11. Social Security Contributions in France
- 11.1. Structure of System
11.2. Contribution Rates
11.3. Relief from Contributions
11.4. Social Security Benefits
11.3. Relief from French Social Security Contributions
There are various grounds on which relief is available, but remember, as we stated in earlier pages, a micro-entreprise does have social security contributions capped as a percentage of turnover, and this is likely to be of particular interest to new start-ups struggling to realise a respectable turnover.
The other forms of relief are as follows:
- 11.3.1. Deferred Payment
- 11.3.2. Low Profit
- 11.3.3. Savings Schemes
- 11.3.4. Unemployed
- 11.3.5. Development Area
- 11.3.6. Occasional Work
- 11.3.7. Illness
- 11.3.8. Dividends
- 11.3.9. Elderly
- 11.3.10. Free Health Cover
- 11.3.11. Financial Difficulties
11.3.1. Deferred Payment
A new business can elect to defer the payment of certain social contributions due during the first year, and then to arrange for these contributions to be paid over the following five-year period.
There is no interest payable on the deferred payments.
If you wish to take advantage of this facility, then you should contact the RSI.
However, you need to consider carefully whether or not this makes good financial sense, as social security contributions are tax deductible.
11.3.2. Low Profit
If your annual net profits are less than €4489 (2008) then, on application to URSSAF, you can obtain reimbursement of contributions paid during the year in relation to allocations familiales and CSG/CRDS.
You can also get some reduction in sickness contributions with a profit level below (around) €12K.
There may also be limited relief on pension and invalidity contributions at different levels of profit, depending on your professional activity. Thus, some of the professions libérales notably are able to obtain a discount on complementary pension contributions, based on quite generous profit levels. You would need to make enquiries to your Caisse to find out if you were eligible.
Even though you make little or no profit, you will still be liable for some social security contributions, be it at a low level. The minimum level of contribution is in the order of €1500 per annum.
11.3.3. Company Savings Schemes
If you employ at least one member of staff (even on a part time basis) you can establish a company savings scheme, in which you, as the owner of the business, can also participate.
These schemes are called Plan d'Epargne Entreprise (PEE).
You can pay in up to 25% of your annual income into a scheme.
Savings in a PEE are invested on the stock market and, provided they are retained for at least 5 years, the sums paid in, and the capital gain, are exempt from social security contributions, other than CSG/CRDS.
The sums and gains are also exempt from income tax and capital gains tax.
There are exceptional circumstances when it is possible to gain access to the funds before the end of the 5 year period, without loss of tax or social security benefits.
Those concerned about funding their retirement can also pay into a retirement savings scheme called a Plan d’Epargne pour la Retraite Collectif (PERCO) which offers similar fiscal advantages.
The sums placed in a PERCO are not available until retirement, although as with a PEE there are exceptional circumstances when you can gain access to the funds.
You can only open a PERCO if you have in place a PEE.
Needless to say, get the advice of your accountant before you start either of these savings schemes.
11.3.4. Unemployed
If you are unemployed in France, and you decide to start a business, you are exempt from most social security charges for up to two years.
To benefit from this concession you do not need to be in receipt of unemployment benefits, provided you have been registered with the unemployment agency ANPE for at least six months out of the last eighteen months.
This option may be of particular interest to those relocating to France and hoping to start a business.
If you register with ANPE on arrival, whilst you plan your business start-up, after six months you can get exemption when you finally start the business!
As you will not be picking up unemployment benefits, ANPE are likely to leave you alone, but be prepared to be creative just in case they do want to try and find you a job!
You can read more in the next section on Financial Assistance
11.3.5. Development Area
If you establish the business in a development area (and there are many different types in both rural and urban areas) you may be entitled to some relief from social security contributions.
You can read more in our pages on Financial Assistance
11.3.6. Occasional Work
If you work less than 90 days per year, then you can claim a reduction in your health/sickness contributions.
The contribution rate for health/sickness contributions is 6.5% of net income.
If you only work on an occasional basis, then you will still pay at this rate, but on a discounted basis, depending on the number of days worked.
This concession is used in the main by those taking seasonal work, but may also used by anyone else who works only on an occasional basis throughout the year.
11.3.7. Illness
If you are unable temporarily for reasons of illness, or other justifiable reason, to operate the business, the social contributions continue to be payable, excepting those for retirement pension, where relief from payment is available.
In such circumstances, you may of course be entitled to benefits yourself!
11.3.8. Dividends
It is possible to reduce your liability to social security contribution by the adoption of a suitable company structure (SARL) and the use of dividends as a method of personal remuneration.
If you decide to establish a limited company, you can choose to pay yourself via a mix of salary and an annual dividend.
Dividends only attract an 11% social security charge (12.1% from 2009)
Company tax at the rate of 15% is payable, but only on 60% of the dividends, as there is relief on 40% of dividends paid.
However, you will pay both the employer and employee social security contributions on that part of your income paid by way of salary. You will also need to declare the dividend payment with your annual earnings, which are then liable to personal income tax.
Clearly, you will need to do the maths, and to take the advice of your accountant to establish whether or not it is worthwhile to do so in your circumstances.
It is, however, fairly straightforward and is a widely adopted practice by many business owners.
11.3.9. Elderly Persons
If you are aged at least 65 years of age, then you are eligible for relief from the payment of social security contributions.
11.3.10. Free Health Cover
If your total income (including income from earnings other than your business) is below certain thresholds, then you can receive free health cover through the
CMU Proctection Complémentaire (CMU–C) .
11.3.11. Financial Difficulties
With effect from January 2008, a business that encounters financial difficulty is able to make application to the RSI for temporary assistance with the payment of social security contributions. Priority is given to those encountering difficulty for the first time, those where an unforeseen external event causes difficulty (bad debt), business women with young children, or difficulties caused by illness or other 'accident of life'. You need to make application to the RSI. The form to complete can be found
here 
.
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Work & Business in France