FBA - French Business Advice - Social Contributions For Independent Workers In 2021 (2023)

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Compulsory health coverage for self-employed workers is now provided for all self-employed workers by the “Caisse d’Assurance Maladie” (CPAM) of their place of residence. This specific regime is called “Sécurité Sociale des Indépendants” (SSI).

Since the start of 2020, beneficiaries must apply to URSSAF for contributions, Health Insurance for health expenses and various benefits and the retirement insurance fund for pensions except for professional liberals who continue to benefit from their usual fund.

Below are the rates of social contributions for self-employed workers at the SSI who do not fall under the micro-social system (the contribution rates of micro-entrepreneurs are indicated in our article entitled “THE MICRO COMPANY” on our website).

I – Family Allowances

  1. Contribution base

The basis for calculating these contributions is the total of the net professional income used to calculate income tax. This is the total profit of a sole proprietorship or the share of the profits of the insured if he is a partner of a partnership. In the case of a non-salaried manager of a company subject to corporation tax, the basis of his contributions shall be his remuneration and any dividends received exceeding 10% of the share capital, share premiums and sums paid into the company’s current account (held in full ownership or in usufruct by the non-agricultural self-employed worker, his spouse or the partner to whom he is linked by a PACS or their unemancipated minor children) or 10% of the assets allocated for E.I.R.L.

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  1. Calculation of contributions

At the beginning of the year, the provisional contributions are calculated on the basis of the profit for year N-2. Then, from May or June month, when the company declared the profit for year N-1, the contributions for the year N-1 are regularized and the provisional contributions for year N are recalculated on the basis of the last known result.

Note: Some URSSAF can offer self-employed workers to pay their contributions and provisional social contributions on a monthly basis established from the information communicated by the latter according to their activity or their monthly income. An annual adjustment is made once their final account has been established.

The rate of this contribution is as follows:

  • For revenues not exceeding € 45,250: 0 %,
  • For income between 45,250 € and 57,590 €: progressive rate between 0 and 3.10 % according to the following calculation formula => (3.10 / 12 341) × (income – € 45,250),
  • For income above € 57,590: 10 %.

II – C.S.G. and C.R.D.S

It is not really a social contribution but a tax that is recovered with the contributions.

  1. Contribution base

The base of the CSG and the CRDS is identical to that used for the calculation of the family allowance contribution, but it is increased by personal contributions to compulsory social security schemes (excluding CSG-CRDS) the manager and his collaborating spouse. It is also increased, where applicable, by the amount of the sums received by the manager under a profit-sharing agreement as well as the sums paid by the company within the framework of a company savings plan or a retirement savings plan.

  1. Rate

The rate is 9.20 % for CSG and 0.50 % for CRDS. Only 6.80 % are deductible from the tax profit (2.40 % must be reinintegrated into the tax result).

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III – Contribution to the professional training of non-employees

  1. Traders, manufacturers and liberal professions

They must pay each year in November to URSSAF at the same time as the provisional due date for other contributions, a contribution which may not be less than 0.25% of the annual amount of the social security ceiling (0.34% if the professional has declared his spouse as a spouse-collaborator).

The contribution due for 2021 therefore amounts to € 103 (€ 41,136 × 0.25%) or € 140 if the self-employed person has declared his spouse as a collaborating spouse.

  1. Craftsmen

Participation in vocational training is ensured by a contribution of 0.29% of the annual social security ceiling (i.e. € 119). The contribution is payable to URSSAF, it is added to the amount of the November due date of all social contributions.

IV – Health insurance contributions

  1. Basis and calculation

The basis of calculation is the same as for family allowances contribution.

As for family allowances, the first installments of the current year are calculated on a provisional basis on the professional income of the penultimate year (N – 2). Then, the provisional contributions are recalculated when the professional income for the previous year is declared. The deadlines remaining to run after the “DSI” (Déclaration Sociale des Indépendants) therefore include the provisional contributions for the current year recalculated on N – 1 income as well as the regularization of N – 1 contributions.

