Roche & Cie

Self-employed workers in France: Measures announced by Edouard Philippe

07 Sep 2017

The French Prime Minister Edouard Philippe presented this Tuesday 5 September in Dijon, the main measures of the government in favor of the self-employed.

The aim of these measures is to support business creation, increase the purchasing power of the self-employed and strengthen their social protection

  • These measures are part of the government’s ambition to pay more for work by reducing the burden on the workforce and by making sure that the financing of social protection is based more on the CSG, which is paid by all. Not only will the increase of the CSG be fully compensated for all the self-employed through a reduction in family contributions, but 75% of the self-employed will experience a gain in purchasing power through a degressive exemption of health and maternity insurance contributions . In addition, creators and business owners will be exempt from social security contributions during their first year of activity below € 30,000 (90% of the time).
  • These measures then aim to radically simplify the lives of the self-employed so that they can devote themselves fully to their activities. Social and fiscal statements, often redundant and unified. Revenue ceilings to benefit from the simplified micro-enterprise tax regime will be raised (but not the VAT exemption to avoid unfair competition).
  • Finally, the aim of these measures is to provide self-employed workers with social protection that is as efficient and rapid as that enjoyed by employees, while continuing to take account of their specific characteristics. The social security scheme for the self-employed will be backed by the general scheme from 1 January, with a transitional period of two years.
    This government plan will soon be complemented by other measures, including the extension of unemployment insurance to the self-employed, promised by Emmanuel Macron during the presidential campaign.

The details of the measures

Support to purchasing power

  • Total compensation for the increase of the CSG for all the self-employed by a reduction in the “family” contribution (-2.15 pts).
  • Degressive exemption of health and maternity insurance contributions, which will result in a saving in purchasing power for 75% of the self-employed, those whose incomes are less than 43.000 € (3 times the SMIC). The gain will be 270 € / year for an independent who wins a SMIC, and 550 € / year at the level of 2 SMIC.
  • Exemption from the payment of the minimum property contribution of companies from 2019 for companies with a turnover less than 5,000 €. The loss of revenues for municipalities and intermunicipalities will be compensated by the State.

Support for business start-ups

  • Exemption from social contributions the first year of activity for creators and business buyers, below 30,000 € of income (approximately 90% of the cases), then degressivity up to 40,000 €. This exemption, which is scheduled to take effect from 1 January 2019, will take the form of an extension of the conditions of eligibility for the exemption currently reserved for unemployed creators and business buyers (ACCRE scheme).
  • Degressive exemption of social contributions for 3 years for self-employed persons.

Simplification of procedures

  • Unification of social and fiscal declarations. At present, self-employed persons file two separate but redundant returns, one to the RSI (for the calculation of their social contributions) and one to the tax administration (for the calculation of their tax) each year. These two statements will be unified by 2020. For the record, the RSI is 2.8 million contributors, 40% of which are micro-entrepreneurs; 4.6 million beneficiaries (with beneficiaries); 8.6 bn of benefits paid; 2 million pensioners receiving a total of 9.2 billion euros of pensions.
  • Opportunity to request advance payment of contributions in case of difficulty. Currently, an Independent may apply for an averaging of its debt, but only on the due date of the payment. As of October 2017, it will be able to make this request in advance, and thus to guard against the risk of being penalized.
  • Progressive payment of membership fees by credit card. Currently, contributions must be paid by check or wire transfer. the payment by credit card will come into force as of 2017 for members of the liberal professions, and as of February 2018 for the quarterly contributors.
    Modulation of the installments of contributions in real time. At present, self-employed persons making only one social declaration per year sometimes have to face a large discrepancy between their income and the amount of their contributions. In the future, they will be able to adjust monthly or quarterly the level of their installment payments: they will be able to pay more in the months of high activity and less in the off-peak periods. This system will be tested in 2018, and generalized in 2019 if satisfactory.
  • Increase in turnover ceilings to benefit from the micro-enterprise tax regime. Currently, the “micro” scheme allows any self-employed worker with a turnover of less than € 82,800 for the sale of goods or € 33,100 for services to benefit from simplified procedures for the payment of social and fiscal contributions, with the application of a flat-rate allowance to turnover. These ceilings will be raised to 170,000 and 70,000 € respectively. This increase will be effective in 2018. The exemption from VAT will remain unchanged, in order to avoid unfair competition between small enterprises with the “micro” scheme and those exceeding this threshold.

Social protection of the self-employed

  • Adoption of the social security scheme for self-employed persons under the general scheme from 1 January 2018. This will enable the self-employed to benefit from a social security system that is as efficient and rapid as that of employees, while preserving the specific characteristics of their social protection. Self-employed workers will benefit from a dedicated organization within the general scheme. They will maintain their own contribution rules: there is no question of aligning their contributions with those of employees (which would mean a 30% increase in their contribution). Their supplementary pension scheme will remain unchanged.

Given the magnitude of this transformation, a transitional phase of two years is planned.

Cabinet Roche & Cie, English speaking accountant in Lyon, France.
Specialist in Real-Estate and Non-resident taxation.