The Apprenticeship Tax Guide

Did you know that? The apprenticeship tax is a tax that dates back to a 1925 finance law! Since then, it has never ceased to be modified. In 2020, the way in which the apprenticeship tax is collected will change with the reform of apprenticeship and the "Professional Future" law known as the "Loi Avenir". What has changed, what is still relevant... we take stock with you.

What is the apprenticeship tax?

Following the law of September 5, 2018 for the freedom to choose one's professional future, the apprenticeship tax and the contribution to vocational training have merged, resulting in a single contribution combining the financing of both apprenticeship and continuing vocational training. Thus, the apprenticeship tax enables the development of apprenticeships as well as technological and vocational training by companies. The amount of the tax is calculated on the basis of the remuneration paid by the company.

Its payment is sometimes accompanied by the additional contribution to apprenticeship (CSA) which is calculated on the same basis. The CSA only concerns companies with more than 250 employees, and whose workforce includes less than 5% of work-study students (employees under apprenticeship, professionalisation contract or VIE). Its rate is determined by a scale based on the number of work-study students in relation to the average annual workforce. (The fewer work-study students the company has, the higher the contribution will be). This is actually a kind of penalty, which is incurred when the company's workforce does not include enough alternates. 

Who has to pay the apprenticeship tax? 

This tax is due by any company subject to French law (according to the principle of territoriality) and subject to corporate or income tax, regardless of its status:

• Sole proprietorships and partnerships
• Commercial, craft, trade and industrial enterprises, as well as permanent establishments of foreign companies.
• Sole proprietorships
• Associations and organizations liable to corporate income tax
• Agricultural cooperatives, employer groups or economic interest groups.

These companies are liable for the tax as soon as they employ at least one employee.

Are there exemptions for the apprenticeship tax?

Some companies are exempt from paying the apprenticeship tax. The beneficiaries of this exemption are:

• Companies employing apprentices and whose tax base (i.e. all remuneration) does not exceed 6 times the annual minimum wage (i.e. €110,838.00 for the tax due in 2020).
• The civil companies of means (SCM) exercising a non-commercial activity.
• Companies or legal entities whose exclusive purpose is education, whether primary, secondary, higher education, technical, etc...
• Employers' groups composed of farmers or agricultural non-trading companies that are themselves exempt.

How to calculate your apprenticeship tax?

The calculation of the apprenticeship tax is simple: it is based on the gross annual payroll, that of the current year (before the 2018 reform, the payroll of the previous year was taken into account). Thus, for 2020, it is the payroll for 2020 that will have to be taken into account. There is therefore no longer a gap between the payment of the apprenticeship tax and the year for which it is due.

The payroll includes all remuneration paid out and subject to social security contributions, as well as benefits in kind: salaries, indemnities, bonuses, gratuities, tips, etc. However, employee profit-sharing, profit-sharing, gains made on the sale of bonus shares or securities, or salaries paid to apprentices by employers with fewer than eleven employees, are to be excluded from the tax base. The latter exemption does not apply to the remuneration of employees on professional training contracts.

A rate of 0.68% is applied to this annual payroll, except in Alsace-Moselle where the rate of apprenticeship tax is only 0.44%.

It should be noted that expenses may be deducted from this tax, namely certain investments intended to finance the necessary equipment and materials:

• To carry out apprentice training when the company has its own CFA (Apprentice Training Center).
• To the setting up of a new apprenticeship training offer by the CFA when this training trains one or more apprentices of the company.

Who collects the apprenticeship tax?

The distribution of the apprenticeship tax has been modified following the 2018 law. From now on, it includes two parts:

• A fraction equal to 87% (formerly "quota"), intended to finance apprenticeship training.
• The balance of 13% (formerly "out of quota"), intended for the employer to pay the expenses incurred by eligible establishments.

There is no specific tax declaration to be made: the declaration of remuneration is normally made through the nominative social declaration (DSN).

Since 2020, since the apprenticeship tax is calculated on the payroll for the current year, employers will have to pay the amounts due by making two installments: a 60% installment (in March) then a 40% installment (in September). The balance of the tax calculated on the 2020 payroll must be paid in 2021.

It is now the OPCOs (Skills Operators) that are the collecting bodies authorized to collect the tax, instead of the OPCA (approved joint collecting bodies, such as the CCI). The employer's collecting body is the one designated by a branch agreement or it is the OPCA at the inter-professional level. Ultimately, it will be the URSAFF which will be in charge of collecting the taxes due, and this monthly.

If the employer has not paid the tax to the approved collecting body within the deadlines, he must make a regularisation payment via a payment slip to the corporate tax department.

Concerning the 13% component (expenses in full discharge), these are direct subsidies that the employer pays to the establishment (authorised to collect the tax) of his choice. It has until May 31, 2020 to do so.

You can thus support the development of IPAG training courses, which is entitled to collect this share of the apprenticeship tax!