Flood of paperwork try umbrella firm

Deluge of paperwork? Try an umbrella firm

WORKING for yourself in France is much easier since the auto-entrepreneur launched three years ago – but if you are not eligible for the scheme or you hate bureaucracy, using an umbrella company could be a suitable alternative.

However, the concept (called portage salarial in French) is not suitable for everyone and can be costly – you will typically lose up to half of your billed fee. Umbrella companies allow a worker to accept freelance or contract work without registering as self-employed. Instead, you are legally classified as an employee and your “employer” (the umbrella company) issues and chases invoices, deals with insurance and pays your social charges for health and pension cover. Your personal income tax remains for you to pay each year – it is not deducted at source.

It is a popular option for new arrivals in France who wish to get started immediately and can also be a way of testing the water before setting up your own company, but you must have valid work papers if you are not from an EU state.

For those already living here, if you earn more than the €32,600 annual earnings limit for the auto-entrepreneur regime, or you have reached the three year limit for the scheme, an umbrella could be preferable to starting a microentreprise, with its additional tax, social charges and accounting requirements.

However, it is generally only suitable for people working in service industries – consultants, communications staff, IT workers and translators for example. More regulated professions – such as construction, medicine or law – are not accepted because of the substantial legal and insurance issues involved.

Most companies will ask about your experience in your chosen field and may ask for qualifications. This is a precaution, as the company is responsible for your work and has public liability insurance to cover it – which also covers you against workplace accidents. However, the individual worker is ultimately responsible for the quality of their work and the company can take the same action against them for misconduct as any ordinary employee, as set out in the French code du travail.

The worker approaches their job in the same way as an ordinary self-employed freelance – they alone are responsible for finding work and negotiating rates, whether in France or with an overseas client. Once you have found a job to do, a contract is signed between you, the umbrella company and your client setting out the work, fees and deadlines.

You will then sign an employment contract with the company. Depending on the job, this will typically be a CDD (contrat de durée determinée, fixed-term or part-time contract) and sets out when you will be paid. This is usually not until the client has paid the company’s bill – a regular, fixed monthly income is not guaranteed.

Fees charged can vary from 5-15% of the billed total – and some firms use a tapered scale which favours workers who bring in more money each month. The fee covers all the company’s administrative work, including setting up contracts, chasing debts and issuing payslips.

Next to be deducted are the employer’s social charges, followed by those of the employee. The final amount is likely to be about half of the total billed.

Before picking a firm and signing a contract, you should check what else is included – some providers may pass on the cost of chasing overdue invoices, or offer additional services such as telephone answering or business cards. Also check whether there is a minimum invoice amount that you must achieve each month or quarter.

For those used to the auto-entrepreneur scheme, it is unlikely to save money. Social charges for auto-entrepreneurs are a fixed 12-21% of turnover, depending on your industry, and there is no liability for local business taxes.

However, there are clear advantages to umbrella companies in terms of avoiding paperwork and having someone else deal with social contributions bodies and the Assurance Maladie. Portage salarial could also benefit workers with a significant amount of professional expenses, which under the auto-entrepreneur scheme cannot be reimbursed or offset against tax or social charges.

Another important difference is that, since June last year, workers in some cases are eligible for unemployment benefits, provided they earn at least €2,900 per month in the three months before the contract ended.

Finally, it is important that anyone who creates intellectual property – writers or designers for example – checks the contract terms to ensure that they retain the copyright in the material produced while “employed” by the umbrella company.

* To find a portage company, check the websites of the three main organisations
representing them: Sneps (www.sneps.fr), Uneps (www.uneps.org) and Fenps (www.fenps.fr) or visit www.guideduportage.com. Some English-speaking umbrella companies are available.

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