There are two different statuses in France to which the manager will be affiliated and which will apply according to the legal structure of the company.
Business leaders who are considered employees are:
- The non-associated managers of EURL;
- Minority or equity managers of SARL (holding up to 50% of the shares);
- The presidents of SAS (or SASU) and the managing directors;
- The chairmen of the board of directors, the chairman of the supervisory board and the managing directors of SA;
- The unassociated and remunerated manager of a partnership.
Business leaders who are self-employed (TNS) are:
- Individual entrepreneurs;
- The managing partners of EURL;
- The controlling shareholders of SARL (holding more than 50% of the shares);
- The partners of SNC.
I – The main characteristics of the salaried status
The advantages of this status
This status allows the manager to obtain the same benefits as an employee, a very good pension plan (basic pension plus a “cadre” retirement), a disability insurance as well as the payment of capital in the event of the death of the manager. In some cases, it is possible to be covered for unemployment, but this requires the conclusion of a contract of employment independent of the management mandate that it will be very difficult to get admitted by the unemployment insurance service.
The manager contributes to Social Security in France at the same rate as an employee.
It should also be added that when the equivalent salaried manager does not receive remuneration, no minimum contribution is payable.
In addition, if he is also a partner of the company, the dividends he receives are not subject to Social Security contributions. This status therefore makes it possible to perform “salaries-dividend” arbitrations quite easily.
We can first notice that the cost is very high. A salaried assimilated manager costs about twice as much as a self-employed worker for the same net income without being able to benefit from unemployment insurance.
The manager must also compile pay slips, send monthly nominative social declarations (DSN) and teledeclare social charges (monthly or quarterly). These constraints cause an additional cost for the company.
II – The main characteristics of the self-employed (TNS) status
The risks of unemployment are not covered, accidents at work and occupational diseases are very poorly covered or even not at all in some cases. The pension plan is less advantageous. On the other hand, the charges are lower than those of an employee and payment of contributions is postponed for one year. During the first year of operation, contributions are paid on a low basis, this constitutes a cash facility at the beginning of the activity.
In addition, the operator can improve and even personalize his social security by subscribing private insurance contracts. If the contract conforms to the “Madelin” law, the contributions paid may be deducted from the tax profit.
For more information about this subject, we advise you to consult our article on this website entitled “SOCIAL CONTRIBUTIONS FOR INDEPENDENT”.
III – Compare the cost of each social system
Here are some examples:
Overall cost of remuneration and charges
Net remuneration for salaried officer
Net remuneration for TNS officer
|10 000||5 720||6 840||1 120|
|20 000||11 440||14 835||3 395|
|30 000||17 160||22 705||5 545|
|50 000||28 600||36 975||8 375|
|100 000||57 732||70 225||12 493|
|200 000||116 384||144 720||28 336|
Here is another example: this table shows the amount of social contributions from an amount of net income.
Cost of social security for TNS officer
Cost of social security for salaried officer
|24 000 €||11 006 €||19 246 €|
|36 000 €||17 034 €||28 537 €|
|48 000 €||22 138 €||37 283 €|
|60 000 €||26 986 €||46 030 €|
|100 000 €||39 596 €||75 183 €|
It is clear that the cost of charges is in all cases significantly higher for an assimilated salaried manager.
However, you should contact an English-speaking chartered accountant before making any decision to first determine the most appropriate legal structure for your project. He will then discuss with you the best social status that may be suitable for the selected legal structure.
Then, in the event that the self-employed scheme might be suitable, the chartered accountant will help you calculate the total cost of social charges (compulsory and optional) which would ensure the coverage of the risks that you want.
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