What is the entrepreneur’s social guarantee?

Who is interested in the social guarantee of the entrepreneur?

The GSC is intended for self-employed managers, but also for certain salaried managers under certain conditions.

The social guarantee of self-employed entrepreneurs

The following managers can benefit from the GSC:

  • the majority managers of SARL or EURL;
  • artisans registered in the Commercial Register;
  • merchants;
  • sole traders;
  • persons exercising their activity in the form of civil partnerships (SNC or limited partnership, etc.).

The social guarantee of salaried directors of companies

Salaried directors of SAs, SASs and SARLs, holding the following positions, can benefit from the GSC:

  • For public limited companies (SA): the President and CEO (CEO), the Chief Executive Officer (CEO), the members of the Board of Directors, the Vice-Chief Executive Officer (administrator or not).
  • For simplified corporations (SAS): the president and statutory managers (general manager and deputy general manager).
  • For limited liability company (SARL): the manager when he is majority or equal (minority managers who are employed can usually benefit from unemployment insurance).

The conditions for benefiting from the entrepreneur’s social guarantee

The above mentioned managers whose company has subscribed to the SGC can benefit from it under the following conditions:

  • for the executive corporate director, whether his term of office is revoked or not renewed;
  • if the loss of employment results from the liquidation or bankruptcy of the company or if it has been the subject of a judgment adopting a disposal plan;
  • if the loss of employment is the result of an amicable decision under economic constraint, resulting in the sale, early dissolution, restructuring or even incorporation by merger of the company.

If you combine a salaried job with a corporate office as a company manager, we highly recommend asking Pôle emploi to find out about your unemployment insurance status.

Only executives under the age of 59 at the time of subscription can benefit from the guarantee. The guarantee becomes effective 12 months after joining and a 30-day deductible is systematically applied.

The conditions for implementing the entrepreneur’s social guarantee in the company

In order for its directors to claim the benefit of the social guarantee coverage for the head of the company, the company must be affiliated to an employers’ union, itself affiliated to the SGC association (this association having been created by a group of employers’ unions: MEDEF , CPME, UP2).

Against payment of a contribution paid by the company, the manager will receive compensation calculated in proportion to his salary (two formulas: 55 or 70%) for a period of 12 months, extendable up to 18 and up to 24 months, depending on the age of the subscription.

The fiscal impact of the entrepreneur’s social guarantee

Subscribing to a GSC contract has a double impact on the tax front.

Impact on company taxation

The applicable rule varies depending on the status of the beneficiary’s manager. As far as the salaried manager is concerned, contributions are considered expenses and, therefore, are deductible from the company’s profit, as well as related expenses. Regarding the self-employed manager, there are two cases depending on whether or not he is within the framework of the Madelin law:

  • Madelin law framework: contributions are deductible up to 1.875% of taxable income (up to 8 times the annual pension ceiling with a minimum of 2.5% of the PASS.
  • Outside Madelin’s legal framework: taxation is the same as for salaried managers.

Impact of compensation received on executive income taxation

It varies by employee/non-employed status. With regard to salaried managers, the remuneration received is not subject to income tax or social security contributions. For freelance managers:

  • Madelin law framework: taxation of income tax and subsidies subject to social security contributions.
  • Outside Madelin’s legal framework: no taxes or social security contributions.

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