Welfare cover for small businesses
I am self-employed but want to have better welfare cover in case of possible illness or unemployment. Is there a way I can pay for this as a separate cover as I do not have access to that provided for other workers?
There is a law for small businesses called the Loi Madelin that gives you a tax deduction for taking out a range of insurances.
It is aimed at those running small businesses and some limited companies but not generally for auto-entrepreneurs or, as they are now called, micro-entrepreneurs as they have social welfare cover included in their cotisations sociales.
The system is aimed at encouraging people to take out illness protection policies and even pensions to fill gaps in social cover and has been running since the 1990s. You need to check that the cover that any policy you take is suitable for your needs and also that the cost is reasonable.
Premiums are deductible from your taxable income (and this applies whether the business is set up to pay impôt sur les sociétés or income tax) but not on your cotisations sociales.
Policies can include a top-up health cover for both you and your dependants; involuntary unemployment cover; illness or accident payment protection cover that will replace work income or insure against death or incapacity, and a private retirement pension.
There are limits on the tax deduction that can be made – and, as a tax deduction, can only be of full benefit if you are paying a certain amount of tax. The deduction limit for 2017 is €39,228, which is a rise from €38,616 in 2016 and €38,040 in 2015.
In all cases, the limits are based on the Plafond Annuel de la Sécurité Sociale.
Auto-entrepreneurs can get one benefit from the Loi Madelin as it has led to a contrat mutuelle Madelin being offered and this may be cheaper than some other health insurance policies.
This question was answered by Olaf Muscat Baron who is a Fellow of the Chartered Association of Accountants UK, a French expert comptable and an International tax advisor. He is the principal accountant of Fiscaly, an accountancy firm based in the Dordogne.
See www.fiscaly.fr or call 09 81 09 00 15