Reminder of regulation in case of call on a self-contractor

The Urssaf network records more than one million self-emplyed entrepreneurs in France, of which 59% reported positive sales in the second quarter of 2015.

There are many reasons why companies call on self-employed entrepreneurs. But if there are advantages working with them, many abuses can occur: abusive outsourcing of employees, recruitment of false self-employed workers, to exempt themselves from the rules of labor law and payroll taxes. The administration regularly recalls the limits and rules surrounding this practice and does not hesitate to reprimand unscrupulous employers.

Like any individual entrepreneur, a self-employed entrepreneur is a self-employed person, which means that he carries out an independent activity which he freely took the initiative to create or take over and which he retains for his practice The organization of the tasks to be carried out and the necessary equipment, as well as the search for customers and suppliers. Thus, there must be no legal subordination, ie: “the performance of work under the authority of an employer who has the power to issue orders and directives, To supervise its execution and to punish the breaches of its subordinate “as defined by the Jurisprudence since 1996.

To verify the independence of the self-contractor, the administration analyzes the conditions of work and follows clues. Among these clues, the administration may ask: is the provider subject to schedules? Does he work within the company? Does he have his own equipment? Does it appear in the organization chart? …

If, at the end of this analysis, the criteria for independence are not met, the commercial relationship between the two parties can be re-qualified as an employment contract. This requalification involves serious consequences.

Precautions to follow.

It is imperative that the company does not treat the self-entrepreneur as an employee. By referring to the indices used by the tax administration, no legal subordination should exist.

Companies should refer to article D 8222-5 of the Labor Code, which stipulates that the contractor, for transactions exceeding 3 000 euros, must make sure that his cocontractor (independent or self-employed) is in good standing with its tax and social obligations every six months.  To do this, it is therefore necessary to ask for a certificate of vigilance and regularity. This precaution avoids, in the event of difficulties, being declared jointly  liable for the contributions owed by his contracting party in delicacy with the tax authorities or the social agencies.

Finally, it is more prudent – even if it is not enough – to ensure that its provider has other clients.

Cabinet Roche & Cie, Chartered english speaking accountant in Lyon, France.
Specialist in Real estate and non-résidents taxation.