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Small Business Reforms Under President Macron

Tuesday 13 June 2017

The programme of change proposed by the new French President Emmanuel Macron includes several measures aimed at stimulating small business growth.

At this stage there are few precise details, but below is a summary of what he is seeking to do.

i. Abolition of the 'Regime Social des Independants (RSI)'.

The RSI is the social security agency for around 6 million self-employed workers and their families. It was formed in 2006 from the enforced merger of three separate such agencies, but it has suffered from grave operational deficiencies from the outset, which we have covered in numerous previous articles (see The 'Racket Social des Indépendants').

The Macron government is now proposing to abolish the RSI and merge it with the main social security agency, the Caisse nationale d’assurance maladie des travailleurs salariés (CNAMTS).

Specifically, the programme states: 'Afin de faciliter le développement de l’activité indépendante, la caisse qui gère le Régime Social des Indépendants (RSI) sera adossée aux caisses du régime général, afin que tous bénéficient de la même qualité de service et des mêmes droits, sans augmentation des prélèvements sociaux.'

Such a proposal is fraught with huge administrative problems and it remains to be seen whether the slightly less ambitious target of reform of the RSI becomes the final response.

ii. Reduce Social Security Contributions

It is not just maladministration by the RSI that is the source of substantial grievance amongst the self-employed. Arguably, of even greater concern is the level of social contributions payable, whatever the business tax status - micro-entrepreneur or régime réel. Macron is proposing to reduce 'cotisation' rates, with a promise of an increase in net revenues of between €500 and €3,000 a month.

It is also proposed to grant an exemption from social security contributions for the first year of a new micro-entreprise, irrespective of turnover.

iii. Micro-Entrepreneurs Turnover Limits

One of the constraints of adopting micro-entrepreneur status is that it is subject to turnover limits, beyond which it is necessary to adopt the régime réel. These limits are currently €33,200 for service based activities, 'professional' activities and unclassed gîte accommodation, and €82,800 for commercial activities, cafes, restaurants, hotels, chambre d'hôtes and classed gîte accommodation. President Macron proposes to double these limits.

iv. Company Taxation - The reduced rate of company taxation of 15% for companies with net profits no greater than €38K will continue to apply. The rate for larger companies will also be reduced to 25%.

v. Unemployment Benefit

Grant a right of unemployment benefits to self-employed persons, a right currently restricted to salaried individuals.

vi. Right of Error

Create a 'right of error' by business owners in their relations with tax and social security authorities. The aim is to end the allegedly systematic imposition of penalties for all infractions, although just what that means and how it will be achieved is by no means clear. The programme states: 'le cœur de la mission de l’administration ne soit plus la sanction mais le conseil et l’accompagnement.'

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