Social Security Charges for Small Business Owners
Tuesday 05 March 2013
A variety of changes to the level of social security contributions for small business owners has been introduced for 2013.
In a recent article we reviewed the recent increases in the level of social security contributions for auto-entrepreneurs.
Those who use this business regime (as well as those who use the related regime of micro-entreprise) pay a fixed percentage of their turnover in social security contributions.
However, for those who operate on the basis of the régime réel, there is no single flat rate percentage, but a range of different contributions at different percentage rates. The rates are sometimes based on a 100% of net revenues, sometimes less, and in some cases they are set at a maximum amount!
Cumulatively they add up to around 45% of net profits, although with slight variations between the various business professions – artisanal, commercial or professions libérale.
One of the contributions is that for health cover, for which there is a minimal and a maximum level of contribution.
Hitherto the minimum level has been set at €945 (for 2012) with a maximum contribution of €10,817 for the highest earners.
Since 1st January 2013, some additional relief has been introduced for those on a low income, whilst the highest earners have seen the level of their contributions increase.
Under the new arrangement the percentage rate for health contribution of 6.5% will now apply on 100% of income, with no ceiling, as was previously the case.
There remains a minimal level of contribution of €650, even in the event of no profits or a loss. Where you actually make a profit, but it is less than €14,813, then the minimum contribution ranges between €650 and €963.
For new start-ups, in the absence of a profit record, during the first two years of the business the rate of 6.5% is calculated against a fixed notional profit figure determined by the government. This notional sum has been reduced in 2013 to €7,036 in Year 1 and €9,999 in Year 2.
The rate of the contribution towards the main pension has also increased this year, from 16.65% to 16.85%.
Further increases are also planned for the three years, rising to 17.15% by 2016.
These rates do not apply to those in one of the professions libérales, who have their own particular rate structure. Broadly speaking, the main pension contribution (pension de base) is at the rate of 9.75% up to €31,477 and 1.81% thereafter.
All business groups also pay a contribution towards a compulsory, complementary pension (retraite complémentaire).
One of the more bizarre obligatory contributions is a training levy called la contribution à la formation professionnelle (CFP) payable by all business owners.
The rate of this contribution has been increased this year from 0.15% to 0.25% for commerçants and professions libérales. The training levy imposed on artisans remains at 0.29%.
The rate is not imposed on net income but is based on the annual social security ceiling called the plafond annuel de la sécurité sociale(PSS) which is used to determine the contribution of a range of social security contributions.
This year the PSS is €37,032 per annum.
In the event your net income was below €4,728 in 2011, then you are exempt from this charge in 2013. To be eligible in 2014 your net business income in 2013 should not have been higher than €4,814.
Family Benefits and Social Charges
In a similar manner the threshold for exemption to the allocations familiales and CSG/CRDS has also been revised upwards to €4,814.
Auto-entrepreneurs continue to benefit from complete exemption from social security contributions if they have zero turnover in the year.
For those that do generate sales the rates have been increased to 14.1% for commerçants, 24.9% for artisans and 21.5% for the professions libérales.