2014 Finance Act

Article 4 of the 2014 Finance Act was published in the Official Journal dated 30 December 2013.  This Article makes provision for the taxation relating to the employer’s contribution for group and compulsory supplementary healthcare.

This measure will take effect from the next due date for income tax payment in 2014, that is to say for income earned during 2013. Companies will therefore have to include this taxable contribution in their DADS (Annual Declaration of Social Data) 2013 return.

2014 Finance Act

How will this affect employees ?

  • Add-back into the employee’s net income of the employer’s contribution relating to income earned during 2013.

Monthly example

Gross monthly salary Net salary after tax Gross monthly salary Net salary after tax Employer’s share of healthcare costs New net salary after tax New net salary after tax
EUR 2000 EUR 1600 EUR 75 EUR 1675

How will this affect companies ?

  • These details must be notified to employees when their « tax statements » are sent to make sure they are made aware of the difference between accumulated net income as per the December 2013 Journal and the amount which appears on their income tax return
  • Inclusion in the DADS (Annual Declaration of Social Data) 2013 for the additional taxable element

New rules on the calculation of taxable assets :

Following this change, the budget for tax allowances on employer and employee contributions to fund pension and healthcare cover is reduced. Contributions cannot be any higher than 5% (instead of 7%) of the total annual limit for Social Security and 2% of gross annual pay (instead of 3%), with the proviso that the total must not exceed 2 % (instead of 3%) of 8 times the equivalent of this same limit. Again, payroll systems will have to be adjusted to take into account this new threshold.

So this means reporting modifications and extra work… in the hope that other reductions in administration due to be announced will prove to be more efficient !

As and when social partners have made supplementary healthcare compulsory for all companies (by 1st January 2016 at the latest), many companies will see this move as an opportunistic tax measure which shows little concern for the buying power difficulties encountered by employees and collective bargaining.

In addition, this year the government should set new rules by decree relating to the way in which group healthcare contracts are handled.

GEREP makes a point of following and anticipating all these developments on your behalf and will always be ready to offer solutions which are most suited to your needs.

Please accept our very best wishes for success in your future plans.

Damien Vieillard-Baron President of gerep