The end of the RSI is nigh. Emmanuel Macron had promised during his campaign that he would make employment his priority, and this regime his main target. Long castigated by the self-employed, the RSI appears to be on its last legs. On September 5, French Prime Minister Edouard Philippe presented his reform of the regime and the main measures he has put in place to improve the lives of the self-employed. A good opportunity for us to mention the RSI again, this reform and above all the implications for the self-employed.
Introduced in 2006, the RSI (Régime Social des Indépendants) counted over 6.6 million self-employed people in France in January 2017. This special scheme ensures social protection for self-employed workers, craftsmen, shopkeepers and the liberal professions, thanks to the establishment of a single contact for all social procedures.
Among other things, the RSI pays self-employed workers sickness and maternity benefits, daily allowances in the event of sick leave, disability and death pensions, and basic and supplementary family pensions. The scheme is based on the general scheme for salaried employees, but is specific to the self-employed.
Since its inception, the RSI's aim to simplify the system has attracted a great deal of criticism from those concerned, due to its many dysfunctions. In particular, the self-employed point the finger at the low level of social benefits, the absence of unemployment rights and regular errors in calculating contributions. In short, the cost and inefficiency of the RSI make this scheme a black mark regularly raised by the self-employed.
A key measure in his program, Emmanuel Macron has been quick to take matters into his own hands since his election, completing his project to abolish the RSI. According to the President, this system is no longer appropriate and should be abolished, so that the self-employed can be affiliated to the general system with a specific counter. Prime Minister Edouard Philippe presented his action plan on Tuesday September 5, unveiling the measures to be introduced.
The main idea behind this reform is to bring greater flexibility and simplify life for the self-employed. The abolition of the RSI will be phased in over two years, starting in January 2018. This period of time is justified by the transfer of all missions attached to the RSI to the general scheme.
Self-employed entrepreneurs
The abolition of the RSI concerns all its beneficiaries, including auto-entrepreneurs, who will continue to benefit from a special tax regime. The change will take shape in the management of their scheme, which will be affiliated to the general scheme. When declaring their activity to the CFE (Centre de Formalités des Entreprises), those concerned will be directed to the general scheme with a special counter, and no longer to the RSI.
Sales figures
An important change in the reform is the doubling of the doubling of the ceiling 70,000 euros for service activities and 170,000 euros for commercial activities. This change will enable the self-employed to work more serenely, removing the fear of too much activity.
Social and tax
The reform also proposes a reduction in contributions by offering a blank year for the first year of business for entrepreneurs. Family contributions will be cut by 2.15 points to offset the 1.7-point increase in the CSG. Likewise, sickness contributions will be reduced by 1.5 points, improving purchasing power for 75% of self-employed workers with incomes up to 43,000 euros. Finally, auto-entrepreneurs will benefit from a sliding-scale exemption from social security contributions for their first three years of business.
Property tax will be abolished from 2019 for small business owners declaring annual sales of 5,000 euros.
By the end of 2017, self-employed people with payment difficulties will be able to request a deferment of payment of their contributions. In the longer term, it is also planned to be able to adjust contributions on a monthly basis according to the economic situation.
Simplified status and unemployment
The self-employed will have a single point of contact when they join the general scheme. This single point of contact will enable over 5,500 employees to continue their work in a different, optimized environment. There will be no consequences in terms of redundancies or geographical mobility.
As part of this drive to simplify the status of self-employed workers, they will now have to complete just one declaration, instead of the current two. This transformation will also be implemented by 2020.
As for unemployment insurance, which is currently non-existent for the self-employed, the government plans to extend it to beneficiaries of this status.
While the reform of the RSI has long been eagerly awaited by the self-employed, it seems to have been well received by those most concerned. The proposed measures are designed to completely transform the administrative and financial management of workers, without forgetting the social security system. This two-year transitional period will enable all self-employed workers to gradually adapt to this major change.
Written by our expert Maeva Girardot
September 15, 2017
