11. Social Security Contributions in France
- 11.1. Structure of System
11.2. Contribution Rates
- 11.2.1. Regime Réel
- 11.2.2. Micro-Entreprise
11.3. Relief from Contributions
11.4. Social Security Benefits
11.2. Social Security Contribution Rates for Business in France
The social security system for independent workers and companies is complex and the contribution level is high by comparison with most other countries. The basis on which you will be assessed will depend on your turnover, type of business activity, and your type of legal/tax structure.
You will need to take advice from your accountant as to the legal/tax structure you should adopt, whether regime réel, micro-entreprise, or impôts sur les societies, as the choice will impact on the level of your social security contributions.
- 11.2.1. Regime Réel
- 11.2.2. Micro-Entreprise
11.2.1. Regime Réel
If you have already acquainted yourself with our pages on the
Taxation of Business Profits, you will be aware that there are three different tax regimes for business; they are, either the
regime réel,
micro-entreprise or
impôts sur les societies.
Under the tax status of
regime reel and
impôts sur les societies you are liable for tax and social security contributions on your actual net profits. In the case of the former you are taxed through the system of personal taxation; in the latter case through the system of company taxation. In both cases no automatic fixed rate allowance applies, as occurs for a
micro-entreprise.
The following table summaries the applicable
average social security contribution rates for a non-agricultural
travailleur non salariés (TNS). That is to say, someone who is either self-employed (
EI), or a majority shareholder of a limited company (
EURL or
SARL).
Depending on your business activity/profession, some of the specific rates do vary slightly, notably in relation to pension contributions. In particular, if you are in one of the
professions libérales then the total is several percentage points lower.
Table: Social Security Rates (TNS)
| Family Benefits | 5.40% |
| Health/Sickness | 6.5% |
| Sickness Benefit | 0.7% |
| CSG/CRDS | 8% |
| Invalidity/Death | 1.5% |
| Pensions | 23% |
| Training Levy | 0.15% |
Most social contributions are considered as a deductible business expense, provided you are taxed on the basis of regime réel.
Under the regime réel your social security contributions are calculated from your turnover less actual eligible costs, including deductible social security contributions.
There is also a 'ceiling' figure used in the application of these percentages. The ceiling figure is called the plafond de la sécurité sociale. Certain social contributions are based on this ceiling, others on a fraction or multiple of it, and yet others on the totality of your business income!
Accordingly, you cannot calculate precisely the level of your social security contributions simply as 45% of your net profits, as the percentage figure will vary by level of turnover, type of business and tax regime.
The level of the plafond de la sécurité sociale for 2008 is €33,276 (€2773 per month) and for 2009 it is €34,308 (€2859 per month).
As a result of this ceiling, the total percentage level of social contributions you will pay reduces the higher your level of profits. Conversely, on higher profits, the greater the amount of income/company tax you will pay.
In the past, one of the most pernicious effects of the system has been the high level of social contributions paid by a small business earning only meagre profits. There has been very little relief to those on low incomes, a situation that has been reflected in the minimum levels of social charges that apply during the first few years of the business.
As a new business has no previous income record on which to base contributions, then for the first two years the contributions were based on a provisional profit figure determined by the authorities on a national basis for everyone.
The use of provisional assessments has been a source of great difficulty for many businesses, as these assessments may bear no relation to reality - they either do not pay enough, and so later have to repay, or they pay too much, which causes problems of cash flow until reimbursement is received.
Accordingly, all businesses are now permitted to pay social contributions on the basis of actual or best estimate profit levels. There is still a minimum amount that you will still need to pay (even if you make a loss), but less than you might otherwise pay through the system of provisional assessments. The minimum amount will depend on your type of business (sales, service or professional), but is between €1000 to €1500 per year.
This option is available at the request of the business, and without supporting information. Needless to say, there may still be the need at the end of the year to regularise the contributions based on final year actual profit figures.
In practice, this means that a business in 2009 would pay cotisations on their declared 2007 income, which is regulared in the third quarter of 2009 when the 2008 figures have been declared and assessed!
You need to be prudent with your estimating, for if your profit is higher than the estimated figures provided to the authorities, then you will be liable for a 10% surcharge on the additional charges payable.
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Work & Business in France