By way of derogation, the installments due for a calendar year can be, at the request of the insured, calculated on the basis of the income estimated by the insured.

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  1. Health insurance contribution rate (excluding liberal professions under the CNAVPL and lawyers)

This rate depends on the size of the income.

There are 4 brackets, which depend on the annual social security ceiling (PASS): from 0% to 3.16%, from 3.16% to 6.35%, 6.35% or 6.50%.

  • Income less than 40% of the PASS (€ 16,454): rate from 0 to 3.16%,
  • Income between 40% and 110% of the PASS (from € 16,454 to € 45,250): rate of 3.16 to 6.35%,
  • Income between 110% of the PASS and 5 times the PASS (from € 45,250 to € 205,680): the rate is 6.35%,
  • On the share of income exceeding 5 PASS (205 680 €): the rate is 6.5%.
  1. Health insurance contribution for regulated liberal professions

  • Income less than 110% of the PASS (€ 45,250): rate of 1.50 to 6.50%,
  • Income greater than 110% of the PASS (€ 45,250): rate of 6.50%.


V –
Old age and invalidity-death contributions for the self-employed

This pension scheme only concerns self-employed workers covered by the general social security scheme (craftsmen, traders and certain unregulated liberal professions), it does not concern liberal professions falling under the CNAVPL or lawyers falling under the CNBF who are subject to a specific contribution scheme.

  1. Basis and calculation

The rules for determining the base and calculating contributions are identical to the rules for health insurance. Please refer to paragraph IV – 1.

  1. Rate

  • Basic old age insurance:
    • Income within the limit of the PASS (€ 41,136): rate of 17.75%,
    • Income above the PASS (€ 41,136): rate 0.60%.
  • Complementary pension:
    • Income within the limit of € 38,493 (Specific ceiling for the supplementary scheme for the self-employed): rate 7%,
    • Income between € 38,493 and € 164,544 (4 PASS): rate 8%.
  • Disability-death insurance:
    • Income within the limit of 1 PASS (€ 41,136): rate 1.3%, the maximum contribution is therefore set at € 535,
    • The minimum contribution is equal to € 62.


VI –
Payment of contributions

All the contributions are paid at the same time to the “SECURITE SOCIALE DES INDEPENDANTS” according to two different deadlines at the choice of the taxpayer:

  • By monthly withdrawal.
    In the event of monthly payment, contributions are automatically withdrawn in 12 monthly installments from January to December, as desired:
    • Either the 5th of each month,
    • Or the 20th of each month.
  • Or by quarterly payment.
    In this case the contributions are to be paid in 4 fractions on:
    • February 5,
    • May 5,
    • August 5,
    • November 5.

In the event of payment after these dates, surcharges for late payment will be applied.

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The amount of the contributions is indicated on the payment schedule sent after the income tax return.

VII – Amount of minimum bases and contributions for 2021

The calculation of the minimum annual amount of contributions for a trader, a craftsman or an unregulated liberal professional is as follows:

  • Illness (40% of the PASS): € 16,454 x 0.85% = € 140,
  • Basic pension (11.5% of the PASS): € 4,731 x 17.75% = € 840,
  • Supplementary pension, no minimum base (calculation proportional to income),
  • Disability-death (11.5% of the PASS): € 4,731 x 1.3% = € 62,
  • Family allowances: none,
  • CSG / CRDG: no minimum base.

Below is a scale showing total proportional contributions to various levels of profit.

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FAQs

How much are social contributions in France? ›

French social security contributions

The contributions are shared between employer and employee; on average the employer's share of contributions represents 45% of the gross salary. For 2022, the employee's share of French social contributions represents approximately 20% to 23% of the remuneration.

How do I pay into Social Security if I am self-employed? ›

Send the tax return and schedules, along with your self-employment tax, to the IRS. Even if you don't owe any income tax, you must complete Form 1040 and Schedule SE to pay self-employment Social Security tax. This is true even if you already get Social Security benefits.

