B. TWO THRESHOLDS FOR COMPULSORY AFFILIATION TO SOCIAL SECURITY CREATED IN 2017: A USEFUL YET INCOMPLETE STEP FORWARD
1. Compulsory affiliation when income from rental of movable property exceeds EUR 7,846 and when income from rental of furnished accommodation exceeds EUR 23,000
Article 18 of the Social Security Financing Act for 2017 27 ( * ) provided an initial response to this problem, by establishing two thresholds for compulsory affiliation to the social security , respectively for the rental of furnished accommodation for short periods and for the rental of movable property (cars, tools, etc.).
Since 1 January 2017, in principle, natural persons whose gross annual income exceeds the following thresholds are therefore compulsorily affiliated to the social security regime of self-employed workers (RSI), or if they so choose to the general system :
- EUR 23,000 for the rental of short-term furnished accommodation , or more precisely direct or indirect rental of furnished residential premises, [] when these premises are rented to customers staying on a daily, weekly or monthly basis and not residing there .Therefore rentals of accommodation by private individuals on platforms such as Airbnb or Abritel are covered by this measure. The EUR 23,000 threshold already exists for professional furnished accommodation provider (LMP) , whose other conditions are however more restrictive (see above): in practice, the LMPsystem has therefore been expanded in relation to social contributions, but remains unchanged in relation to income tax;
- EUR 7,846 (in 2017) for the rental of movable property . The criterion laid down by the Act being that of proceeds greater than 20% of the annual “ plafond annuel de la Sécurité sociale ( PASS )”. This activity 28 ( * ) is mainly aimed at car rental (for example via Drivy or Ouicar ), but also applies to any other type of object, from prams to boats, taking in barbecues and cameras on the way (for example on Zilok ).
When his income exceeds these thresholds, the person is subject to social security contributions on all his income, i.e. from the first euro.
Below these thresholds, the income is not considered to be income from a professional activity, but personal immovable or movable property income . It is therefore, in principle, subject to income tax and social levies of 15.5% on property income.
These thresholds apply to all activities and are not specific to the activities carried out via online platforms. They are “ceilings thresholds” beyond which affiliation is mandatory, but do not prevent affiliation at a lower level of annual proceeds.
2. A useful yet incomplete clarification, which does not cover sales or services
It is a useful clarification . Indeed, although it is important to allow the sharing economy to its “life”and not to hamper it with restrictive rules from the first euro earned from a sideline activity, it is not acceptable that it can become a real shadow economy, with fake private individuals entering into direct competition with professionals who do not pay social contributionsand ultimately not benefiting from any social protection either. In this regard, the establishment of a threshold that clearly distinguishes income derived from the private ownership of property from that from professional rental is a step in the right direction .
In particular, two changes that came about in the course of the parliamentary debates should be welcomed 29 ( * ) :
- the increase from 10% to 20% of the PASS for the threshold applicable to rentals of movable property : the level of EUR 3,923 gross per year originally proposed by the Government, i.e. EUR 327 per month, may appear to be very low, especially since it only applies to gross proceeds, which in no way implies that the private individual makes a significant net profit or even any profit at all. As Francis Delattre, the Finance Committee's rapporteur opinion 30 ( * ) , an individual who occasionally rents his car, his motor home, his lawnmower or his drill, would have been considered to be a self-employed worker, and would have had to join the RSI, with all the constraints and obligations that this entails. Is this really what millions of French citizens engaged in the sharing economy want, and who often only derive sideline income from it? ;
- the possibility to opt for an affiliation to the general regime , which, in particular, allows people who are already employees not to have to join two different systems 31 ( * ) .
However, the rules laid down by the Social Security Financing Act for 2017 only settle a small part of the problem. The Secretary of State responsible for the budget, Christian Eckert, acknowledged this problem during the debates in the National Assembly: let us be clear on this: this article does not claim to solve everything .
