For company executives, depending on the legal form of the company and the percentage of shares they hold, two statuses are available: “Assimilated Employee” or Non-Salaried Worker “TNS” (Travailleurs Non-Salarié).
Like an employee, company executives considered “assimilated employees” receive a salary and are affiliated with the general social security system.
Like any employee, these executives are under contract, receive salary slips, and benefit from the same social security coverage as other employees, which is broader than that of the TNS coverage from the SSI (Sécurité Sociale des Indépendants).
They must pay employee and employer social security contributions – health and maternity insurance, family allowances, work accident, and basic old age pension scheme – to the Organizations for the Collection of Social Security and Family Benefit Contributions) l’URSSAF (Unions de Recouvrement des Cotisations de Sécurité Sociale et d’Allocations Familiales).
Assimilated Employee
An easy place to start is to define the assimilated employee. Executive managers are considered assimilated salaried employees and are affiliated with the general social security regime if they fall into one of the following categories:
- A non-partner manager of a EURL.
- A Minority or equal shareholder manager of a SARL.
- A president and general manager of a SAS/ SASU.
- A chairman of the board of directors of a SA.
- A CEO or chairman of the supervisory board of a SA.
- A managing director of a SA.
Non-Salaries Employee “TNS”(Travailleurs Non Salarié)
Executive managers are considered “TNS” and are affiliated with the SSI (Sécurité Sociale des Indépendants) regime if they fall into one of the following categories
- A majority manager of a SARL. Note: the manager is a majority shareholder when he holds at least 50% + 1 share of the company. The manager’s shares, those of a spouse, minor children, and co-managers (if any), are part of his SSI social calculation.
A managing partner of the EURL they manage.
An individual entrepreneur. Note! Although an individual entrepreneur, the auto-entrepreneur benefits from a preferential micro-social regime that can be highly advantageous. He or she is not a TNS in the classic sense.
Calculation of TNS Contribution
The basis for calculating TNS contributions varies according to the following elements of a company’s tax regime.
- Corporate income tax for most companies (except the EURL that has not expressly opted for corporate income tax).
- Personal income tax for sole proprietorships – EURL.
- Specific tax regime of micro-enterprises for self-employed entrepreneurs.
The TNS calculation of social contributions for Year N is based on compensation paid in N-2. For example, the social contribution calculations for 2023 will be based on compensation paid in 2021. This benefits a company’s cash flow in times of growth where turnover and revenue have increased, but it may be disastrous under the opposite scenario.
As there is no reference income, there is a flat-rate contribution base for a company’s first two years of activity:
- A flat-rate base of 19% of the Annual Social Security Ceiling (PASS – Plafond Annuel de la Sécurité Sociale – currently 41,136 Euros annually) for supplementary pension, basic pension, disability, death, family allowances, basic old age pension, General Social Contribution, CSG (Contribution Sociale Généralisée), Social Debt Repayment Contribution, CRDS (Contribution pour le Remboursement de la Dette Sociale), and disability-death insurance.
- 40% of the PASS for health insurance and daily allowances.
For the General Social Contribution – CSG and the Social Debt Repayment Contribution – CRDS, all the social contributions (compulsory and optional) are added to the base.
“IR” Personal Income Tax Option
For the company subject to “IR” taxation (personal income tax), the contributions are calculated on all the taxable income before applying possible tax breaks or deductions of optional social contributions.
“IS” Corporate Income Tax Option
Contributions are calculated based on the compensation received when the company is subject to “IS” (corporate taxation).
Self-Employed Entrepreneurs
For individual self-employed entrepreneurs subject to the micro-enterprise tax regime, turnover is the base used to calculate their contributions, with a deduction of the fixed allowance for expenses (except for those under the micro-social regime where the base is total turnover).
Dividends
The TNS contributions also apply to the fraction of the dividends paid that exceeds 10% of the sum of the share capital, any share premiums, and the sums paid into the partner’s current account.
As a side item, this is one of the downsides of creating a company with minimum share capital – TNS social contributions will eat up a large chunk of dividends paid to owners/shareholders.
