The French General Payroll Contribution Reduction (RGDU): How to Apply It and Allocate Between URSSAF and Agirc-Arrco

What is the general reduction of employer contributions and what is its legal framework in 2026?

The réduction générale dégressive unique (RGDU) — the single degressive general reduction — is a standard mechanism codified in Articles L.241-13 and D.241-7 of the French Social Security Code. Since 1 January 2026, it has absorbed the three general reliefs that previously coexisted: the so-called “Fillon” general reduction, the reduced health insurance contribution rate, and the reduced family allowance rate (Article 18 of Law No. 2025-199 of 28 February 2025). It applies to annual remuneration not exceeding 3 times the French minimum wage (SMIC) — up from the former 1.6 SMIC threshold. Decree No. 2025-1446 of 31 December 2025 sets its parameters, notably raising the uncapped old-age contribution rate to 2.11%.

The RGDU is a major instrument of French employment policy: it represents several tens of billions of euros in annual relief for French companies. A solid technical command of it is essential for any payroll manager. For an overall view of payroll mechanisms, see our complete payroll guide.

Which employer contributions fall within the “T perimeter” of the general reduction?

The T perimeter refers to all employer contributions and levies taken into account when calculating the reduction coefficient. In 2026, this perimeter includes:

Sickness-maternity-invalidity-death (MMID): 13.00%, a single rate since the removal of the reduced rate on 1 January 2026;
Capped old-age insurance: 8.55%;
Uncapped old-age insurance: 2.11% since 1 January 2026, in accordance with Decree No. 2025-1446 of 31 December 2025;
Family allowances: 5.25%, a single rate since the removal of the reduced rate on 1 January 2026;
Work accidents / occupational illnesses (AT/MP): a flat rate of 0.49 points, not the company’s actual rate. This point is fundamental and a frequent source of errors;
FNAL (national housing assistance fund): 0.10% (companies with fewer than 50 employees) or 0.50% (companies with 50 employees or more);
Unemployment insurance: standard rate without bonus-malus, i.e. 4.00%;
Solidarity contribution for autonomy (CSA): 0.30%;
Legally mandatory supplementary pension: 6.01%.

Why is the AT/MP rate used a flat 0.49 points and not the actual rate?

The legislature chose a flat rate for calculating the general reduction to prevent companies with high accident rates (and therefore high AT/MP rates) from benefiting from a disproportionate reduction. The 0.49-point flat rate is set by regulation and does not vary according to the business sector or the company’s individual rate. This rule is expressly provided for by Article D.241-7 of the French Social Security Code. To explore the AT/MP topic further, see our AT/MP guide.

How is the unemployment insurance bonus-malus neutralised in the general reduction calculation?

Since the introduction of the bonus-malus scheme on the employer’s unemployment insurance contribution (affected sectors: hospitality and food service, agri-food, transport, etc.), the question of how it interacts with the general reduction has arisen. The answer is clear: the bonus-malus is neutralised for the calculation of the T coefficient. In other words, it is the standard unemployment insurance rate (4.00%) that is used in the T perimeter, and not the modulated rate (which can vary from 3.00% to 5.05% depending on the company’s performance in terms of employment separations).

This neutralisation guarantees equal treatment between companies for the calculation of the general reduction, regardless of their separation rate. The surplus (or reduction) in unemployment contribution linked to the bonus-malus is added to (or subtracted from) the effective unemployment contribution, but without affecting the calculation of the general reduction.

Which contributions are excluded from the scope of the general reduction?

Several employer contributions and levies are expressly excluded from the T perimeter:

CSG and CRDS (general social contribution and social debt repayment contribution): these levies are not employer contributions in the strict sense and are therefore excluded from the calculation;
Vocational training contribution: this levy (0.55% or 1% depending on headcount) is not included in the reduction perimeter;
Apprenticeship tax: excluded from the T perimeter;
Mobility levy (formerly the transport levy): excluded, although it represents a significant charge for companies located within the jurisdiction of a mobility authority;
Social dialogue contribution: excluded.

