This law is mainly marked by an adjustment to the timetable for pension reform, but it also includes measures directly concerning the contributions of employers and self-employed workers as well as a CSG increase directly impacting a large number of taxpayers.
We present it to you below in four major points:
- Measures relating to payroll contributions and exemptions
- Measures relating to self-employed workers
- Measures concerning employers, employees and the self-employed
- Miscellaneous measures
It should be noted that we present below only the provisions that mainly concern companies.
1- MEASURES RELATING TO PAYROLL CONTRIBUTIONS AND EXEMPTIONS:
Individual negotiated terminations and retirements:
The employer’s specific contribution rate on severance payments for individual negotiated terminations and retirements is increased from 30% to 40%. This contribution is due on the portion of the severance payment exempt from social security contributions, whether or not it is subject to CSG/CRDS.
This measure is expected to apply from January 1st 2026. However, the administration is expected to clarify the exact date of entry into force.
Penalty on employer pension contributions for certain companies:
The “Seniors” law required companies and groups with at least 300 employees to negotiate periodically on employment, work, and improving working conditions for older workers. The 2026 Social Security Financing Law (LFSS 2026) lays the groundwork for a penalty on employer pension contributions for companies that fail to engage in these negotiations.
The flat-rate employer deduction for overtime is extended to companies with 250 or more employees:
The flat-rate deduction is extended to these companies from January 1st 2026. The deduction amount will be €0.50 per overtime hour and, for employees on a “days-based work agreement,” €3.50 per day worked beyond 218 days per year.
Gradual reduction of employer contributions in sectors with collectively agreed minimum wages lower than the SMIC (French minimum wage):
In sectors where the collectively agreed minimum wage for unskilled workers is lower than the SMIC, it is planned to replace the SMIC parameter with this collectively agreed minimum wage in the formula for calculating the coefficient of the single general gradual reduction of employer contributions.
This measure requires an implementing decree. It therefore does not come into effect immediately.
Social security treatment of management packages:
The 2025 Finance Act defined a set of rules applicable to gains realized on securities subscribed to or acquired by employees or managers, or allocated to them in consideration of their functions within the issuing company. The exemption from the tax base now applies only to net gains corresponding to securities meeting the financial loss risk conditions and, for “non-qualified” plans, the minimum holding period requirements.
2- MEASURES RELATING TO SELF-EMPLOYED WORKERS:
Declaration and withholding of contributions by digital platforms:
The 2024 Social Security Financing Law (LFSS 2024) introduced a mandatory system for digital platforms to declare and withhold social security contributions for self-employed workers under the micro-social regime. From January 1st 2027, these social security contributions will be directly collected by the platforms. However, these provisions may be phased in starting in April 2026.
When workers fail to provide the platform with the data necessary for their identification, or when platforms fail to transmit this same data to the URSSAF, penalties will apply.
The maximum penalty amount will be:
– €3,250 for sellers and service providers;
– €15,000 per seller or service provider concerned, for platform operators.
Measures concerning artists and authors:
– The URSSAF will be the sole point of contact for affiliation and contributions: From April 1st 2026, the URSSAF will become responsible for the affiliation of artists and authors in place of the social security for artists and authors (SSAA).
-Social security for artists and authors will be maintained: As of June 1st 2026, an organization called the National Council for the Social Protection of Artists and Authors will be responsible for the following missions:
- establishing the general guidelines for health and social action;
- ensuring the proper application of social protection rules and the quality of services provided to artists and authors;
- publishing an annual activity report.
-Mandatory electronic filing of income tax returns for artists and authors: As of January 1st 2026, artists and authors must file their income tax returns and related social security contributions electronically.
3- MEASURES CONCERNING EMPLOYERS, EMPLOYEES AND THE SELF-EMPLOYED:
Revision of the exemption from social security contributions for business creators and buyers:
Note: By way of exception, the reform does not concern agricultural managers covered by the agricultural social protection scheme.
From now on, only the following people will be eligible for the scheme:
– Unemployed individuals receiving benefits;
– Unemployed individuals not receiving benefits but registered with France Travail for 6 months during the last 18 months;
– Recipients of the Specific Solidarity Allowance (ASS) or the Active Solidarity Income (RSA);
– Young people aged 18 to under 26;
– People under 30 with a recognized disability;
– Employees or former employees of a company undergoing safeguard, receivership, or liquidation proceedings who are taking over the company’s business;
– Individuals who have signed a Business Project Support Contract (CAPE), provided they belong to one of the six categories above;
– Individuals creating or taking over a business located in a priority district under the urban policy (QPV);
– Recipients of the Shared Childcare Benefit (PrePare);
– Individuals creating or taking over a business located in a municipality within one of the France rural revitalisation zones (ZFRR).
