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Cotisation advice request. Just when I thought,,,,,,,,


Bud
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I started as self employed in the last quarter of 2005. Micro bic.

Therefore my revenue was only a few ,000's.

Ive just had my calculation in from the 'RSI' asking for 460 euros for the fist half of this year,

they say this is based on "montant pris en compte" 12874 euros.

Shouldnt the amount I pay be based on my earnings from 2005? Why are they basing this on 12874 euros?

Can I challenge this?

Thanks in advance for any help.

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For the first two or three years, unless you have elected otherwise, cotisations are taken based on estimated average initial income, with adjustments up or down in the second and third years, or after you have made returns of actual income. After about the third year it settles down so that you pay based on your previous year's taxable income. So the initial figures can bear little relation to reality. If your income is substantially below the calculated average, you can apply to have payments reduced or deferred altogether in some cases, but the danger is that if you do better than you thought you can incur penalties for under-payment. RSI is the primary health assurance part, you will probably also have to pay into a retirement fund and  will definitely have a third sum to pay to URSSAF.

This is one reason why an accountant is very useful, even for a micro business. Although the taxation of a micro is very straightforward, you cannot always say the same for the social security payments. The new rules that were proposed by Jacques Chirac for this year are aimed at reducing the payments in the first years, but overall you will still have to pay the same amount.

I don't know what you do for a living, but you may find the URSSAF booklet on setting up as an artisan or commercant useful, it does go some way towards explaining (in French) how the cotisations are calculated and collected, particularly during the start-up years. You can download it from http://www.urssaf.fr/images/ref_guide_2006Janvier_Artisans.pdf

If you look at the tables in the booklet you will see that they work on a level of income of 12874€ per annum, below which a minimum RSI payment of 927€ for the year is payable - this ties up with the figures you mention.

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[quote user="Will"]

For the first two or three years, unless you have elected otherwise, cotisations are taken based on estimated average initial income, with adjustments up or down in the second and third years, or after you have made returns of actual income. After about the third year it settles down so that you pay based on your previous year's taxable income. So the initial figures can bear little relation to reality. If your income is substantially below the calculated average, you can apply to have payments reduced or deferred altogether in some cases, but the danger is that if you do better than you thought you can incur penalties for under-payment. RSI is the primary health assurance part, you will probably also have to pay into a retirement fund and  will definitely have a third sum to pay to URSSAF.

This is one reason why an accountant is very useful, even for a micro business. Although the taxation of a micro is very straightforward, you cannot always say the same for the social security payments. The new rules that were proposed by Jacques Chirac for this year are aimed at reducing the payments in the first years, but overall you will still have to pay the same amount.

I don't know what you do for a living, but you may find the URSSAF booklet on setting up as an artisan or commercant useful, it does go some way towards explaining (in French) how the cotisations are calculated and collected, particularly during the start-up years. You can download it from http://www.urssaf.fr/images/ref_guide_2006Janvier_Artisans.pdf

If you look at the tables in the booklet you will see that they work on a level of income of 12874€ per annum, below which a minimum RSI payment of 927€ for the year is payable - this ties up with the figures you mention.

[/quote]

Thanks a lot Will for the reply. & thanks for the urssaf link.

So maybe the 'RSI' (health) be basing the charge I spoke of above on the same minimum. & I dare say the pension folks, & that is the killer charge also!

Has anyone got any experience of getting the charges reduced?, would appreciate your experiences.

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Charlotte, I hope you are right, as I have written to organic with exactly those details two weeks ago, and have reveived a letter back saying they cannot lower my payments for the interim, I have just received the bill again today saying i must pay 993.00 euros before the 17.3.07.   I have again written today to say I cannot afford that and could they lower it, so i will wait to see what they say for the second time.

 

I was fully aware of how the system worked when i set up my business, but it does feel as if they expect a lot of new businesses to be turning over some profit quite quickly when they ask for there payment.

 

Fingers crossed all goes well for me.

 

Emma

 

 

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Will, Click on Bud's link and you will see he is a Carpenter/Joiner.

Cheers

whereas if I click on your link (icon for the top level domain) , you are apparently "Owned" by a hacker called  nwx0x [8-)]

EDIT: If you need some advice to fix it, pm me.

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Hi all,

Can you not ask to pay monthly - it is still crippling for a new business but makes it slightly easier to budget.

Mind you with all the wet weather we've had so far this winter my husband has only managed to work a few weeks (this is his first winter as an artisan and it's all outside work - will definately plan better for next winter).

