In summary
| Section | Description |
|---|---|
| 📜 Introduction | Presentation of the Madelin law, its objectives, and its initiator, Alain Madelin. |
| 🚻 Beneficiaries | Self-employed non-agricultural workers, including sole proprietors, non-salaried managers, and partner spouses. |
| 🛡️ Types of Contracts | Details of the three eligible contract types: health insurance, provident schemes, and supplementary retirement savings. |
| 🏥 Health Insurance | Advantages of Madelin health insurance contracts, including reimbursements and tax deductions. |
| 🛡️ Provident Schemes | Financial protection in case of disability, death, or unemployment, with benefits such as income maintenance. |
| 💰 Retirement Savings | Old Madelin retirement contracts still valid if signed before October 2020. |
| 📅 Retirement Contract Criteria | Specific criteria for retirement contracts, such as regular payments and the annuity exit. |
| 🔄 Alternatives to Madelin | Introduction of the Retirement Savings Plan (PER) offering more flexibility, with options for lump-sum withdrawals and similar tax deductions. |
The Law n° 94-126 of February 11, 1994, relating to individual entrepreneurship and sole proprietorship, provides tax advantages to non-salaried workers (TNS) who subscribe to social protection contracts. Named in honor of its initiator, Alain Madelin, then Minister of Enterprises and Economic Development, this law aims to encourage TNS to create their own social protection while benefiting from a tax deductibility.
Who Can Benefit from the Madelin Law?
Non-agricultural self-employed workers (TNS), subject to income tax on industrial and commercial profits (BIC) or non-commercial profits (BNC), or those falling under article 62 of the CGI, can benefit from the advantages of the Madelin law:
- Sole proprietors: merchants, artisans, liberal professions
- Non-salaried managers: Major un salaried managers of SARL or SELARL, non-salaried managers of partnerships
- Partner spouses: Participate in the activity without being compensated or work part-time (maximum 50% of the legal working time)
Special Case of Workers Affiliated with the MSA
Self-employed agricultural workers under the mandatory regime of the Mutual Agricultural Social Security (MSA) can benefit from the Madelin agricultural scheme for retirement contracts, allowing the deduction of contributions from professional income.
Types of Affected Contracts
Health Insurance (Mutual)
Madelin health insurance contracts allow non-salaried workers (TNS) to benefit from comprehensive health coverage in addition to Social Security reimbursements. This type of contract is essential for TNS, as it significantly improves their coverage of medical expenses.
Advantages :
- Reimbursement of medical expenses not covered by Social Security
- Tax deduction of contributions paid
- Adaptability to the specific needs of each TNS
The Madelin mutuals offer great flexibility and customizable guarantees. TNS can choose higher reimbursement levels for specific expense items such as hospitalization, dental, or optics. Additionally, some contracts offer packages for alternative medicine like osteopathy or acupuncture.
Provident Scheme (Disability, Death, Unemployment)
The Madelin provident contracts are designed to provide financial protection in case of unforeseen events such as disability, death, or unemployment. They ensure income maintenance for the TNS in case of work stoppage and provide a financial security for their family.
Advantages :
- Income maintenance in case of work stoppage
- Payment of daily allowances in case of disability
- Rente for beneficiaries in case of death
Madeline provident contracts cover various risks and allow TNS to receive daily benefits in case of incapacity to work, permanent disability pensions, and educational rentes for children in case of death. These contracts can also include unemployment coverage, allowing TNS to receive an indemnity in case of job loss.
Supplementary Retirement Savings
The Madelin retirement savings contracts enable TNS to build up a supplementary retirement. Although these contracts have been discontinued since October 1, 2020, those signed before this date remain valid and still offer tax benefits.
Advantages :
- Building up savings for retirement
- Tax deduction of contributions paid
- Payment in the form of an annuity at retirement
The Madelin retirement contracts allow TNS to accumulate a retirement capital that will be paid as a life annuity upon cessation of professional activity. These contracts provide significant security as they guarantee additional income at retirement. Contributions paid are deductible from taxable income, thus reducing income tax during the active period.