How do I declare freelance income in France? ›

You will need to register with URSSAF, Chambre de Métiers or Chambre de Commerce and get your official business number called SIRET before you can start trading. Get in touch if you want help to register your freelancing activity.

Do self-employed get Social Security? ›

Social Security isn't much different whether you're self-employed or work for someone else. Self-employed individuals earn Social Security work credits the same way employees do and qualify for benefits based on their work credits and earnings. Business tax deductions create the biggest difference.

How are French social charges calculated? ›

How are French social charges paid? Social charges are paid in arrears and usually calculated on the income declared in your income tax return. Each autumn you receive a notification of the amount you owe for the previous year's income.

What is social contribution rate? ›

Social security contribution is levied on salary. It includes an employer and employer contribution. All salary elements considered as remuneration of work performed by employee, including benefit in kind assessed with taxable percentage constitutes basis of social security contribution.

How do independent contractors contribute to Social Security? ›

Independent contractors contribute to Social Security and Medicare through the self-employment tax (SET).

Can you put extra money into Social Security? ›

No. You can't buy Social Security credits, the income-based building blocks of benefit eligibility. You can't borrow them or transfer them from someone else's record. The only way to earn your credits is by working and paying Social Security taxes.

Is Social Security tax deductible for self-employed? ›

However, you figure self-employment tax (SE tax) yourself using Schedule SE (Form 1040 or 1040-SR). Also, you can deduct the employer-equivalent portion of your SE tax in figuring your adjusted gross income. Wage earners cannot deduct Social Security and Medicare taxes.

How much money can you make freelance before paying tax? ›

If you earn $400 or more from freelance work in any given year, you are responsible for paying taxes on those earnings.

How much can a freelancer make without paying taxes? ›

Freelancers can't avoid dealing with taxes. If you make any freelance income over $400, you must report it to the IRS. Fortunately, the IRS treats your freelance career as a business, which means you can deduct expenses from the income.

What expenses can a freelancer declare? ›

Below are general expenses you should track to help lower your tax bills, regardless of what you do as a freelance writer.
  • 🏦 Bank fees. ...
  • 🛡 Business insurance. ...
  • ✂️ Commissions and affiliate fees. ...
  • 👥 Employees and subcontractors. ...
  • Gear and equipment. ...
  • ⚖️ Legal and professional services. ...
  • 🗃 License and permits. ...
  • 🏦 Loan interest.

How much is self-employed Social Security? ›

If you are self-employed (SE) or a voluntary member (VM), you must pay the full 12%, based on the monthly earnings that you declared at the time of registration (for SE), or the MSC that you set for yourself (for VM, such as members separated from employment).

How do I get the $16728 Social Security bonus? ›

How to get the $16,728 bonus in retirement?
  1. Work as long as you can: the later you retire the higher your benefit will be. Remember that 70 is the maximum age. ...
  2. Years worked: If you work less than 35 years you will have a reduction in your SSA check. ...
  3. High salary: with a high salary you will have a high retirement.
14 Sept 2022

How do independent contractors avoid paying taxes? ›

Six Tips to Avoid Paying Taxes on your 1099
  1. Set Up an Automatic Savings Plan for Taxes.
  2. Use a 1099 Tax Calculator to Estimate Taxes.
  3. Make Your Money Work for You with Micro-Investing.
  4. Create an Emergency Fund.
  5. Itemize Your Deductions.
  6. Employ a Tax Professional.

Who pays French social charges? ›

Social charges are paid from your wage if salaried or when you declare your turnover or profits if self-employed. For example: If you have micro-entreprise business tax status you will pay social security contributions as a percentage of your turnover, whose rates will vary by type of business – around 13% to 25%.

What are the employer contributions in France? ›

Employers and employees share contributions to the social security system. The employer's contributions depend on the business type, size and location, but on average, they are 40% of the employee's gross salary. The employer withholds the employer's and employee's share of French social security charges.