He is owed money by a client which should have covered  cotisations. We are now having to draw money from British credit card to pay his cotisations, this means we will have to pay to transfer money back to the UK to pay the flipping thing - but it does give us a little breathing space. Talk about robbing Peter to pay Paul!!!

 

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Emma,

Perhaps it depends on the mood of the person who opens your letter on that particular day!  We're in Mayenne and have found the relevant offices all to be helpful when given the bald facts.

My partner also was aware of the potential charges before he started his business, but it doesn't soften the blow does it? When you open a business and go the through the official advice channels, the authorities fully expect you to borrow lots of money to finance the startup, presumably so that you will be able to afford to pay up for your cotisations without complaining!

I wish you the very best of luck with your endeavors,

Aly

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[quote user="oglefakes"]Will, Click on Bud's link and you will see he is a Carpenter/Joiner.

Cheers

whereas if I click on your link (icon for the top level domain) , you are apparently "Owned" by a hacker called  nwx0x [8-)]

EDIT: If you need some advice to fix it, pm me.

[/quote]

Yep, feel free to click on my link!

Oglefakes, I might have a few www questions for you if you dont mind, all to do with bandwidth. Ill think about what I want to know and PM you if thats OK.

Charlotte, thanks for the reply, its encouraging to hear that you have had success, well done. I will try and get a likewise result.,,,,, wish me luck!

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I have tried to get a reduction in charges in the past and had some success.  In the first year, I hadn't filled out a tax return, but this didn't actually matter.  I just needed to write to each of the organisation with my 'chiffre d'affaires' (amount earned) for that year, and ask for a reduction.  URSSAF said that I didn't have to pay anything for that year as I was below the threshold.  Organic wanted around €600 for the year in two installments.  CPAM (or whatever they're called now - the health cover side of things) also wanted money; I can't remember how much.  Despite being told by the Chambre de Commerce that I shouldn't be paying anything, these two organisations insisted that I paid.  I have an IT business so am registered with the CdC rather than CdM - I don't know if this affects the earnings threshold or the amount to be paid in cotisations.

If I can help at all with getting a reduction, feel free to PM me - same goes for the internet stuff.

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the first year, no problem - they used the 'default' rate, and you don't have to pay some of the usual charges..

Year two - not an issue, payments went up but I assumed it was in line with what i'd earnt, and I coped.

Year three however...

they decided that they wanted 8K in charges and 8K to make up for the previous years!!! (this was RSI by the way)

Well personally that adds up to 2/3 of what I earnt last year, so no chance!

I've sent off the forms, I've opted for monthly payments, and I'm still waiting for a reply 2 months later.

The good news though, is that when earning 38K€ the income tax was only 340€ so every cloud has its silver lining :)

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Just to update you all, RSI organic have just phoned today, they are going to send me another form to fill in, and have said once they have received my response, they will be writing to me again with a lower payment plan.  Think you must be right as to who opens the letter, as they had even bothered to get the lady who speaks a little english to speak to me, just to make sure i fully understood they were going to help me this time.

 

Emma

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[quote user="emma5"]

Just to update you all, RSI organic have just phoned today, they are going to send me another form to fill in, and have said once they have received my response, they will be writing to me again with a lower payment plan.  Think you must be right as to who opens the letter, as they had even bothered to get the lady who speaks a little english to speak to me, just to make sure i fully understood they were going to help me this time.

 

Emma

[/quote]

That is fantastic Emma, chuffed for you, have sent you a PM.

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Bud, have recieved your pm, just spent ages typing a reply and somehow lost the lot before sending, I will hopefully get time tomorrow now, as am off out for the rest of the day, didnt want you to think I hadnt got it thats all.

 

Emma

 

 

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[quote user="emma5"]

Bud, have recieved your pm, just spent ages typing a reply and somehow lost the lot before sending, [/quote]

 

I know that pain [:(].

FYI if I am writing anything longer that a few short paragraphs, I type it into Windows Notepad, then copy'n'paste just prior to posting/emailing/PMing etc.

 

Cheers

 

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Ok Emma,

Look forward to it.

Thanks.

[quote user="emma5"]

Bud, have recieved your pm, just spent ages typing a reply and somehow lost the lot before sending, I will hopefully get time tomorrow now, as am off out for the rest of the day, didnt want you to think I hadnt got it thats all.

 

Emma

 

 

[/quote]
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