So, in choosing the form of company to create in France, determining how much the manager’s pay and the employment of non-salaried employees, in general, will cost the company are very important considerations.
TNS – Minimum Social Contributions
Social security contributions for the self-employed have minimum bases. As an with TNS status, you will have to pay social security contributions, even if you don’t pay yourself a salary
Health and Maternity Insurance
- Minimum contributions are calculated at 40% of the annual social security ceiling PASS – currently 41,136 euros. However, this minimum base is not applicable when the manager has several activities, and his main activity is a salaried activity.
Daily Allowance Insurance
- Minimum contributions are calculated at 40% of the PASS (for traders and artisans).
Family Allowances & Complimentary Elderly Insurance
- There is no minimum base. The calculation is proportional to income.
Disability & Death Insurance
- Minimum contributions are calculated at 11.5% of the PASS (for traders and artisans).
Basic Elderly Insurance
- Minimum contributions are calculated at 11.5% of the PASS (for merchants and artisans).
Because contributions are calculated on lump-sum bases of the PASS, they are paid even if the TNS-subjected company has no actual earnings during your first two years of activity.
TNS – Social Security Contribution Rates
- CSG – CRDS: 9.70% of the total activity income.
- Sickness and Maternity: 6.5% of the total activity income. Daily allowances: 0.85% of the daily allowances received, up to a limit of five times the PASS (for traders and artisans only).
- Family allowances: 3.10% of the total income.
- Professional training: 0.25% of the PASS (0.29% for artisans).
- Basic elderly insurance: For traders and artisans: 17.75% up to the PASS and 0.6% on all income. For the liberal professions: 10.10% up to 85% of the PASS and 1.87% between 85 and 500% of the PASS.
- Supplementary pension insurance: For traders and artisans, 7% up to the PASS and 8% for the bracket between the PASS and four times the PASS.
For the liberal professions, the contribution varies according to the activity.
TNS Contributions Due Date
By default, the payment of TNS social contributions is quarterly. If you have opted for monthly deductions, TNS social security contributions will be deducted in 12 installments (from January to December).
Exemption From SSI Social Security Contributions
If you are a business creator or entrepreneur, you can be exempted from social security contributions for one year (the first 12 months of activity), or even longer, under the aid to creators scheme – ACRE (Aide aux Créateurs et Repreneurs d’Entreprises), but not from the supplementary pension, CSG and CRDS in particular.
The unemployed business creators scheme ACCRE (Aide aux Créateurs Chômeurs et Repreneurs d’Entreprises) is also a source of help.
TNS Summary Characteristics
The difference in the status of the managers is an essential criterion in choosing the form of his company. And there are trade-offs. For example, if you want to reduce your social charges for a EURL, the TNS status is less expensive.
With the TNS status, the manager’s social security coverage is different from the coverage of a regular or “assimilated employee:
- A priori, unlike “assimilated” employees, TNSs are not covered by the general social security system.
- The conditions of TNS status implementation (duration of affiliation, waiting periods) are stricter.
- The benefits in cash are less.
- The SSI does not cover the risk of work accidents and professional illness.
- On the other hand, the self-employed worker’s social contributions to the SSI are lower, with minimal contributions for the first two years of activity.
Assimilated Employee Advantages
The manager with the status of a salaried “assimilated” employee who contributes to the general social security system benefits from protection nearly equal to that of an employee.
- This includes reimbursement of health expenses and daily allowances in case of illness and maternity, death and disability insurance, basic and supplementary retirement, work accident, and professional illness.
- The social security coverage of the manager as an employee is optimal compared to the TNS. Generally speaking, the coverage of a TNS owner/executive is less than that of company directors who are assimilated employees.
- Unlike the regular employee, the manager deemed an “assimilated” employee does not benefit from unemployment insurance.
Note! Many employee benefits and protections enshrined in the French Labor Code do not apply to corporate officers. The unpaid director who does not contribute has no real social protection.