What does French social security cover? ›

Social Security is the public health insurance system that covers all life risks. Employees and their families are fully eligible for France's comprehensive social security system, which includes: Health, maternity, paternity, disability and death insurance. Occupational accident and illness insurance.

What are examples of social contributions? ›

Examples of Social Contribution Activities
  • Management with an Emphasis on Sustainability.
  • Basic Policy on Sustainability.
  • Promotion of Management with an Emphasis on Sustainability.
  • Materiality (Priority Social Issues)
  • "Value" chain Starting with Customers. ...
  • The Brother Group Principles of Social Responsibility.

What is your social contribution? ›

Social contributions are the costs incurred by employers on behalf of their employees or by protected persons to secure entitlement to social benefits.

What is the maximum social benefit for 2022? ›

The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2022, your maximum benefit would be $3,345. However, if you retire at age 62 in 2022, your maximum benefit would be $2,364. If you retire at age 70 in 2022, your maximum benefit would be $4,194.

How do I protect myself as an independent contractor? ›

Get general/professional liability insurance.

Hiscox is a good place to start if you are a new business. Some clients may even require proof of insurance prior to executing your contract.

What are the four 4 factors used to determine whether someone is an independent contractor? ›

The Law Is Clear

Certain factors will define a worker as an independent contractor in every case: not relying on the business as the sole source of income, working at his or her pace as defined by an agreement, being ineligible for employer provided benefits and retaining a degree of control and independence.

Which is a benefit of being an independent contractor? ›

Less commuting, fewer meetings, less office politics – and you can work the hours that suit you and your lifestyle best. Being a contractor means you get paid for every hour of work you do, at the market rate. If your skills are in demand, your income could be high.

What is the Social Security 5 year rule? ›

You must have worked and paid Social Security taxes in five of the last 10 years. If you also get a pension from a job where you didn't pay Social Security taxes (e.g., a civil service or teacher's pension), your Social Security benefit might be reduced.

What is the Social Security loophole? ›

The Voluntary Suspension Loophole

This Social Security loophole allowed a married worker to voluntarily suspend his/her own benefits after full retirement age, allowing the spouse to receive spousal benefits while the worker was not collecting benefits.

How many years is 40 credits for Social Security? ›

Earn 40 credits to become fully insured

If you earn four credits a year, then you will earn 40 credits after 10 years of work. Each year the amount of earnings needed to earn one credit goes up slightly as average wages increase.

How much would you pay in taxes as a self-employed worker? ›

The self-employment tax rate for 2022-2023

As noted, the self-employment tax rate is 15.3% of net earnings. That rate is the sum of a 12.4% Social Security tax and a 2.9% Medicare tax on net earnings.

What is the maximum amount of self-employment income subject to Social Security tax? ›

The Social Security tax rate for 2022 is 12.4 percent on self-employment income up to $147,000. You do not pay Social Security taxes on earnings above that amount.

What occupations do not pay into Social Security? ›

These include public workers who participate in a government pension plan comparable to Social Security. In addition, federal workers, including members of Congress, who have been serving consistently since before 1984 are covered under another retirement plan, so they're also exempt from Social Security taxes.

Do freelancers need to declare income? ›

You will need to report your accumulated income derived from all your freelance gig work for the calendar year as your self-employed income in your individual income tax return for the following Year of Assessment (e.g. income for the whole year 2020 in YA 2021).

What is the self-employment tax for 2022? ›

The California self employment tax rate for 2022 is 15.3%. As previously discussed, this includes your Social Security and Medicare taxes. Those who are self employed need to cover the entire 15.3% of these taxes in addition to paying the normal income tax rates.

Why is freelance tax so high? ›

In addition to federal, state and local income taxes, simply being self-employed subjects one to a separate 15.3% tax covering Social Security and Medicare. While W-2 employees “split” this rate with their employers, the IRS views an entrepreneur as both the employee and the employer. Thus, the higher tax rate.

