The basis for social security contributions for self-employed workers was reformed by the social security financing law for 2024, and subsequently by various decrees. The aim of this reform is to simplify the basis of social security, but also to increase the pension rights of self-employed workers (TNS) through an increase in retirement contributions while maintaining the same overall level of contributions as before.
I- WHO IS AFFECTED BY THIS REFORM?
This concerns all self-employed workers, that’s to say:
- Craftsmen, traders, liberal professions;
- Managing partner of a general partnership (SNC);
- Single-member limited liability company (EURL);
- Majority shareholder of SARL (or manager belonging to a majority management board);
- Farmers.
However, it should be noted that the latter are not covered in this article.
Conversely, the following are not affected by this reform:
- Self-employed workers under the micro-social regime;
- Artists;
- Marins;
- Company officers treated as employees for social security contributions.
II- METHOD FOR DETERMINING THE CONTRIBUTION BASE
1- The principle for calculating the single contribution base:
The social security contribution base is determined from the CSG-CRDS base after deducting amounts paid under a profit-sharing or employee participation agreement, as well as employer contributions paid under a company savings plan or a group retirement savings plan (French Labor Code, Articles L. 3312-4, L. 3324-5 and L. 3332-27). It also includes the amount of replacement income, unrelated to a long-term illness, paid to self-employed workers in the event of illness, maternity, paternity, and parental leave.
2- Principles for calculating « gross »:
For a sole proprietorship subject to income tax, « super gross » income is equal to net taxable profit plus social security contributions (excluding non-deductible CSG and CRDS).
Another calculation method involves deducting company expenses from revenue, other than social security contributions and CSG which are tax-deductible.
3- Which net taxable profit should be considered?
- The following allowances or exemptions must be added back to the taxable income declared to the tax authorities:
- for new businesses in regional development zones;
- for young innovative businesses;
- for businesses located in various zones (urban enterprise zones, “France ruralité”, rural revitalization zones, etc.).
- Prior losses carried forward for tax purposes are not deductible from the social security contribution base.
- Long-term capital gains and losses are not included in the social security contribution base.
- Short-term capital gains and losses, however, must be included in the profit subject to contributions, even if they are tax-exempt.
4- A flat-rate allowance of 26%:
A standard 26% allowance is applied to « super gross » income as defined above. This allowance cannot be:
- less than 1.76% of the annual social security ceiling;
- more than 130% of the annual social security ceiling.
Therefore, the standard deduction no longer applies to income exceeding five times the social security ceiling.
III- THE SPECIFIC CASE OF MANAGERS « MAJORITY SHAREHOLDERS »
For company directors subject to corporation tax (IS), the basis for calculating social security contributions includes the total of the following elements:
- net remuneration;
- mandatory and optional social security contributions;
- deductible and non-deductible CSG (General Social Contribution);
- and the taxable portion of dividends paid by the company.
The standard 26% allowance (capped at 130% of the social security ceiling and no less than 1.76% of pass) is then applied to the total defined above.
Regarding dividends subject to social security contributions in companies subject to corporate income tax, this concerns the portion of dividends exceeding:
- 10% of the share capital and the average balance of the shareholder’s current account for majority shareholders of SARL/EURL companies;
- 10% of the annual net profit for sole proprietors.
Beware of the 10% standard deduction! When a majority shareholder declares his income for income tax purposes, he is entitled to a standard 10% allowance for professional expenses (this allowance is capped). This standard allowance is not deductible from the income used as the basis for social security contributions.
On the other hand, if he chooses to deduct his actual expenses instead of applying the standard allowance (in which case he must provide supporting documents), these expenses will be deductible from « social income ».
IV- CHANGES TO SOCIAL SECURITY CONTRIBUTION RATES FOR SELF-EMPLOYED WORKERS
The reform of the contribution calculation base primarily reduces the CSG/CRDS, but the rates of certain social security contributions, such as pension insurance, increase.
New health and maternity insurance contribution rates
| Amount of the annual contribution base | Health and maternity insurance contribution rates | Formula for calculating the contribution rate |
| < 20 % of PASS | 0 % | – |
| Between 20 % and 40 % of PASS* | Progressive rate between 0 % et 1,50 % | [1,50 % × (base – (0,2 × PASS)) / (0,2 × PASS)] |
| Between 40 % and 60 % of PASS | Progressive rate between 1,50 % et 4 % | [2,50 % × (base – (0,4 × PASS)) / (0,2 × PASS)] + 1,5 % |
| Between 60 % and 110 % of PASS | Progressive rate between 4 % et 6,50 % | [2,50 % × (base – (0,6 × PASS)) / (0,5 × PASS)] + 4 % |
| Between 110 % and 200 % of PASS | Progressive rate between 6,50 % et 7,70 % | [1,20 % × (base – (1,1 × PASS)) / (0,9 × PASS)] + 6,50 % |
| Between 200 % and 300 % of PASS | Progressive rate between 7,70 % et 8,50 % | [0,80 % × (base – (2 × PASS)) / (1 × PASS)] + 7,70 % |
| For the portion exceeding 300 % of PAS S | 6,50 % |
*PASS = Annual Social Security Ceiling
New retirement contributions: Traders, craftspeople, and unregulated professionals
| Nature of the contribution | Base and rate of contribution |
| Basic pension | 17,87 % in the limit of 1 PASS 0,72 % beyond1 PASS |
| Supplementary pension | 8,1 % in the limit of 1 PASS 9,1 % between 1 and 4 PASS 0 % beyond 4 PASS |
Regulated self-employed professionals (CIPAV and others)
| Nature of tha contribution | Base and rate of contribution |
| Basic pension | 8,73 % in the limit of 1 PASS 1,87 % beyond 1 PASS and in the limit of 5 PASS |
| Supplementary pension | 11 % in the limit of 1 PASS 21 % beyond 1 PASS |
The consequences of this reform vary depending on your income level and the sector in which you work. It may be worthwhile to assess its impact on your company in order to best adapt your social status.