Retirement Contract Criteria
Retirement contracts must meet certain specific criteria :
- Regular payments: Contributions must be paid regularly, with minimum amounts and a defined periodicity.
- Term-based payment: At retirement, the accumulated funds are paid out as a lifelong annuity, ensuring a steady income for the retiree.
- Non-cashout before retirement: Funds cannot be withdrawn before retirement age, except in exceptional cases provided by law, such as disability or death.
- Payment in lifelong annuity: In case of death of the subscriber, funds are converted into a lifelong annuity for designated beneficiaries, ensuring continuous financial protection for the family.
Madeline retirement contracts thus offer long-term financial security by guaranteeing a regular income at retirement while enabling tax deductions during the active period. It is crucial for TNS to understand these criteria to optimize the benefits of their Madelin retirement contract.
Tax Benefits of Madelin Contracts
The tax advantages vary depending on the type of contract subscribed (health insurance, provident scheme, dependency, unemployment, retirement). The deductible amounts take into account BIC, BNC, the remuneration under article 62 of the CGI, as well as the annual ceiling of Social Security (PASS).
Tax Deduction Ceiling
The ceiling depends on the nature of the contract :
- Provident scheme (including dependency and health insurance): 3.75% of professional income, plus 7% of PASS, within the limit of 3% of 8 times PASS.
- Supplementary retirement:
- Revenu exceeding 1 time PASS: 10% of professional income limited to 8 times PASS, plus 15% of the portion of income between 1 and 8 times PASS.
- Revenu less than or equal to 1 times PASS: annual flat-rate deduction, with a minimum of 10% of PASS.
- Unemployment benefit: 1.875% of professional income (limited to 8 times PASS) or 2.50% of PASS (the more favorable ceiling is applied).
Example of Deduction Ceiling
Antoine has a taxable profit of €60,000. He can deduct for his Madelin retirement contract contributions :
(10% x 60,000€) + (15% x (60,000€ – 46,368€)) = 6,000€ + 2,045€ = 8,045€
For a taxable profit less than or equal to €46,368, the ceiling is set at €4,636.80 in 2024 (10% of PASS).
Alternatives to Madelin Retirement Savings Contracts
Since October 1, 2020, it has no longer been possible to subscribe to a retirement savings contract under the Madelin scheme. The new Individual Retirement Savings Plans (PER) offer greater flexibility, with free contributions and the possibility of capital withdrawals, while benefiting from the same deduction ceilings as Madelin retirement contracts.
Individual Retirement Savings Plan (PER)
The PER has been introduced to replace former Madelin contracts and to offer additional advantages. This new savings product allows better adaptation to the needs of the self-employed.
Advantages :
- Flexible contributions: Unlike the old Madelin contracts, PERs allow free choice of the amount and frequency of payments.
- Capital withdrawal: At retirement, it is possible to choose between a capital or annuity payout, offering greater flexibility.
- Tax deductibility: Contributions into the PER are deductible from taxable income, under the same ceilings as the old Madelin contracts.
Features of the PER
The PER is distinguished by its flexibility and ability to meet the diverse needs of savers. Here are its main characteristics:
- Accessibility: Open to all self-employed workers, this retirement savings plan is designed to be easily accessible.
- Free management: Savers can manage their investments themselves or delegate management to a professional.
- Transferability: Funds invested in a PER can be transferred to another PER, providing additional flexibility.
Comparison with Old Madelin Contracts
The PER offers significant advantages over older Madelin contracts. Here is a comparison of the two:
- Flexible contributions: PERs allow free contributions, unlike Madelin contracts which required regular payments.
- Withdrawal options: At retirement, PERs give the choice between a capital or annuity payout, whereas Madelin contracts only allowed a lifelong annuity.
- Transparency: PERs offer greater transparency concerning fees and management options, helping savers better understand their investments.
Conclusion
The Madelin Law is an advantageous tax scheme for non-salaried self-employed workers, enabling them to benefit from tax deductions on their social protection contributions. Understanding the criteria and deduction ceilings is essential for TNS to maximize their tax benefits and ensure adequate social protection for themselves and their families.
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