Independent workers: social announcements of the government

On September 5, 2017, the government introduced many reforms in favor of self-employed workers. These reforms include many campaign commitments by the President of the Republic, Emmanuel Macron. Among others:

• the abolition of the social security system for the self-employed (RSI) and the introduction of social protection of the self-employed in the general scheme,
• the reduction of social security contributions and the increase of the ceilings to benefit from the micro-enterprise scheme.

Some of these measures should be included in the Social Security Financing Bill for 2018 to be presented on 27 September.

• The RSI will be deleted

The RSI would be abolished by 1 January 2018 and its tasks would be entrusted to the general scheme, the scope of which would be extended to the self-employed.

This reform aims to put an end to the dysfunctions of the RSI, regularly denounced by its insured persons. The Government recognizes that although management improvements have been achieved, it believes that the relationship of trust is now altered between the self-employed and their social security system and that it is therefore appropriate to take a new step towards a more efficient and modern one.

Self-employed workers would therefore benefit, within the general scheme, from an organization dedicated to their social protection. The rules for self-employed contributions should remain unchanged. The reform would also not have an impact on the specificities of the social protection of the persons concerned, relating to social action, the assumption of contributions for the insured persons in difficulty, supplementary pension schemes.

Another advantage of the reform is the elimination of the steps to be taken by insured persons to move from an employed activity to an independent activity or vice versa. The proposed reform should allow a self-employed worker to remain affiliated to his primary health insurance fund (CPAM). The validation of the contributory periods should be carried out by the retirement insurance fund, whether for periods of self-employment or for an employee.

The reform should be phased in as the government is considering a transitional period of two years. During this period, the RSI missions would gradually be entrusted to the local and regional funds of the general scheme. The management of these missions would be immediately assured by the national funds of the general scheme (Cnamts, Cnav and Acoss). The definitive organization of social protection for the self-employed in the general scheme should be in place no later than 31 December 2019.

• A reduction in premiums would offset the increase in CSG

The increase of the CSG by 1.7 percentage point on 1 January 2018 should be compensated for the self-employed by a reduction in their social contributions. This includes:

• a decrease of 2.15 percentage points of the family allowance contribution for all self-employed workers. According to the Government, this measure would result in the abolition of the family allowance contribution for the overwhelming majority of the self-employed;
• and a degressivity of the rate of the sickness-maternity contribution which could reach 5 points and be extended to the self-employed with an annual income of less than about 43 000 €.

According to figures given by the Government, the gain obtained from these measures would be 270 € per year for self-employed persons with a monthly income equal to the minimum wage and 550 € per year for self-employed persons with a monthly income of 2 400 € .

These measures should be included in the Social Security Financing Bill for 2018.

The rate of the family allowance contribution is currently equal to:

• 2.15% for annual working income less than or equal to 110% of the annual social security limit (Pass) (€ 43 150,80 in 2017);
• 5.25% for annual operating income above 140% of this ceiling (€ 54 919.20 in 2017);
• an increasing rate of between 2.15% and 5.25% for an activity income between 110% and 140% of this ceiling.

The rate of the sickness-maternity contribution, which is in principle set at 6.5%, is subject to a gradual reduction within the limit of 3.5 points for the self-employed with an income of less than 70% (€ 27,459.60 in 2017).

• Business creators would benefit from an exemption from contributions for one year

The government program devotes a component to support the creation or takeover of companies with, as a main measure, the establishment of a generalized system of exemption from social security contributions.

As of 1 January 2019, the Accre (aid for the unemployed creating or taking over a company) would be open to all self-employed persons who created or took over an undertaking. According to the Government, this measure should concern 350 000 new entrepreneurs.

This opening of the Accre would allow all self-employed workers to create or take over a company to benefit from social security contributions for 12 months:

• Total in case of annual income less than 30 000 €;
• Degressive if the annual income does not exceed 40 000 €.

All creators and entrepreneurs under the micro-social regime could benefit from the degressive exemptions provided under the Accre for 3 years.

At present, micro-entrepreneurs benefiting from the Accre are subject to a reduced lump-sum payment. This is equal to a fraction of the rates of common law of this payment fixed at:

• 25% until the end of the third quarter following that in which the effective date of affiliation occurs;
• 50% for the following 4 quarters;
• 75% for the following 4 quarters.

The component of the government program dedicated to support for the creation and takeover of companies also provides for the appointment by Urssaf of a single interlocutor to accompany the self-employed person in his / her actions and to inform him / her about the exemptions he / she could possibly benefit.

• The ceilings for benefiting from the micro-enterprise scheme would be increased

The ceilings of the micro-enterprise tax regime (micro-BNC and micro-BIC) would be increased, from 2018, to:

• € 170,000 compared to € 82,800 currently for the sale of goods, sale for consumption on the premises and provision of accommodation (excluding furnished accommodation other than tourism furnished tourist accommodation or guest rooms);
• € 70,000 compared to € 33,200 currently for other service activities.

These ceilings apply to the annual turnover of the self-employed worker.

• The formalities and obligations of self-employed workers would be simplified

A fourth strand of measures is aimed at simplifying the formalities of the self-employed. This would include:

• the possibility of requesting payment terms online and the benefit of advance payment terms (maturity in October 2017);
• the payment by bank card of the contributions (deadline November 2017 for the liberal professions and February 2018 for merchants and craftsmen paying their dues quarterly);
• the effective recovery by the Urssaf of the health insurance contributions due by the liberal professionals (deadline 1 January 2018);
• the implementation of an application allowing micro-entrepreneurs to make their declarations and payments from their smartphone or digital tablet (first quarter 2018 deadline);
• the redesign of the internet site www.lautoentrepreneur.com (third quarter 2018 maturity);
• the opening up to the self-employed of the on-line services which employees benefit from for the management of their retirement (in the course of 2018);
• the possibility of adjusting the amount of the monthly or quarterly installments according to the activity (experimentation in 2018 and generalization in 2019);
• the introduction of a single online declaration replacing the social and tax declarations of the self-employed (2020 at the latest). It should be noted that the Government no longer seems to envisage the unification of the bases of tax and social security levies.

Source : EFL

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