In a context where companies face increasing challenges in recruiting and retaining staff, the crèche cradle constitutes a social lever that should not be ignored. This system allows the company to concretely support its parent employees while benefiting from an incentive tax and social framework.
We will present this system to you below in three main points:
- The principle of operation
- The advantages and disadvantages for the company
- The advantages and disadvantages for employees
I- THE PRINCIPLE OF OPERATION:
We speak of a company cradle when a company reserves places in creches on behalf of its employees. This system allows employees’ children to be looked after in a private crèche. Highly appreciated by employees, this service responds to the problem of the lack of places in public crèches, by making access to private crèches more affordable for parents. In addition, when a company reserves a company crib, it co-finances part of the price of the place in the nursery.
To reserve one or more company cradles, it is possible to contact a structure offering an inter-company crèche system. An intermediary offering the reservation of cribs in inter-company crèches takes care of finding the best establishment according to the wishes of the parents while managing the associated administrative part for the company.
II- THE ADVANTAGES AND DISADVANTAGES FOR THE COMPANY:
1- Social benefits:
Reserving a company bed is not considered as a benefit in kind: It is important to clarify first that employers are not legally obligated to contribute to childcare costs. However, if they choose to finance personal cradle in a nursery, particularly by covering the childcare expenses of their employees, this financial assistance may be exempt from social security contributions up to a certain limit, which is reviewed annually. So, there is no increase in employer contributions. Works councils (CE) and social and economic committees (CSE) can also participate in financing a business cradle.
However, when an employee benefits from a rate negotiated by their employer or the Works Council (CSE) through a subsidy paid to a creche or micro-nursery, the amounts of benefits granted by the employer to the nursery and the employee must be determined. If the negotiated rate applicable to the employee is lower than the rate normally applied to other parents, this rate constitutes an individualized benefit for the employee. The nursery must complete an annual statement allowing the employer to know the amounts of benefits granted to their employee during the year. This benefit is, however, exempt from social security contributions up to the legal limit.
Note: company that covers childcare costs solely for its director, without extending this benefit to any other employee, should not be eligible for the social security contribution exemption. The benefit derived from the employer’s payment of childcare costs should therefore be treated as a benefit in kind for payroll purposes.
Various other social benefits, the main ones being:
- employee retention through improved well-being at work;
- securing a smooth return to work after maternity leave and preventing the need for extended maternity or paternity leave;
- controlling hidden human costs (lateness, absences, stress, early departures, turnover;
- strengthening the company’s attractiveness during recruitment;
- developing a quality of work life policy by improving working conditions and the social climate.
2- Tax benefits:
When a company decides to reserve a crib, part of the cost is covered through the tax scheme called Family Tax Credit (CIF), the company can recover 50% of the amount advanced through operating expenses. Its operation is as follows:
Eligible businesses: All businesses subject to standard tax regimes, whether corporate income tax or personal income tax, are eligible for the Family Tax Credit (CIF), regardless of their sector of activity. Public institutions and associations can also benefit from this scheme, provided they are subject to corporate income tax.
However, businesses subject to personal income tax under the micro-enterprise regime are excluded.
Eligible expenses: include childcare costs, such as funding for a private facility directly operated by the company (nursery, daycare, etc.) that cares for employees’ children under three years of age. This category also includes payments made by the company for childcare for its employees’ children (under three years of age) in public or private facilities operated by organizations external to the company.
Amount of the CIF: It amounts to 50% of the expenses incurred and is capped at € 500,000 per calendar year for each company.
To benefit from this tax credit: The Family Tax Credit (CIF) is deducted from the income tax or corporation tax owed by the company for the year in which the expenses were incurred. To claim it, you must complete form no. 2069-FA-SD, “Family Tax Credit,” and attach it to:
- your supplementary income tax return (form 2042-C-PRO), if your company is subject to income tax;
- or your corporation tax balance statement (form 2572-SD).
Furthermore, companies will deduct all their expenses from their taxable profit. This deduction varies from 15% to 28% (depending on the company’s tax rate) for companies subject to corporate income tax, and corresponds to the personal income tax rate for other companies.
We therefore note that the remaining cost for the company (which is at most 50% in the case of a company that is not tax-profitable) can become very low when the company is heavily taxed.
3- Disadvantages:
The actual or potential drawbacks are few, but they should not be overlooked. Here are a few:
- cash flow impact despite tax breaks;
- contractual commitment that can be a burden on a small business;
- need to ensure fairness among employees, particularly in the case of a small workforce.
III- THE ADVANTAGES AND DISADVANTAGES FOR EMPLOYEES:
1- Advantages:
Having access to a company-sponsored childcare facility is a real advantage for employees. Here are the main benefits:
- A quaranteed place in a daycare centre for your child. In France, there is a shortage of daycare places for children under 3 years old. Company-sponsored childcare facilities solve this issue by guaranteeing working parents priority access to private nurseries.
- Benefir from safe childcare. Private nurseries offer good organization: they are open during office hours and close for only 5 weeks a year, according to a pre-established schedule.
- The advantage of access at a preferential rate.
- Benefit from a facility that meets the employee’s criteria. Company-sponsored childcare reservations are made according to parents’ wishes: nurseries are selected based on specific criteria, both geographical and educational.
- Achieve a better work-life balance while reducing stress at work.
- In some cases, combine with certain public aid.
- Benefit from the absence of taxation on benefits in kind (under certain conditions).
2- Disadvantages and limits:
The disadvantages for the employee are rare, but there are some limitations:
- The number of places is limited, adn sometimes some staff members cannot access this service.
- The choice of nurseries is restricted, and schedules are often imposed.
- The employee may lose access to the service if they relocate.
In conclusion, to successfully manage the nursery reservation process, we believe it will be important to:
- clearly define the allocation criteria;
- communicate transparently with the teams;
- regularly assess the cost and social impact.