First and foremost, this clarificationis limited to the case of rentals of furnished accommodation and movable property, but sets no minimum threshold for services on the one hand, and for sales of goods on the other hand, leaving out a considerable proportion of the collaborative economy . Like those of the General directorate of public finance (DGFiP), the representatives of the Social security directorate (DSS) heard by the Working Group took the view that the existing law posed no problem, and that there was no reason to change it: a sale or provision of a service are a professional activity from the first euro of profit.
It follows that a student offering some mathematics tuition or one evening of babysitting per week via an online platform should in principle join the RSI as soon as he receives his first euro . The same is true for a pottery enthusiast who occasionally sells his own products in a Sunday market. However, although there is no doubt about the principle of affiliating to the social security when the activity is professional, one can nevertheless doubt the social acceptability of affiliation from the first euro for occasional or sideline activities , sometimes carried out as a hobby or by a simple enthusiast.
Moreover, it could well prove to be hard to distinguish those activities covered by the thresholds (rental of movable or immovable property) from those activities not targeted (sales and services). Thus, must the services linked to the rental of an apartment on Airbnb , not only handling-over the keys and the cleaning but also the advice given to tourists about the neighbourhood, be taken into account in calculating the thresholds? A series of unjustified and contentious affiliations can legitimately be feared, or on the contrary a multiplication of deadweight effects.
In addition, affiliation to the social security for the activities carried out via platforms and whose professional nature is not clear is problematic in several cases and in particular:
- for people already affiliated to social security for another activity , whether they are employed or self-employed. Indeed, and unlike taxation, social contributions are defined by the existence of rights in return (sickness insurance, retirement pension, etc.): therefore, these people would have to pay additional contributions, without benefiting from a higher level of protection, which could be hard to understand. People with several different jobs or people who work and receive a retirement pension at the same time who pay solidarity retirement contributions, could find themselves in this case;
- for civil servants , who are required to get written authorisation for having a second activity from their superior, limited in time 32 ( * ) : strict application of the law would make it illegal for any civil servant to be active on a services or sale platform if they receive more than EUR 7,846 per year from a property rental platform or more than EUR 23,000 per year from an accommodation rental platform. The same problem arises for professions subject to a strict ban on undertaking any form of commercial activity , such as judges, police officers and certain regulated professions;
- for the unemployed and the recipients of minimum social benefits (disability pension, RSA, AAH, etc.), who could lose part of their rights by renting their apartment or their car or by offering some DIY services in their neighbourhood, even though this may be essential extra incomefor them.
Moreover, this socialclarification does not seem consistent with the taxclarification of the definition of co-consumptionactivities if they are by nature exempt as regards to tax, what is the justification that simply crossing gross proceed thresholds necessarily results in affiliation to the RSI, even when this is also co-consumption?
* 27 Article 18 of Act No. 20161827 of 23 December 2016 on Social Security Financing for 2017. These provisions are codified in Article L. 6131 of the Social Security Code, which lists the persons compulsorily affiliated to the Sickness Insurance and Maternity Insurance System for Non-Agricultural Self-Employed Workers (RSI).
* 28 Defined by reference to 4° of Article L. 1101 of the Commercial Code, which refers to any movable property rental business (see above).
* 29 And more precisely on the occasion of a second deliberation requested by the Government from the National Assembly, taking into account the reservations expressed about this article by parliamentarians of the majority and the opposition, in the National Assembly and in the Senate.
* 30 Opinion No. 108 (2016-17) from Francis Delattre, made on behalf of the Finance Committee, about the Social Security Financing Act for 2017, lodged on 8 November 2016. For information, the general rapporteur of the Social Affairs Committee, Jean-Marie Vanlerenberghe, proposed a threshold of 40% of the PASS, namely EUR 15,691 for 2017, a level equivalent to the minimum wage.
* 31 This measure therefore essentially satisfies a need for simplification, since social security contributions and the acquisition of rights are now largely aligned between the two systems.
* 32 Article 25 septies of Act No. 83-634 of 13 July 1983 concerning the rights and obligations of civil servants, as amended by Article 7 of Act No. 2016-483 of 20 April 2016 relating to the ethics, rights and obligations of public servants.