The only good news is that the majority of social security contributions are tax-deductible and, with the exception of sickness benefits, social security benefits aren’t taxed. The main disadvantage of being self-employed is that there’s no sick pay or unemployment benefit if you’re off work due to illness, accident or lack of custom, although it’s possible for the self-employed to buy a form of unemployment insurance that converts to extra retirement cover if it hasn’t been used up by the time you retire. Some people have tried to get around paying the many social charges required by forming an association and paying themselves a salary. But owning or running an association exempts you from social charges, and employees of an association must pay exactly the same social charges as any other employees.
Most business owners and self-employed people must register for social security with the Union de Recouvrement des Cotisations de Sécurité Sociale et d’Allocations Familiales (URSSAF). You’re then automatically registered with the relevant funds ( caisses) for family allowances and pensions, each of which will send you a bill for contributions. Writers and translators pay reduced contributions, provided they’re registered with one of the two organisations that manage their contributions: the Association pour la Gestion de la Sécurité Sociale des Auteurs (Agessa) or the Maison des Artists.
Registering for social security
When registering for social security, you must provide your personal details, including your full name, address, country of origin, and date and place of birth. You must also produce passports, cartes de séjour (if applicable) and certified birth certificates for your dependants, plus a marriage certificate (if applicable). You may need to provide copies with official translations. You also need proof of residence such as a rental contract or an electricity bill.
Social security contributions in France
As an employer, you must complete the necessary formalities to ensure that your employees are covered by social security. You must report your intended engagement of an employee to URSSAF up to a week before he’s due to start work, using a document unique d’embauche. This document serves as registration for all the relevant social security funds.
Social security contributions ( cotisations sociales or charges sociales) for the self-employed and those running a business are calculated as a percentage of your taxable income (i.e. the business results or their actual salary or drawings) plus the amount of ‘optional social benefits’ paid for by the business. These may include private pension plans and death and incapacity insurance plans, as well as any complementary health insurance. If you’re the manager of a business, your contributions are assumed to be paid out of your own pocket. Contributions are paid to the relevant fund or funds, each of which has its own payment schedule.
Compulsory social security contributions for the self-employed fall into three main categories: health insurance, family allowances and pension. In addition, you must make contributions to the social security debt, known as CRDS and CSG.
In addition to the above compulsory contributions, you may make the following contributions (if you can afford them!):
- Death & Incapacity Insurance – Private death and incapacity insurance ( prévoyance) for the self-employed includes provisions for paying compensation to keep a business running while the owner is unable to run it himself.
- Complementary Health Insurance – Commonly known as a mutuelle, but properly an assurance complémentaire maladie, this insurance covers the portion of medical bills not reimbursed by compulsory state health insurance.
- Unemployment Insurance – A form of private unemployment insurance is available to those who aren’t covered by the state unemployment insurance organisation, ASSEDIC – which includes most self-employed people. This insurance pays a daily compensation when the business owner is unemployed (i.e. when the business goes bust).
You may receive ‘demands’ for contributions from organisations to which you aren’t offiliated or obliged to join. Always check before paying anything whether contributions are compulsory or optional. If in doubt, consult your accountant.
For the first two years you’re in business, the social security funds base their charges on an assumed salary of around €6,000 the first year and €9,000 the second year. At the end of the first year, after you’ve declared your actual income, the funds calculate the actual amounts due and adjust the provisional payments for the coming year, in effect backdating contributions to your start date. Don’t be lulled into a false sense of security by low initial social security contributions: they will catch up with you in the end!
Social security contributions for your employees
If you employ full-time staff, you must make social security contributions for your employees. If you employ someone to undertake work for you, you should ensure that he has adequate insurance (e.g. accident and third party liability) or is registered as self-employed and, therefore, making social security contributions himself.
Social security contributions are calculated in a different way for the self-employed (including business owners who don’t employ staff) and for employers. Calculations are VERY complicated and you should check with an accountant exactly what you must pay and when.
For general information about social security, contact the Caisse Nationale d’Assurances Maladie des Travailleurs Salariés (www.ameli.fr). Information about social security is also available via the internet, e.g. www.service-public.fr. There are a number of books (in French) about social security, including Tous les Droits de l’Assuré Social (VO Editions).