A good knowledge of the social and legal environment of a business can result, in some cases, in a 60% to 25% reduction of the payroll tax rate applied to earnings if the director is self-employed. This can also benefit sales force and/or certain categories of employees.
It is not possible to modify and adjust the status of the director in respect to social organizations to drastically reduce the required contributions; they solely apply to pension schemes, sickness, or retirement.
Indeed, the Code of Social Security determines, through clearly defined coverage criteria, membership in a particular social status, himself setting the payroll tax rate and applicable mandatory membership organizations.
The payroll tax rate may vary, depending on the status (employed or self-employed) from 60% to 20-25%. Coverage criteria is based on the Director’s status and the form of the Company (SA, SAS or SARL).
The optimization of social status has a significant impact on "social pressure". It is then essential to decide the best contributions-benefits that take into account the age of the insured and his familial status.
In most cases, this optimization will lead to retention of the employed-status.
For benefits provided under this scheme, those relating to the coverage of the "disease" will remain the same. Only pension benefits and retirement will be slightly affected.
Nevertheless, there are various tax provisions that enable a director to additionally fund his individual retirement and pension plans through an insurance contract. Assuredly, the solution is perfectly legal. It derives from thorough knowledge of the Social Security Law, Business Law and Labor Law in particular. Additionally, it is the result of our attorney’s knowledge and experience acquired over a long period of legal practice.
For instance, here is a detailed test case (experience):
Mrs. B and C have a new technology business. They reported a turnover of €4,300,000 per year. They each earn a salary which costs the company €167,000
|
|
Before |
After |
|
Cost for the Company |
167,000 € |
167,000 € |
|
Employer Contribution |
44,800 € |
None |
|
Gross Income |
122,000 € |
167,000 € |
|
Personal contributions + CSG + RDS |
21,800 € |
40,112 € |
|
Net Income |
100,200 € |
126,900 € |
Annual Payroll Savings: 21,800 €
Payroll reduction for the sales force:
The firm of Mrs. B and C employs 10 representative agents. The average cost of one of them is 55.700 €.
|
|
Before |
After |
|
Cost for the Company |
55,700 € |
55,700 € |
|
Employer Contribution |
15,200 € |
None |
|
Gross Income |
40,500 € |
55,700 € |
|
Personal contributions + CSG + RDS |
7,600 € |
17,400 € |
|
Net Income |
32,900 € |
38,300 € |
Annual Payroll Savings: 5,400 €