What happens if you dont report freelance income? ›

Not reporting self-employment income is a serious issue and a federal and state crime. This is a form of tax evasion. You will incur a fee on the amount not paid, interest will be charged on the amount not paid, and you may be arrested and sent to prison for failing to pay your taxes.

What happens if you don't file freelance taxes? ›

First, the IRS charges you a failure-to-file penalty. The penalty is 5% per month on the amount of taxes you owe, to a maximum of 25% after five months. For example, if you owe the IRS $1,000, you'll have to pay a $50 penalty each month you don't file a return, up to a $250 penalty after five months.

How do I tax myself as a freelancer? ›

In addition to regular income tax, freelancers are responsible for paying the self-employment tax of 15.3% in 2022. This tax represents the Social Security and Medicare taxes that businesses pay and that employees have taken out of their paychecks automatically.

What Cannot be claimed as a business expense? ›

Anything to do with personal activities or personal spending is a non-deductible expense. As are any political contributions, commuting costs and any gifts over $25. It might seem like an expense is business-related, but sometimes they're not.

What Cannot be written off as a business expense? ›

Gifts: You can't deduct the entire cost of business gifts. But, you are allowed to deduct the first $25 worth of gifts to clients. Penalties or fines: You cannot write off the costs of any penalties or fines, even if these are incurred during business activities. This includes parking tickets and traffic tickets.

What is the difference between self-employed and freelance? ›

As a general rule, a freelancer is a person who works alone. They don't typically have any help to perform the work they do. Someone self-employed tends to have a team under their belt, helping them to keep their business going. This helps to lead to a larger-sized business than one that a freelancer operates.

How do small business owners pay into Social Security? ›

If you have either a sole proprietorship, partnership or a limited liability company (LLC) without a corporate election, all your business income gets passed on to your individual tax return. If you made at least $400, you'll pay Social Security taxes on your business profits when you file your annual tax return.

Can I draw Social Security if I own a business? ›

If you're operating a small business, you can get Social Security benefits at the same time if you qualify on your own work record or someone else's. The Social Security Administration treats your self-employment income the same as wages earned by a worker.

How do I get Social Security credits for self-employed? ›

If you are self-employed, you earn Social Security credits the same way employees do (one credit for each $1,510 in net earnings, but no more than four credits per year). Special rules apply if you have net annual earnings of less than $400.

How do I get the $16000 Social Security bonus? ›

How to Get a Social Security Bonus
  1. Option 1: Increase Your Earnings.
  2. Option 2: Wait Until Age 70 to Claim Social Security Benefits.
  3. Option 3: Be Strategic With Spousal Benefits.
  4. Option 4: Make the Most of COLA Increases.
2 Mar 2022

Who is eligible for Social Security bonus? ›

For every year that you delay claiming past full retirement age, your monthly benefits will get an 8% “bonus.” That amounts to a whopping 24% if you wait to file until age 70.

Is Social Security giving extra money this month 2022? ›

The latest COLA is 8.7 percent for Social Security benefits and SSI payments. Social Security benefits will increase by 8.7 percent beginning with the December 2022 benefits, which are payable in January 2023. Federal SSI payment levels will also increase by 8.7 percent effective for payments made for January 2023.

What is one disadvantage when it comes to taxes as an independent contractor? ›

1099 Form Independent Contractor Requirements

Independent contractors have a lot of advantages. They are their own boss, set their hours, and can deduct a lot of business-related expenses come tax time. But there are also some cons, one of which is that they have to pay self-employment tax.

What percentage of income do independent contractors pay in taxes? ›

What percent do independent contractors pay in taxes? The self-employment tax rate is 15.3%, of which 12.4% goes to Social Security and 2.9% goes to Medicare. Income tax obligations vary based on net business profits and losses, among other factors.

