Tax increaseEndedEmployment and contributionsNational

Overseas employer contribution exemptions (Lodeom) refocused on low wages

Article 130 of the 2014 Finance Act amended the exemption from employer social security contributions applicable in the overseas territories (Article L. 752-3-2 of the Social Security Code, known as 'Lodeom') for pay from 1 January 2014. For employers eligible for the competitiveness and employment tax credit (CICE), the exit thresholds were lowered: in the general scale, the exemption falls to zero at 2.6 times the minimum wage instead of 3.8; in the other scales, the thresholds moved from 2.2 to 1.8 and from 3.8 to 2.8 times the minimum wage, or from 2.5 to 2 and from 4.5 to 3 times the minimum wage. The previous parameters still applied to employers not eligible for the CICE.

Measure originators

InitiatorGVT

Bernard Cazeneuve

Gouvernement

InitiatorGVT

Pierre Moscovici

Gouvernement

Impact on public finances

Brings in 108 m €/yr2015 estimate · State

Source of the estimate: Évaluations préalables des articles du PLF pour 2014, article 70 (Recentrage sur les bas salaires de l'exonération des cotisations employeurs outre-mer) (Official figure)

A positive amount is revenue or savings for public finances; a negative amount is a cost or lost revenue.

Effective date

1 January 2014

Measure impact

Overseas businesses eligible for the CICE: exemption reduced or removed on average and higher wages, kept on low wages. The prior impact assessment estimated the savings for the State, which compensates these exemptions to social security, at €90m in 2014 and €108m in a full year.