French Employers Face New Social Tax Reporting System Challenges

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By Rick Mitchell

June 12—Companies in France should begin adapting their payroll systems by early fall, at the latest, to ensure they comply with requirements set to take effect in 2016 for France's new unified social welfare data reporting system, practitioners told Bloomberg BNA.

France has been gradually implementing a system to replace its notoriously onerous reporting requirements for dozens of social welfare, health insurance, pension and other related public and private agencies that collect the tax, also called “contributions.”

The so-called déclaration sociale nominative, or DSN, lets “companies transmit payroll data without a mountain of different administrative obligations,” said Elisabeth Humbert-Bottin, director general of the public body in charge of the project (the Groupement d'Intérêt Public Modernisation des Déclarations Sociales, or GIP-MDS).

Until now, companies had to report payroll data separately to dozens of social welfare agencies via separate forms, often in different formats, with a variety of deadlines, said Thierry Muller, a partner specializing in regulatory compliance at Ernst & Young in Paris.

Companies have been slow to respond to an early call for volunteers for the system, said Humbert-Bottin.

Most employers have until Jan. 1, 2016, to implement the new system, but they should start at least three months before that, Muller said.

Many Forms, Formats and Deadlines

Once the DSN system is fully implemented, companies will only have to carry out one administrative obligation on a monthly basis to meet most of the reporting requirements, said Nathalie Devernay, a Lyons-based attorney for Bird & Bird AARPI. Companies submit their DSN data through a single portal,, or for some cases, a related agricultural portal. The national bank for French social security (Agence Centrale des Organismes de Sécurité Sociale, or ACOSS) controls DSN data and sends it out to relevant public agencies, while the national pension fund (CNAV) stores it, according to the GIP-MDS.

The new system won't combine all companies' administrative declarations. Under the program, companies still will have to separately report such events as hirings, terminations, and accidents, as well as leave periods for as maternity and illness, and return from leave, within strict time limits that vary depending on the event.

Calculation rules and rates will be just as complicated as before, but overall things will be simpler, said Muller.

Employers using the DSN system are required to inform employees via a meeting, by email or intranet of the switch to the new system. The French data protection authority (CNIL) said that employees must be provided with an information sheet explaining what personal data the new system processes, and how they can access it to correct it if necessary, said Devernay.

Employers should use the well-drafted template that CNIL provides for this information sheet, she advised.

Three Phases

The DSN is being phased in three steps. About a dozen software companies and several dozen pilot companies have been participating on a volunteer basis since phase 1 began on April 1, 2013.

Phase 1 allowed participating companies to send payroll data, termination and leave declarations, through the DSN system for all employees, with payments made under the old system, said Jean Saphores, an official from the French national association of certified public accountants (Conseil Superieur De L'ordre Des Experts-Comptables, or CSOEC).

In phase 2, which has been in effect since the April 2015 reporting period, companies can pay social charges through system, but only to URSSAF (Union pour le recouvrement de la sécurité sociale et des allocations familiales, the powerful administrative body responsible for collecting social security funds). The system became mandatory for some 13,000 of France's biggest companies at that time.

When phase 3 begins in 2016, companies will be able to report data and make payments for all social welfare and related organizations through the system, beginning in February for January data, Saphores said.

For now, the old and new systems are being maintained in parallel and the old system is supposed to end completely Jan. 1, 2017.

Humbert-Bottin said that to date, only 26,000 companies have signed up for the DSN, encompassing about 7 million employees. “Some 1.2 million companies subject to the obligation now have six months to sign up,” said Humbert-Bottin.

In addition to the poor response in general from employers to migrate to the program, “payroll providers have not all been quick in providing compatible systems and companies have not all anticipated its implementation,” Devernay said. A list of compatible payroll providers has been made accessible on, she said.

Muller said that if companies choose to make the transition internally, “you had better be really sure of yourself.” A company using an IT payroll tool internally should ask the software publisher to adapt it, he said. “If your data are clean, in theory, you push a button, the file is generated, you verify, and send. That shouldn't cost much either.”

But when there are problems, such as incorrect social security numbers, incorrect addresses, and so forth, it will take time to clean up data, said Muller.

Penalties, And Avoiding Them

Muller said that for big companies subject to phase 2 reporting deadlines, the first three to six months are likely to be a testing phase. “It is important to note the deadline is for reporting. Payment of social charges is still done via the regular route,” he said.

In 2016, social welfare contribution payments will also be collected through the DSN, and starting in January, penalties will be assessed for non-payment, he said.

“The fact that you don't declare via the DSN will possibly mean you can't make your payment to URSAFF or other funds, which could levy penalties for nonpayment. URSAFF penalties are rapid, and less open to negotiation. That's something you want to avoid,” Muller said.

Saphores agreed that legal penalties will apply for noncompliance after Jan. 1, 2016. “However, the goal of this project is gradual implementation. So although it's not written, there's a little de facto tolerance, in particular for a company that is trying to do this but is having problems. In that case, it is important to contact URSAFF and explain the situation.”

Getting Started

Beginning in September, larger companies subject to phase 2 reporting deadlines will be required to report more and more things through the DSN, said Muller.

For companies subject to the Jan. 1, 2016 deadline under phase 3, the ideal would be to start testing their implementation by the end of the summer holidays in September. If it doesn't work, there will be no impact while any problems are corrected. The new system is complex, so January will be too late to begin, he said.

To contact the reporter on this story: Rick Mitchell in Paris at

To contact the editor responsible for this story: Jared Mondschein at

Decree No. 2014-1082 of Sept. 24, 2014, is available, in French, at:

The official website for the DSN program is available, in French, at:

A brief overview of the DSN program is available in English at:

More information on payroll issues in France can be found in the France country primer.