This exclusion means that these employer charges remain fully due, with no possibility of reducing them via the general reduction. The employer must be careful not to include them in the calculation of the C coefficient, on pain of unduly inflating the amount of the reduction.

How to calculate the general reduction’s C coefficient step by step?

Calculation of the C coefficient follows a precise regulatory formula detailed in Article D.241-7 of the French Social Security Code. Here is the four-step methodology:

Step 1: Determine the value of T

T corresponds to the sum of the eligible employer contribution rates. In 2026, for a company with 50 employees or more with FNAL at 0.50%:

Sum = 13.00% (MMID) + 8.55% (capped old-age) + 2.11% (uncapped old-age) + 5.25% (family allowances) + 0.49% (AT/MP pooled portion) + 0.30% (CSA) + 6.01% (supplementary pension) + 4.00% (unemployment) + FNAL

The total amounts to 40.21% for FNAL at 0.50%, and to 39.81% for FNAL at 0.10%. This total corresponds to the maximum coefficient, reached at the SMIC level: in the terminology of the 2026 formula, this is the sum Tmin + Tdelta (Tmin being 0.0200 in all cases).

Step 2: Calculate the C coefficient

The coefficient formula is:

C = Tmin + Tdelta × [ ½ × (3 × annual SMIC ÷ annual gross remuneration − 1) ]^1.75

The C coefficient must be calculated to four decimal places, applying the rule of rounding to the nearest ten-thousandth. The C coefficient may under no circumstances exceed the maximum value Cmax = Tmin + Tdelta (0.3981 or 0.4021). If the calculation produces a higher coefficient, this cap is applied. Symmetrically, as long as remuneration remains below 3 SMIC, the coefficient cannot fall below the floor of Tmin of 0.0200.

Step 3: Calculate the amount R of the reduction

The amount of the reduction is:

R = C × annual gross remuneration

The amount R is rounded to the nearest euro cent. In practice, the calculation is performed month by month with progressive or annual regularisation (the progressive regularisation method recommended by URSSAF).

Step 4: Split the reduction between URSSAF and Agirc-Arrco

The single amount R must be split between URSSAF and Agirc-Arrco according to an allocation key set by regulation. This split is detailed in the following section.

How to split the reduction R between URSSAF and Agirc-Arrco under the 2026 allocation key?

The reduction R calculated above is a single amount that must be allocated across two sets of contributions: those paid to URSSAF and those paid to Agirc-Arrco. The allocation key depends on the FNAL rate applicable to the company:

Companies with FNAL at 0.10% (fewer than 50 employees)

URSSAF portion = R × (33.80 ÷ 39.81) ≈ R × 84.90%

Agirc-Arrco portion = R − URSSAF portion ≈ R × 15.10%

Companies with FNAL at 0.50% (50 employees or more)

URSSAF portion = R × (34.20 ÷ 40.21) ≈ R × 85.05%

Agirc-Arrco portion = R − URSSAF portion ≈ R × 14.95%

Rounding is done to the nearest cent. The difference between the two formulas is minimal, but it must be observed on pain of rejection by the collecting bodies.

What are the rules on combining or not combining the general reduction with other schemes?

The principle of no cumulation on the same risk prohibits combining the general reduction with another relief bearing on a contribution already included in the T perimeter. Where such a combination is possible, the employer must opt for the more favourable scheme. For example, an employer cannot combine the general reduction with a ZFU-TE exemption (urban tax-free zone) bearing on the same contributions: they must choose one or the other.

Conversely, combinations are permitted with measures bearing on contributions or levies located outside the T perimeter. Thus, the general reduction may be combined with:

The flat-rate employer deduction on overtime (companies with fewer than 20 employees, then those with 20 to 249 employees);
Exemptions from vocational training contributions;
Specific overseas exemptions (LODEOM), under the conditions provided for by the applicable texts.

How to declare the general reduction in the DSN?

Declaring the general reduction in the DSN (the French unified monthly payroll declaration) requires specific codes:

CTP 668: general reduction — URSSAF portion (negative amount as a deduction);
CTP 669: regularisation of the general reduction — URSSAF portion;
CTP 671: general reduction — Agirc-Arrco portion;
CTP 801: regularisation of the general reduction — Agirc-Arrco portion.

