 of the year following the year mentioned on the check to be reimbursed.

To date, only 6 organizations are authorized to issue pre-financed Cesu securities:

However, it is with your employer that you will have to find out about acquiring and employing a home-based employee yourself.

The two systems that are the declarative Cesu and the pre-financed Cesu combine perfectly. You are simply required to declare the remuneration to the CnCesu, or to Pajemploi, in the case of childcare or the employment of an approved childminder.

The use of the Cesu in itself does not entitle you to any tax advantage. On the other hand, the fact of employing an employee at home gives you the right to a reduction or a tax credit. This benefit amounts to 50% of the amount of wages and social charges paid, up to an annual limit of 12,000 euros. An increase of 1,500 euros in this ceiling may be granted for each dependent child or for each member of the tax household over the age of 65, up to a limit of 15,000 euros. The ceiling is increased to 20,000 euros for individual employers with a disability. Be careful however: if you pay your employee with pre-financed checks, the amount of the contribution of your employer (or EC, or mutual, etc.) will be subtracted in the calculation of your tax benefit.

The redesign of the Cesu site, which allows employers to make their declarations, was put online in October 2017. Cost simulator, pre-filled forms, search engine... The site has been thoroughly reviewed and now offers new functionalities facilitating the procedures for employers. When the deduction of tax at source will be in force in 2019, the Cesu site will take on its full interest. It will indeed offer employers using the Cesu the possibility of recovering each month the payment of the tax credit granted to them. Remember that the use of the universal service employment check entitles you to a tax credit. It is possible to know the amount by making an estimate on the Cesu website.

The Cesu Early Childhood is a scheme allowing employees to finance all or part of the childcare costs of their children aged 3 months to 3 years. It is open to all active employees of companies participating in the program. It is co-financed by the employer, the CMCAS Coordination Committee and the employee. Its total annual amount is 2,000 euros per employee and per year for one child and 2,555 euros for several children. The employer and the Committee participate in the financing within the limit of 1,830 euros per employee. The assistance begins on the first calendar day of the month following the child's 3 months and extends until the last day of the month of his 3rd birthday. It is extended until the child's 7th birthday if the child has a disability equal to or greater than 70%. Check with your company to find out if you are eligible.

The state employer also offers a contribution to childcare costs for civil servants. State civil servants and workers, magistrates, soldiers, agents not holding public law... If you are responsible for one or more children aged 0 to 6, you will be able to benefit from assistance. The amount of the Cesu is calculated according to your conditions of resources, your place of residence and your family situation. For families living as a couple, the aid is capped at 400 or 700 euros, depending on resources. Ceiling which amounts to 840 euros for single-parent families. This aid can also be combined with the legal benefits paid by the Family Allowance Fund.

Self-employed workers, whether self-employed, merchants, craftsmen or individual entrepreneurs can also obtain pre-financed titles. Up to 1,830 euros of private expenses related to personal services can be tax-exempt per year. The sums are deductible from the taxable profit of the company, which benefits from a tax credit amounting to 25% of the sums committed.