The family tax credit for companies

The family tax credit (CIF) is an incentive for companies to spend money to help their employees better reconcile family and professional life.

Who can benefit from the family tax credit?

• Company subject to income tax (IR) 
• Company subject to corporation tax (IS)
• Professional Civil Society (SCP)
• Public institutions and associations, if subject to corporate income tax
  

The CIF is granted to companies regardless of their legal status (sole proprietorship, joint stock company) or their sector of activity (industrial, commercial, liberal or agricultural), with the exception of micro-enterprises and micro-entrepreneurs. 

What expenses are eligible for the family tax credit?

There are two categories of expenditure eligible for the family tax credit:

• expenditure to finance the creation and operation of a day nursery and crèche, operated either directly by the company or on an inter-company basis, and providing care for children under 3 years of age of the company's employees (category 1);
• payments made directly by the company, in return for childcare services for its employees' dependent children under 3 years of age, to public or private bodies operating a crèche or day-care centre (category 1), the company's financial contribution having to be proportional to the service provided by the childcare establishment;
• financial aid paid by the company to finance personal services, in the form of CESU for example (category 2).
  

These expenses can benefit from the tax credit if the company has participated fully or partially in the financing of these establishments. However, it is not necessary for the crèche to cater solely for the children of its employees.

Which staff are affected?

The expenses incurred may concern any person carrying out a professional activity within the company:

• employed staff within the meaning of labour law, i.e. those with an employment contract;
• non-salaried staff, provided that the company employs salaried staff (with an employment contract) and that the expenditure benefits all salaried and non-salaried staff according to the same rules of attribution:
• the head of a company in a sole proprietorship (liberal profession, craftsman, trader, etc.);
• corporate officers of a company: chairman, managing director, deputy managing director, manager or member of the management board.
  

How to calculate the family tax credit? 

What are the applicable rates?

The credit rate depends on the type of expenditure.

• For eligible category 1 expenditure, it is 50%.
• For eligible category 2 expenditure, it is 25%.

Thus, for personal services, the tax credit corresponds to 25% of the amount spent. The Worklife solution allows you to digitise the CESU and is therefore the most economical way to increase the purchasing power of your employees.

How to calculate the tax credit rate?

The calculation of the family tax credit is done per calendar year.

The maximum amount is €500,000 per year.

The calculation is based on the following formula: (eligible category 1 expenditure x 50%) + (eligible category 2 expenditure x 25%).

Where the expenditure incurred by the company is subject to VAT, only the amount excluding tax of the expenditure is included in the calculation basis.

These rates are to be applied to the total amount of expenditure giving rise to the family tax credit.

Any public subsidies received to finance these expenses must be deducted.

How does the family tax credit work?

The tax credit must be deducted from the company's income tax liability for the calendar year in which the eligible expenditure was incurred. It is taken after compulsory deductions and other tax credits.

Where the financial year does not coincide with the date of payment of taxes, the CIF relies on the principle of commitment of expenses.

Which declarations are necessary to benefit from the family tax credit?

In order to benefit from the CIF, it is necessary to fill in the form n° 2069-FA-SD and attach :

• The 2042-C-PRO supplementary income tax return when the company is subject to income tax
• The corporate income tax balance statement n° 2572-SD if the company is subject to corporate income tax.

‍