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 both employed and the self-employed 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 as the choice will impact on the level of your social security contributions.
Broadly speaking there are two types of tax regimes for a business, either the regime réel or micro-entreprise. We review the social security contributions relating to each of them on the following pages.
- 11.2.1. Regime Réel
- 11.2.2. Micro-Entreprise
11.2.1. Regime Réel
Under the tax status of
regime reel you are liable for tax and social security contributions on your
actual net profits.
The level of these contributions will vary depending on whether you have opted to be taxed on the basis of company taxation (
impôts sur les societies) or through the system of personal taxation.
However, whichever system of taxation applies, the following table summaries the applicable average social security contribution
rates for a non-agricultural
travailleur non salariés (TNS).
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 | 6.5% |
| Sickness Benefit | 0.7% |
| CSG/CRDS | 8% |
| Invalidity/Death | 1.5% |
| Pensions | 23% |
| Training Levy | 0.15% |
Provided you are taxed on the basis of regime réel most social security contributions are considered as a deductible business expense.
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 2011 it is €35,352 (€2,946 per month). For 2012 it is €36,372 (€3,031 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 tax/company tax you will pay.
Nevertheless, one of the most pernicious effects of the system is the high level of social contributions paid by a small business earning only meagre profits. There is 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 (except for those adopting the micro-social simplifié tax status who 'pay as you go').
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, although the contribution level from these figures varies slightly by type of activity.
The main first year provisional profit figure for 2011 is €7,006; the second year (2012) figure is €10,508, although there is some small differences betweeen the different professions. This means that, broadly speaking, the contributions in the first year are in excess of €3000, pro-rata to start date of the business.
The use of provisional assessments has been a source of great difficulty for many businesses, as they 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.
The option to pay social security contributions on the basis of a best estimate 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 2011 would pay cotisations on their declared 2009 income, which is regularised in the third quarter of 2010 when the 2009 figures have been declared and assessed!
You need to be prudent with your estimating, for if your profits are higher than the estimated figures provided to the authorities, then you will be liable for a 10% surcharge on the additional charges payable.
In the next page we consider the social security contributions for a business operating as a micro-entreprise, although it should be noted that the same basic rates above apply, except for those who have elected for the tax regime of micro-social simplifié.
Next:
Micro-Entreprise
Back:
Structure
Work & Business in France