A group hires a managing director out of London for its French subsidiary. Package agreed, office contract signed, start date on the first of the month. Payroll enrols the executive in every French scheme, like any other manager. No one files anything with URSSAF before the start date. Three months later an adviser points out that a legal mechanism would have taken the executive out of French pension contributions, and saved the company the matching employer charges. The right is not lost, but immediate effect is, and putting it right now means fronting cash that nothing ever required.
The tax side of the impatriate regime, article 155 B of the French Tax Code, is now well known. Its social-security twin is not. Yet the PACTE Act of 2019 created a way to take people hired from abroad, executives included, out of French old-age insurance. The financial effect is large, and it is steered at the same moment as the tax regime, with the same people around the table.
Article L. 767-2 of the French Social Security Code allows employees called from abroad to take up employment in France, and the executives treated as employees for social security purposes, to request not to be enrolled in the compulsory French old-age insurance schemes, both basic and supplementary, for a period of three years, renewable once.
The saving covers both the employee and the employer old-age contributions. The executive receives a higher net figure, the company bears reduced employer charges. On an executive's remuneration, where the old-age base is by nature high, this saving is not marginal: it is one of the rare mechanisms where the interest of the executive and that of the host company coincide exactly.
The central condition mirrors that of the inbound expatriate tax regime: not to have been enrolled in a compulsory French old-age scheme during the five calendar years preceding the year in which duties are taken up, save for ancillary, seasonal or study-related activities.
The mechanism further requires the executive to show a minimum contribution paid elsewhere towards his old-age insurance, whether to a French or a foreign scheme. The amount of that contribution and the nature of the pension vehicle chosen call for a decision to be taken in advance, not for a formality to be improvised when the request is filed.
The exemption is not automatic: it is granted by the director of the competent URSSAF, on a joint request by the executive and the employer.
Before the start date.
The request is joint, employee and employer, filed with URSSAF. Filed in time, it takes effect from the first payslip. Filed late, the benefit is not lost, but the company has to pay the old-age contributions until URSSAF decides, then claim them back. A pointless cash advance, entirely avoidable with a few weeks' lead time.
Where eligibility is in doubt, the employer can pin down its position with a ruling from URSSAF. That matters especially for a corporate officer, whose status as an employee for social-security purposes is worth checking before filing.
They fall first on the company. A breach of the conditions of the mechanism exposes the employer to a reassessment of contributions. The procedure is joint, but it is the company that bears the bulk of the financial risk in the event of irregularity, and that must answer for it to URSSAF. The precise classification of the executive's situation, and the documentation of the alternative pension contribution, therefore determine the security of the whole operation.
The exemption has an obvious upside: more net for the executive, fewer charges for the company. It also has a consequence people rarely see coming: no quarter of French pension builds up over the period covered.
For an executive whose career has run across several countries, with pension rights already spread across several systems, this is part of a bigger picture. What rights are already built up abroad? In which countries can they add their periods together and draw a pension? Do the bilateral social-security treaties, or the European coordination rules, allow the two to combine? Does the private pension vehicle set up to meet the minimum-contribution test fit that global picture, and often a foreign pension plan the executive does not want to break?
None of this undercuts the mechanism. It shapes how it should be built, and it is why the opt-out belongs inside a full wealth review, not treated on its own as a social-security formality.
The social opt-out and the inbound expatriate tax regime share the same five-year prior condition, the same moment of activation, and the same people on the company side and the executive side. They are decided together, before the contract is signed, not after. Dealing with one without the other means activating half of an advantage and letting the other half slip away.
Lobe Law, a Paris law practice specialising in the tax and international mobility aspects of executives' affairs, advises executives and companies on eligibility, the URSSAF procedure and coordination with the inbound expatriate tax regime. Book a consultation before duties begin.