How to save money and reduce household costs with CESU
If you need help around the home in the form of a cleaner, gardener or handyman, or are looking for support for elderly relatives or child-care, but are concerned about the cost – there is a solution!
The little-known (and generous) French tax credit system – crédit d’impôt – is a fabulous incentive, and can potentially see you getting reimbursed up to 50% back of the cost of many home help services. I even know of a hardworking farming couple that use a meals-on-wheels catering service that effectively costs them 50% less under this tax credit system.
What’s not to love about this! You just need to get your head around it – and one of the simplest ways to benefit from this is to use the CESU system as explained below.
Just so you know: tax credits are not the same as tax reductions. While tax reductions and tax credits can both reduce the amount of tax you owe; with a tax credit, if you pay little or no tax, you will get a refund of money from the tax office (which is rather like a ‘grant’ – a lovely surprise in the cold months of January after the credit card gets a little ‘warm’ after Christmas!).
Eligibility for CESU
To be eligible for the ‘home help’ tax credit - called crédit d’impôt emploi domicile / services à la personne - you must be tax resident in France, and the services you buy can only be on a casual basis for less than 8 hours per week (beyond this and you would need to enter into a formal employment contract)
Keep in mind that the maximum tax credit or ‘grant’ you can get is €6,000 for home help services per household, per year which equates to a total expenditure (the gross services cost) per annum of €12,000.
There are also maximum expenditure limits p.a for the following:
€5,000 for gardening;
€500 for property repairs and maintenance (unskilled minor repairs undertaken in under 2 hours only);
€3,000 – IT support.
An example
Mr and Mrs Smith both work full time and have a combined income of just under the income tax threshold so don't pay any income tax. They use CESU online for the casual employment of cleaner (around 8 hours a month) and for a gardener / handyman now and again. The total cost to them for the year was 2000 euros (the combined cost of the net salaries they paid plus their URSSAF social charges). They receive a tax credit for 50% - 1000 euros into their bank account- in September of the following year. Their total cost for using these services is therefore reduced to 1000 euros. The following year the tax office will assume they are continuing to use the same services so the couple will receive 400 euros in January and the remaining tax credit ‘grant’ in September (which will be adjusted up or down depending on if their income and costs etc remained the same).
Want a step by step guide to using CESU?
Access the video tutorial here
How to “sign up” for CESU within the rules
There are two ways in which you benefit from this type of tax credit without falling foul of the regulations: one is via the ‘cheque emploi” (CESU) system and the other by using an “accredited” service provider.
Accredited service providers may be either private, public or not-for-profit bodies such as the well-known ADMR - a national network of services a la personne usually focused on providing home help services to the elderly, parents and disabled using volunteers. Have a read up on this on the Fr Gov’s servicesalapersonne website.
However, many English-speakers want to use private individuals aka micro-entrepreneurs (ME) – and most are not accredited (for reasons too complex to mention here). You can find out by asking them (they should know if they are) and they will be listed on the Fr gov’s website for accredited services à la personne. If this is the case, you can however use MEs via the CESU system.
How to use the cheque emploi (CESU) alternative
This is a wonderful, and fairly easy-to-use system (once you know how!) called CESU (“Le Chèque Emploi Service Universel”) whereby you become the private individual employer, and the service-provider your private individual employee; resulting in you getting a tax credit for up to 50% of your total costs – in effect: halving your bill. And the person does not need to be an ‘accredited’ provider.
And the good news is that the online CESU system does all the calculations and administration side for you. Once set up, you can then opt for CESU Plus (CESU +) whereby you don’t even need to write out a cheque as your salaired employee is automatically paid from your bank account, along with your payment on their behalf of the social charges to URSSAF. Later on, you can even opt for “CESU avance immediate” – getting the 50% tax credit back in real time – in other words you then only pay 50% in total on the day payments are made.
For step-by-step guidance on creating a CESU account; making the declarations; and getting the tax credit back, take a look at the French Wordsmith resource How to use CESU online to get back 50% of costs for home help services.
And don’t worry - you are not required to establish an employment contract, and most people don’t, provided it is for casual services under 8 hours per week, and not for more than 3 weeks in a row, or on an ad hoc basis, but you can do so if you wish. Employing for someone above this minimum, and you do need to set up an employment contract.
CESU, however, do recommend doing a really basic contract for this ‘casual’ employment, which can make sense: getting something in writing helps to ensure all parties understand and agree to terms: such as the rate of pay (minimum wage is around €10 / hour), how long you are engaging them for, etc. A fixed-term contract CDD is often the way to go and Legal Place has some excellent – and simple – resources including fillable time-saving contract templates.
You’ll find more information on the CESU system on the French government public service website.
Do beware that, if you engage, and pay for, non-accredited home help services and claim back tax credit you are doing so in error, and, in the event of a tax inspection (‘control’), you may have to repay the tax office for any tax credits received (ouch!) – another good reason to use CESU instead!
Note to the reader: As ever, I’ve done my utmost to give you the facts and clear explanations prior to publication, but you’ll need to keep an eye on updates as they become available by checking the links provided.
COPYRIGHT NOTICE
As this blog article is freely available you are permitted to pass on the link to the article for third parties to read without altering its contents in any way. However, the contents are owned and copyrighted by Jenifer Smith© EI, French Wordsmith© of www.frenchwordsmith.fr. Any illegal modification and subsequent distribution to third parties will result in a claim made against the individual or business as an infringement of French Wordsmith rights.
FRENCH WORDSMITH INFORMATION:
This information sheet is copyrighted and owned by Jenifer Smith© EI, French Wordsmith© May 2022,
any illegal copying or distribution to third parties will result in a claim made against the individual or business.
