You are working as a freelancer in France and to make things easier, you are working through a portage salarial company (the French equivalent of an umbrella company).
Here is everything you need to know before you start working.
What is a portage salarial company ?
As a freelancer working in France, you might think about the portage salarial (french umbrella company) to make things easier. Here is everything you need to know before you start working with us.
Advantages & disadvantages: Micro-enterprise vs Portage Salarial (Umbrella Company)
Since 2009, an easy business status has been created to facilitate the setting up of a small enterprise in France.
At first named auto-entrepreneur, it’s now known as micro-entreprise.
Those adopting this status run the enterprise as a micro-entrepreneur.
As for the Portage Salarial status, it is the best way to benefit from the entrepreneur process and the social avantages of the employee status whilst being completely independent.
|No need to create a company|
All tax and administrative obligations are covered
Management of invoices and follow-up of payments by Prium Portage
Salaries paid every month independently of your clients’ invoice payments
Financial guarantee of salaries mandatory for portage salarial companies (financial protection)
Professional insurance subscribed by Prium Portage for the contractor
Benefit from the unemployment insurance (cumulation of unemployment and salary if part-time work contract)
Benefit from the company’s mutual insurance
Contribute to the employee pension scheme
Benefit from an employment contract (permanent or fixed-term contract) to be used for housing or a bank loan
|Payment of social security contributions at 45% of your turnover before tax|
Invoicing before tax vs. gross salary vs. net salary
The invoice is the amount excluding tax related to your assignment.
The gross salary is a salary deducted from the employer’s charges
Net salary before tax is a salary deducted from payroll charges
Why you should charge more if you want to receive the negotiated gross or net salary
Social security contributions must be taken into account in the calculation of the invoice to the client
|Simplified accounting: keeping a book of receipts and a register of purchases|
Simplified taxation: the entrepreneur is personally taxed on a profit calculated on a flat-rate basis on the amount of turnover (50% deduction from turnover for service activities)
Simplified social security contributions: the micro-social security rate is 22 for the provision of services (for ACRE from 5.5% to 22%)
Do not exceed the annual threshold of €72,600 for services assignment.
From €34 400 turnover, VAT must be charged
Flat rate taxation (% on turnover) does not allow professional expenses to be charged
Difficult to maintain unemployment benefits: the maintenance of benefits is calculated in relation to the income received and declared. Impossible to forecast remuneration or lack of remuneration in advance.
When a salary is set, there are various social contributions paid by the employer. These employers’ social charges remain unseen for the employee.
The contributions are shared between employer and employee; On average, the employer’s contribution share is 45% of the gross salary. Until 2021, the employee’s share of French social security contributions will be around 20 to 23% of wages. However, since the contributions are valued according to different maximum limits, the average rate decreases with increasing gross salary.
Hence, the gross salary includes the employee’s social contributions, and the net salary is the rest after that employee’s social charges are paid.
The net salary after tax corresponds to the remuneration actually received by the employee. To calculate the net salary from the gross salary, there is no single, precise calculation. In fact, the amount of employee (and employer) social security contributions depends on the amount of the salary and the company’s sector of activity, and the calculation will differ according to the situation.
In portage salarial , the employee is responsible for his or her own employer’s and employee’s contributions. These social contributions are automatically paid by Prium Portage.
The social charges in France are also known as “prélèvements sociaux”. Most personal income and capital gains are liable to social charges which form part of the social security contributions.
Therefore, a foreign contractor working in France is liable to all social charges on the income generated as for any other French worker.
For example: the employer contributions are approximately 45% and employee contributions approximately 21.5%. Social security contributions are deducted from the salaries and finance the main schemes of social protection: old age, sickness and maternity, family planning, vocational training, pension funds, workplace accidents and work-related illnesses.
Health Insurance Cover
The health system in France is known as l’assurance maladie or Sécu, an abbreviation for “sécurité sociale”.
Health care is financed by a dual health insurance system, consisting of:
- A state-controlled social security health insurance system, l’assurance maladie and;
- A separate voluntary (Top-up) health insurance scheme called Assurance Complémentaire provided by mutuals and private insurance companies.
Anyone who works or does business in France automatically has access to the state health system, regardless of whether they are an EEA citizen or a citizen of a “third country”.
The employer applies for the social security number after the employment contract is signed. In order to submit the application, the contractor must provide an original birth certificate and its certified translation as well as a bank account number.
The contractor will first obtain a temporary social security number whilst the application is being processed. Then, he will obtain the permanent number and finally later on directly at his/her personal address his/her social security card called “carte vitale”.
Top up Health Insurance
In English, policies are either referred to « additional » health insurance, « voluntary » health insurance or « additional » health insurance.
Since January 1st, 2016, the company’s mutual insurance has become mandatory. In the case of portage salarial, the contractor has the same privilege as a normal employee as soon as he signs his employment contract: the basic health insurance is already included in the salary contribution costs.
Supplementary insurance does not allow you to skip the queue for treatment, it only reimburses the part of the costs that is not covered by social insurance.
This Top-up coverage pays most, but not all, of the remaining health care costs, so you will still have to pay a small amount yourself. The amount depends on the terms of your policy.
Most policies exclude insurance for illness or accidents due to “dangerous” sports, with possible restrictions on alcohol or drug-related illnesses or accidents. Most also limit coverage for dental and visual treatments.
All information will be on the document you will receive from your employer.
If your doctor or specialist charges more than the official tariffs (as many can), you will find that many policies do not charge this surcharge or only charge part of it up to a maximum amount.
Therefore, you need to determine the amount of insurance you want and pay the appropriate premium.
Normally, the best Top-up coverage you will find is the one agreed by the employer; in our case here, Prium Portage and the insurance company chosen.
Determining your tax residence
It all depends on the mutual agreements and conventions between France and your country or region of origin.
Taxpayers resident in France pay tax in France on their worldwide income, while non-residents in France only pay tax on income earned in France. ) if you meet one of the following criteria:
- You live or have your main residence in France
- You are usually resident in France if you are in France for more than 183 days a year
- You are employed in France, either as an employee or not, unless you can prove that this activity is on an ancillary basis
The income tax declaration process is a personal one meaning that you will have to go to the nearest tax organization to do it and therefore is not included in our management services and fees.
Prium Portage will provide the taxable amounts that need to be declared to the tax organization.
The income tax system is on a PAYE (Pay As You Earn) basis. For the first payroll, Prium Portage will apply a flat rate for the Income tax. The Income Tax Office then gives Prium Portage the income tax rate to be applied to the contractor.
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