Attribution is made to the month worked (and not the month of payment). In the case of progressive regularisation, adjustments are declared month by month with the corresponding regularisation CTPs. The employer must ensure that the amounts declared correspond exactly to the calculations performed, with the regulatory rounding.

What is the complete operational order for calculating the general reduction?

To avoid any error, here is the order that must be strictly followed:

(i) Calculation of the C coefficient: to 4 decimal places, verifying that C ≤ Cmax (= T);
(ii) Calculation of the amount R: C × gross remuneration, rounded to the nearest euro cent;
(iii) Split according to the key: allocation between the URSSAF portion and the Agirc-Arrco portion according to the applicable ratios;
(iv) Rounding: each portion is rounded to the nearest cent. The sum of the two portions must equal the amount R (with adjustment of the residual portion if necessary to avoid rounding discrepancies).

This order is mandatory. Any reversal (for example, splitting before rounding R) can create significant cumulative discrepancies over a full financial year, liable to trigger DSN anomalies.

What are the common errors in applying the general reduction?

URSSAF audits regularly reveal the following errors:

1. Using the actual AT/MP rate instead of the 0.49-point flat rate. This is the most costly error: it artificially inflates or deflates the T coefficient and therefore the amount of the reduction. A URSSAF reassessment may result in either direction.

2. Using the bonus-malus unemployment rate instead of the standard rate. The bonus-malus must be neutralised in the T perimeter. Only the standard rate of 4.00% is used.

3. Decimal error in calculating the C coefficient. The coefficient must have exactly 4 decimal places. Rounding to 2 decimal places significantly distorts the calculation for remuneration close to the SMIC.

4. Failure to update parameters as of 1 January 2026. Raising the uncapped old-age rate to 2.11% changes the value of T. Payroll software must be updated accordingly.

5. Prohibited combination with an exemption bearing on the same risk. The employer must systematically verify the absence of a double benefit on the same risk covered by the T perimeter.

FAQ — Frequently asked questions on the general contribution reduction

Does the general reduction apply to apprentices?

No. Since 1 January 2019, apprenticeship contracts benefit from a specific exemption (Article L.6243-2 of the French Labour Code) that replaces the general reduction. Apprentices are therefore not eligible for the RGDU but benefit from their own regime, which is at least as favourable.

How are part-time employees handled in the reduction calculation?

For part-time employees, the SMIC used in the C coefficient formula is prorated according to the contractual working hours relative to the statutory working hours. For example, an employee working 80% will have the reference annual SMIC multiplied by 0.80. This proration is automatic in most payroll software.

What happens if the calculated C coefficient is negative?

The question arises differently since 2026: the coefficient does not become negative — it hits the Tmin floor of 0.0200 as long as annual remuneration remains below 3 SMIC. However, as soon as remuneration reaches 3 SMIC, the employer is no longer eligible and the reduction falls to zero for the financial year. Under progressive regularisation, one month may therefore give entitlement to the reduction while another does not, the regularisation being carried out by offset on an annual basis.

Can the general reduction be combined with the CICE?

The CICE (competitiveness and employment tax credit) was abolished on 1 January 2019 and converted into a permanent cut in employer contributions, in the form of a reduced health insurance contribution rate. That reduced rate was itself abolished on 1 January 2026 and absorbed into the RGDU. The question of combining the two therefore no longer arises.

How to regularise at year-end if the progressive method has not been applied?

If the employer has applied the monthly calculation method without progressive regularisation, an annual regularisation must be carried out in December (or on the last payslip of the financial year). The annual amount of the reduction is recalculated on the basis of total annual remuneration, and the difference from the sum of the monthly reductions is applied (positively or negatively) to the last payslip. This regularisation is declared in the DSN with CTPs 669 and 801.

For any question on applying the general reduction in your company, contact our firm. We can audit your payslips and secure your calculations ahead of any URSSAF audit.