Does independent contractor count as income? ›

If you are an independent contractor, then you are self-employed. The earnings of a person who is working as an independent contractor are subject to self-employment tax.

How much does France spend on social welfare? ›

Social spending totalled 31% of GDP in 2019, well above the OECD average (20% of GDP) and indeed the highest among OECD countries. In addition, the social security system has been severely impacted by the Covid-19 crisis.

How is social care paid for in France? ›

Around 80% of residents benefit from assistance towards their care costs through APA. Aide Sociale à l'Hébergement (ASH) - The benefit is used to provide a degree of independence for those who need day care or specialist equipment.

How does France pay for social care? ›

The prime d'activité is paid by France's family benefits funds (Caf) and Agricultural social mutual funds (MSA) as an income supplement for low-wage salaried or self-employed workers.

How much do French people get for pension? ›

You can receive a maximum of 50% of your basic salary, with a minimum cap of 37.5% for those born after 1953. Your rate is affected by a percentage that is calculated from how many conditions you meet.

What is private social spending? ›

Private social expenditure concerns social benefits delivered through the private sector (not transfers between individuals) which involve an element of compulsion and/or inter-personal redistribution, for example through the pooling of contributions and risk sharing in terms of health and longevity.

Which country has the highest welfare payments? ›

While social spending as a share of GDP has generally declined in OECD countries over the past ten years, France remains the country which is most generous in terms of its social benefits. In 2019, the equivalent of almost a third of French GDP was spent on social services by the government.

How can you avoid paying social care costs? ›

AVOIDING CARE HOME FEES IN 2022 | Tips on what to do!
  1. Care Annuity. Deferred Payment Schemes. Widow's Pensions and the Bereavement Allowance. Defined Benefit Pension Scheme. Pension Transfer Advice. Defined Contribution Pension Schemes. Defined Contribution Pension Schemes. ...
  2. Protective Property Trust.
  3. Paying for Care.

What benefits am I entitled to in France? ›

Mandatory Employee Benefits in France
  • Old-Age Pension. The legal minimum retirement age is 62. ...
  • Solidarity Allowance for the Elderly. ...
  • Long Term Disability Pension. ...
  • Short-Term Disability Pension. ...
  • Spouse's Pension. ...
  • Death grant. ...
  • Worker's Compensation. ...
  • Medical Insurance.

What is solidarity allowance in France? ›

From 1to July 2022, when the 2 members of the couple receive the Aspa, the maximum total amount paid is 1,480.24 per month €17,762.96 maximum per year). The amount paid to your couple is equal to the difference between 1,480.24 and the amount of income per month of your couple.

Who is eligible for free healthcare in France? ›

French healthcare and state social security

Anyone living in France for more than three months is covered by the state social security system up to a point, with those on the CSS being covered entirely by the state. Cover is also at 100% for those with certain serious long-term conditions.

Who is eligible for Social Security in France? ›

Employees and their families are fully eligible for France's comprehensive social security system, which includes: Health, maternity, paternity, disability and death insurance. Occupational accident and illness insurance. Government pension contributions.

Do expats get free healthcare in France? ›

French healthcare becomes accessible for expats after three months or sometimes sooner if they are working and paying social security. France offers preventative care for all, including free medical checkups every two years.

How many years do you have to work in France to get a pension? ›

In most countries you have to work a minimum number of years before you are entitled to a state pension. In the UK it is 10 years. France has a qualifying period of 15 years' worth of contributions in order to receive a state pension.

How much monthly income do I need to retire in France? ›

The minimum monthly earnings requirements has therefore increased from nothing to €1,329 net income per month for a single person and around €2,658 net income per month for a couple. For a British family moving to France with 3 children, they will now have to show a gross annual income of around €60,000.

Are French pensions good? ›

Currently, in terms of how much they receive, French workers also do well with the average pension equivalent to 74 percent of the person's salary at the time they retired – one of the most generous in Europe and well above the OECD average of 58 percent.

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