A new French program approved in December as a result of widespread worker unrest allows employers to pay bonuses of up to 1,000 euros free from any income tax or social charges. Employees who earn less than 3,600 euros per month are eligible for the tax break.
The bonuses must be paid out by the end of March and will not count toward retirement.
According to reports, most listed companies have committed to paying the bonuses. For example, IBM will pay 1,000 euros to all its employees in France earning less than 2,000 euros per month, and Michelin will pay bonuses to about half of its employees. La Poste, the French national postal service, will pay bonuses or 200 or 300 euros to 200,000 of its employees.
The “exceptional purchasing power” program was put into place on 24 December 2018, as part of a package of emergency provisions seeking to respond to violent protests against tax increases on fuel and retirement income.
Worldwide ERC® members with employees in France may wish to take advantage of an opportunity to provide nontaxable compensation to some members of their workforce.