Article of 15/04/2024 updated on 15/10/2024
The choice of the social security system for the company director is a strategic decision that can have significant implications in terms of social security contributions, social protection and taxation.
Depending on the legal structure of the company and the director’s participation in the share capital, the latter may be subject to either the self-employed workers’ system (TNS) or the general social security system. Each system has advantages and disadvantages, both in terms of social security coverage and financial charges.
It is therefore crucial to analyze these options to optimize the personal situation of the director while taking into account the company’s objectives.
I – What will be your mandatory social system depending on the legal structure or your shareholding in the company?
Business leaders who are considered salaried 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 general managers;
- 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 (including micro-entrepreneurs);
- The sole managing partner of EURL;
- The controlling shareholders of SARL (Holding more than 50% of the shares)
- The partners of SNC.
II – The main characteristics of the salaried status
1 – The advantages of this status
This status allows the manager to obtain the same benefits as an employee, a better pension plan as leaders affiliated with the TNS regime, a disability insurance as well as the payment of capital in the event of the death of the manager. In some case 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.
2 – The disadvantages
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 tele-declare social charges (monthly or quarterly). These constraints cause an additional cost for the company.
III – 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 contributions 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. But it must be added that minimum social security contributions are due even if the manager receives no remuneration (as we will see in the table below).
Important note: In addition, distributed dividends and current account interest may be subject to social security contributions.
This concerns the following managers:
- Individual entrepreneurs who have opted for corporate tax, for the portion that exceeds 10% of the net profit amount;
- Non-salaried managers of companies subject to corporate tax (majority manager of SARL, manager of EURL, partner of SNC), their spouse or civil partner or their minor children. In this case, the portion subject to contributions concerns the fraction exceeding 10% of the share capital, issue premiums and amounts paid into a current account held by the self-employed manager.
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.
Below you can see a comparative table of social coverage between the two regimes.
SALARIED STATUS | TNS STATUS |
Hospitalization: 80% High risks: full reimbursement Small risks: 70 – 65 – 60 – 30 – 15% Capped daily sickness-maternity benefits Work accidents: full coverage + higher benefits Supplementary executive pension (if salary at the ceiling) Family allowances
| Hospitalization: 80% High risks: full reimbursement Small risks: 70 – 65 – 60 – 30 – 15% Daily benefits in the event of hospitalization, illness or accident (for traders and craftsmen only). Rest allowance and flat-rate daily allowance in the event of maternity (subject to minimum income conditions) No work accident insurance Mandatory basic and supplementary pension Family allowances |
IV – Compare the cost of each social system
Here are some examples.
Total cost of remuneration and charges | Net remuneration for salaried officer | Net Remuneration for TNS Officer (excluding optional contributions) | Difference |
| 20 000 € | 11 423 € | 14 156 € | 2 733 € |
| 30 000 € | 17 135 € | 21 053 € | 3 918 € |
| 50 000 € | 28 559 € | 34 178 € | 5 619 € |
| 100 000 € | 57 514 € | 69 112 € | 11 598 € |
| 200 000 € | 116 080 € | 145 145 € | 29 065 € |
Here is another example: the table below shows the amount of social contributions from an amount of net income.
Net Income | Total Costs of social security for salaried officer | Cost of social security for TNS officer |
| 0 € | 0 € | 1 320 € |
| 30 000 € | 22 524 € | 13 725 € |
| 50 000 € | 37 169 € | 23 208 € |
| 70 000 € | 51 319 € | 31 169 € |
| 100 000 € | 72 543 € | 40 634 € |
| 150 000 € | 107 923 € | 56 385 € |
It can be seen that the cost of contributions 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.
