Summary
| Section | Description |
|---|---|
| 📜 Introduction | Overview of the Madelin law, its objectives, and its initiator, Alain Madelin. |
| 🚻 Beneficiaries | Self-employed non-agricultural workers, including sole traders, non-salaried managers, and partner spouses. |
| 🛡️ Types of Contracts | Details of the three eligible contract types: supplementary health, provident insurance, and supplementary retirement savings. |
| 🏥 Supplementary Health | Advantages of Madelin supplementary health contracts, including reimbursements and tax deductions. |
| 🛡️ Provident Insurance | Financial protection in case of disability, death, or job loss, with benefits such as income maintenance. |
| 💰 Retirement Savings | Older Madelin retirement contracts that remain valid if subscribed before October 2020. |
| 📅 Contract Retirement Criteria | Specific criteria for retirement contracts, such as regular contributions and income stream at retirement. |
| 🔄 Alternatives to Madelin | Introduction of the Retirement Savings Plan (PER) offering greater flexibility, with options for capital withdrawals and similar tax deductions. |
The Law n° 94-126 of February 11, 1994, related to individual entrepreneurship and initiative, offers tax advantages to self-employed (TNS) non-agricultural workers by subscribing 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 establish their own social protection while benefiting from 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 under Article 62 of the CGI, can benefit from the advantages of the Madelin law:
- Sole traders: merchants, artisans, liberal professions
- Non-salaried managers: Majority managers who are non-salaried of SARL or SELARL, non-salaried managers of partnership companies
- Partner spouses: Participate in the activity without being remunerated or work part-time (maximum 50% of the legal working time)
Special Case of Workers Affiliated with MSA
Non-salaried agricultural workers under the compulsory scheme of the Mutual Social Agriculture (MSA) can benefit from the Madeline Agricultural System for retirement contracts, allowing deduction of contributions from professional income.
Types of Relevant Contracts
Supplementary Health (Mutual Insurance)
Madeline supplementary health contracts enable self-employed workers (TNS) to have 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 paid contributions
- Customization to meet specific needs of each TNS
Madeline mutual insurances offer great flexibility and customizable guarantees. TNS can choose higher reimbursement levels for specific expense items such as hospitalization, dental, or optical. Additionally, some contracts offer packages for complementary medicine such as osteopathy or acupuncture.
Provident Insurance (Disability, Death, Unemployment)
Madeline provident insurance contracts are designed to provide financial protection in case of unforeseen events such as disability, death, or job loss. They ensure income stability for the TNS in case of work stoppage and provide financial security to their families.
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 insurance contracts cover various risks and enable TNS to receive daily allowances in case of incapacity to work, permanent disability pensions, and education pensions for children in case of death. These contracts can also include unemployment benefit, allowing TNS to receive an indemnity in case of job loss.
Supplementary Retirement Savings
Madeline retirement savings contracts enable TNS to build up a supplementary retirement fund. Although these contracts have not been sold since October 1, 2020, those subscribed before this date remain valid and still offer tax benefits.
Advantages :
- Accumulation of savings for retirement
- Tax deduction of contributions paid
- Payment as an income stream at retirement
Madeline retirement contracts allow TNS to establish a retirement capital that will be paid out as a lifelong annuity upon cessation of professional activity. These contracts offer great security by guaranteeing an additional income at retirement. Contributions paid are deductible from taxable income, thereby reducing income tax during the working period.
Retirement Contract Criteria
Retirement contracts must meet certain specific criteria :
- Regular payments: Contributions should be made regularly, with minimum amounts and a set periodicity.
- Endowment at retirement: At retirement, the accumulated funds are paid out as a lifelong annuity, ensuring a steady income for the retiree.
- Non-early withdrawal before retirement: Funds cannot be withdrawn before reaching retirement age, except in exceptional cases provided by law, such as disability or death.
- Income stream upon death: In case of the subscriber’s death, funds are converted into a lifelong annuity for designated beneficiaries, ensuring ongoing financial protection for the family.
Madeline retirement contracts thus provide long-term financial security by ensuring a regular income at retirement while allowing for advantageous tax deductions during the working period. It is essential for TNS to understand these criteria well to optimize the benefits of their Madelin retirement contract.
Tax Advantages of Madelin Contracts
Tax advantages vary depending on the nature of the subscribed contract (supplementary health, provident insurance, dependency, unemployment, retirement). The deductible amounts consider BIC, BNC, Article 62 remuneration of the CGI, as well as the annual ceiling of Social Security (PASS).
Tax Deduction Ceiling
The cap depends on the nature of the contract :
- Provident insurance (including dependency and supplementary health): 3.75% of professional income, increased by 7% of PASS, within the limit of 3% of 8 times the PASS.
- Supplementary Retirement:
- Income exceeding 1 times the PASS: 10% of professional income limited to 8 times the PASS, plus 15% of the portion of income between 1 and 8 times the PASS.
- Income less than or equal to 1 times the PASS: annual flat rate, with a minimum deduction of 10% of PASS.
- Unemployment: 1.875% of professional income (limited to 8 times the PASS) or 2.50% of PASS (the most advantageous ceiling is used).
Example of Deduction Ceiling
Antoine earns a taxable profit of €60,000. He can deduct as contributions for his Madelin retirement contract :
(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 is no longer possible to subscribe to a retirement savings contract under the Madelin scheme. New individual Retirement Savings Plans (PER) offer greater flexibility, with free contributions and a possible withdrawal in capital, while benefiting from the same deduction limits as Madelin retirement contracts.
Individual Retirement Savings Plan (PER)
The PER (Retirement Savings Plan) has been introduced to replace the old Madelin contracts and to offer additional advantages. This new savings product allows better adaptation to the needs of self-employed workers.
Advantages :
- Free contributions: Unlike old Madelin contracts, PER individual plans allow you to choose freely the amount and frequency of contributions.
- Capital withdrawal: At retirement, it is possible to choose between a capital withdrawal or an annuity, offering greater flexibility.
- Tax deductibility: Contributions paid into PER are deductible from taxable income, according to the same limits as old Madelin contracts.
Features of the PER Individual
The PER individual stands out for its flexibility and its ability to meet the diverse needs of savers. Here are the main features of the PER individual:
- Accessibility: Open to all self-employed workers, this retirement savings plan is designed to be easily accessible.
- Free management: Savers can choose to manage their investments themselves or delegate this management to a professional.
- Transferability: Funds invested in a PER individual can be transferred to another PER, offering greater flexibility.
Comparison with Old Madelin Contracts
The PER individual provides significant advantages over old Madelin contracts. Here is a comparison of the two contract types :
- Flexibility of contributions: PER individual plans allow free contributions, unlike Madelin contracts which required regular payments.
- Exit options: At retirement, PER individual plans offer the choice of capital or annuity, whereas Madelin contracts only permitted lifetime annuity payouts.
- Transparency: PER individual plans provide increased transparency regarding fees and management options, enabling savers to better understand their investments.
Conclusion
The Madelin Law is an advantageous fiscal framework for non-agricultural self-employed workers, allowing them to benefit from tax deductions on their social protection contributions. It is crucial for TNS to understand the criteria and deduction caps to optimize their tax benefits and ensure adequate social protection for themselves and their families.
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