From January 1st 2026, the exemption will be reduced: When the contribution base is less than or equal to 75% of the social security ceiling, the exemption, to be specified by decree, may not exceed 25% of these contributions. For contributors whose contribution base exceeds 75% of the ceiling, the exemption will be gradually reduced, becoming zero at 100% of the ceiling.
Implementation of a procedure for requesting exemption: From now on, anyone wishing to benefit from this exemption must apply to their URSSAF or CGSS.
Measures relating to sick leave and work-related accidents or occupational diseases:
-From September 1st 2026, the initial prescription of sick leave by doctors, midwives, or dentists will be limited to a duration set by decree.
– From September 1st 2026, extensions of sick leave will also be capped (cap determined by decree).
– The medical advisor of the Health Insurance may request an examination by the occupational physician.
Creation of an additional birth leave:
An employee who has taken maternity leave, paternity and parental leave, or adoption leave may, after exhausting this leave entitlement, benefit from additional birth leave of 1 or 2 months, at the employee’s choice.
With regard to self-employed workers, the mother, the father and, where applicable, the mother’s spouse as well as adoptive or foster parents may also benefit, upon their request, from additional daily birth allowances provided they cease their activity.
Retirement-related measures:
The law makes some adjustments to the schedule for raising the legal retirement age, which will be set as follows:
– 1964 generation: 62 years and 9 months (instead of 63 years);
– generation born in the first quarter of 1965: 62 years and 9 months (instead of 63 years and 3 months);
– generation born in the second, third, or fourth quarter of 1965: 63 years (instead of 63 years and 3 months);
– 1966 generation: 63 years and 3 months (instead of 63 years and 6 months);
– 1967 generation: 63 years and 6 months (instead of 63 years and 9 months);
– 1968 generation: 63 years and 9 months (instead of 64 years).
Regarding the number of quarters required to qualify for a full pension (50%, without reduction), the adjustments are as follows:
– 170 quarters (instead of 171) for the 1964 generation;
– 171 quarters (instead of 172) for the 1965 generation.
The reform applies to pensions taking effect from September 1st 2026.
The rules for combining employment and retirement benefits will be changed in 2027.
4- MISCELLANEOUS MEASURES:
Increase in the CSG rate on capital:
The CSG rate on investment income and capital gains is increased to 10.6% from 9.2%. For income subject to the flat tax of 12.8%, the total levies thus increase from 30% to 31.4%.
- For patrimony income: This applies to:
– certain life annuities acquired for valuable consideration;
– income from movable capital, except where the CSG has been withheld at source;
– capital gains;
– distributions of assets and capital gains realized by OPCVM (UCITS);
– certain acquisition gains on free shares, stock options, and share purchase certificates (CAAS);
– all income taxed as industrial and commercial profits (BIC), non-commercial profits (BNC), or agricultural profits (BA), unless it is subject to the CSG on employment and replacement income.
Entry into force: For patrimony income, the increase in the CSG rate applies from the taxation of income in 2025.
Important note: The CSG on heritage income is not payable by individuals who both:
-are subject to the legislation of another Member State of the European Union or the European Economic Area (Iceland, Norway, Liechtenstein) or Switzerland with regard to health insurance;
-are not covered by a mandatory French social security scheme.
- For investment income: Income in question is: dividends, other distributed income
and fixed-income investment.
The increase in the CSG rate applies to products received from 2026 onwards, unless they are subject to social security contributions on earned income.
Important note: For investment income, the CSG (General Social Contribution) is not payable by individuals who are both affiliated with a health insurance scheme in another EU/EEA state or Switzerland and are not covered by a mandatory French social security scheme.
- As an exception, the following income remains subject to the CSG at a rate of 9.2%:
– rental income;
– capital gains on real estate and personal property;
– certain savings products, interest, or bonuses.
Increases in contributions in the event of hidden work:
As part of the fight against social security contribution fraud, the LFSS 2026 increases by 10 points the rate of increases in specific contributions due.
Thus, for procedures initiated from June 1st 2026, the rate of the specific increase applicable to the amount of the adjustment will be set at 35% (instead of 25%) in the general case and 50% (instead of 40%) in the case of concealed work with aggravating circumstances.
You can of course contact us if you would like clarification on the subject.
