A group recruits a managing director from London for its French subsidiary. Package finalised, corporate office agreement signed, duties starting on the first of the month. The payroll department enrols the executive in every French scheme, like any other manager. No one filed a request with URSSAF before duties began. Three months later, an adviser points out that a statutory mechanism would have exempted him from French old-age contributions, and saved the company the corresponding employer charges. The right is not lost, but immediate application is, and regularisation now requires a cash advance that nothing made necessary.
France's inbound expatriate tax regime, set out in article 155 B of the French Tax Code, is now well known. Its social security counterpart is much less so. The PACTE Act of 2019 nonetheless introduced a mechanism exempting persons recruited from abroad, executives included, from French old-age insurance, with a considerable financial effect, and one that is steered at the same moment as the tax regime, with the same people.
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 duties are taken up.
The request is joint, employee and employer, and is filed with URSSAF. Filed in time, it allows application from the first payslip. Filed late, it does not cause the benefit to be lost, but it requires the company to pay the old-age contributions until URSSAF decides, and then to claim their refund. A pointless cash advance, entirely avoidable with a few weeks' anticipation.
The exemption is granted for three years, renewable once. The renewal is not automatic: it must be applied for, and its deadline watched, failing which the executive is re-enrolled without anyone having decided it.
Where eligibility is in doubt, the employer can secure its position through a ruling request to URSSAF. This step is particularly meaningful for a corporate officer, whose treatment as an employee for social security purposes deserves to be checked 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 produces an immediate, visible effect: more net for the executive, fewer charges for the company. It carries a consequence that is rarely anticipated: no quarter of French pension is acquired during the period covered.
For an executive whose career has spanned several countries, and whose pension rights are already spread across several systems, this decision forms part of a wider reflection. What rights are already built up abroad? In which countries will he be able to aggregate his periods and draw a pension? Do the bilateral social security conventions, or the European coordination regulations, allow an accumulation? Is the private pension vehicle set up to meet the minimum-contribution condition consistent with that global horizon, and often with a foreign pension plan the executive does not wish to interrupt?
These questions do not call the mechanism's value into question. They determine how it must be structured, and justify steering it within an overall wealth analysis, rather than treating it in isolation as a mere 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.