Memorandum on the new regulations regarding contingency funds, health insurance and retirement funds, which were concluded in favour of employees, and lead to preferential treatment with respect to income tax and social security contribution.

INSURANCE CONTRACTS MUST COMPLY WITH THESE NEW REGULATIONS TO REMAIN VALID AND KEEP THE RESULTING ABATEMENT.

Due to the Law 2003 - 775 from August 21, 2003 in regards to the reform on retirement ("Loi Fillon") the tax and social exemption rules for contingency (health costs, death, sick leave) and retirement (articles 83 and 39 of the General Tax Code) are now more strict.

Some of these social and tax exemption-related regulations will be checked more often in the future, which can bring about an increase of tax and social contributions if the contract does not comply.

Here are some of the most important regulations:

·          Setup of a social welfare scheme with one of the procedures provided by article L911-1 of the social security code: collective agreement, referendum or unilateral decision of the employer

·          The social insurance contribution cannot replace any income (this is possible only after a 12-month waiting period)

·          Financial participation of the employer

·          Fixed contribution rate

·          The benefits of the supplementary health insurance can only complement those of the social security ("responsible contract")

These regulations came into force on January 1, 2005. They do not apply only to the current social systems but also to those before this date which might not comply with these regulations. The deadline for compliance has been fixed for the 31st of December 2008.

We highly recommend that you check your social welfare schemes in order to prevent any potential risk in case of a control.

Should you need further information about this, or help to ensure that your social welfare schemes comply with the regulations, please do not hesitate to contact us.