Nice for you that you agree with it but for many landlords it was a big change if they weren’t already earning over the 9000 odd euros a year threshold from employment (though they could be paying cotisations on part time employment of less than that), so naturally they wouldn’t be happy. French rental income was already subject to 15.5% social charges (gone up to 17.2% this year and doesn’t entitle you to anything and you don’t get the 9000 odd allowance for those) and this rule added another 8% to that for some people.
I’m not sure why you’d think the rentier in your example would pay no cotisations in the past as they’d need to be paying in order to have healthcare - whether through part time employment/small business income or being in the CMU (in which case they would have been paying the same as now anyway if all their income was rental income as it’s all still liable to the same extent it was before).
The French landlords forum was the first place I saw a reaction to it but it’s affected many Brits too, who were running small businesses and getting healthcare that way and are now liable to pay extra cotisations on rental income - including UK rental income, which isn’t normally subject to social charges. Those who were early retired and only had pension income saw a reduction in healthcare cotisations because under PUMa, only capital income is subject to the charge.
If you’re considering what is fair, is it fair that someone could earn 10000 euros per year from earned income and 20000 from rentals but not pay the extra 8% on that 20000 when someone else who doesn’t meet the right threshold for earned income pays 8% extra on that 20000 now? It’s obvious to me why people who went into the landlord business before the rule change won’t be happy and it’s only going to get worse when the new rule about higher habitation tax comes out for certain areas, for people doing short term rentals. Being a landlord in France is looking at not being such a good deal in future as it has been.
I could understand your position if the artisan with the same rental income as the part time worker/small business owner paid the same cotisations overall for the same income but they wouldn’t - the latter would be paying more. They could have exactly the same income altogether but the artisan’s healthcare cotisations would only be charged on his earned income whereas the other person would be paying it on both earned and rental income.
I think if you do the sums you’ll find out that in your example, they pay around the same.
Your self-employed worker earning 10,000€ will have paid around 4,000 in cotisations, using the rule of thumb of 40% of profit or 20-25% of turnover. Your rentier will have paid 15% CSG on 20k= 3,000 plus 8% on 20,000-9,000 which is around 880€. I don’t see how you work out that the rentier would pay more?
The threshold you need to meet for earned income in order to not pay cotisations subisidiaires is very low. You only pay full cs if you earn less than around 2k a year, ie you’ve contributed under 500€ which is a ridiculously small amount for anyone not on a low income. Between 2k and 4k of earned income, your cotisations on that are taken into account.
Maybe you don’t realise quite how much the average full time worker contributes over the year.
If you earn less than 4k income you pay 8% on all capital income over 25% of PASS (on top of the tax and 17.2% social charges already charged on the whole lot) with a deduction for what you’ve already paid for the healthcare part of your earned income cotisations. The full time worker cotisations you quote aren’t just to cover healthcare are they? They cover things like sickness cover, maternity cover, unemployment insurance, pension cover. The 8% of capital income only covers you for healthcare and the csg/crds etc (social charges which have just gone up to 17.2%) entitle you to nothing.
Also, it’s global capital income that is liable for the 8% - so even rental income that isn’t taxable in France (nor liable to social charges) is taken into account. Also capital gains that you’ve already paid thirty odd per cent in tax and social charges on.
No, self-employed workers don’t pay unemployment insurance and they have no chômage entitlement. Some activity categories are entitled to a minimal amount of sickness cover and some aren’t, profession libérale for instance have no sick pay entitlement. Maternity entitlement yes, pension well it depends how much you earn. Also there is a small professional training contribution, also CSG contributions is included in that.
OK, I agree your rentier probably pays more than I realised. One could argue that it’s a lifestyle choice but I guess in some cases it isn’t really. The trouble is that there are so many different sets of circumstances, it’s impossible to legislate even handedly for every possible combination. I do think without a shadow of a doubt there was abuse under CMU with people (French and Brits) setting up unprofitable businesses solely as a cheap route to healthcare, so there were households with a very decent income were paying cotisations of literally a few hundred euros. PUMA has closed that off which is good. But as you point out it’s now created other inequalities, which is not good.
You were comparing an employee and their level of contributions when they include all those things I listed to what a part time worker or small business owner (with less than 4k income) would pay and I meant that the 40% you quote wasn’t directly comparable - only the bit they pay that covers healthcare (no idea what that is).
I agree with all the rest you said but you can understand why the change might be upsetting for people who had already gone down that route and then had the goal posts moved.
A lot of Brits who may be perceived as starting a business to get cheap healthcare may be those who had no choice when Sarkozy changed the rules about access to the CMU and said everyone had to have private healthcare for their first five years of stay if not working or running a business. It’s been sorted now (happened between 2007 and 2015 and I agree anyone who did it after that may be suspected of going the cheap route, if not accepting out of date advice) but it’s a shame for some of them who have since lost access to a UK S1 on reaching retirement age because France has now become their competent state because they were active here. So instead of getting free healthcare along with their OAP they now pay social charges on their early retirement pensions that they wouldn’t have paid if they’d just been allowed to join the CMU in the first place.
A lot of these had no choice as they couldn’t get PHI which was accepted by France as comprehensive healthcare cover as per EU rules because of pre-existing conditions. Not to mention it’s very expensive. At least in Spain PHI is reasonable - and Spain accept that it fulfils the EU rules even if it excludes pre-existing conditions. They do require it for the first year of residence though (which probably breaks the EU rules just as much as France’s insistence on 5 years did).
No I wasn’t talking about employees. Apparently employers pay 13% of salary for healthcare, sick pay, maternity and death, I’ve never seen that broken down into a percentage for healthcare alone but I imagine healthcare is by far the largest component.
http://www.cleiss.fr/docs/regimes/regime_francea2.html
Likewise out of the 40% that a typical self employed worker or small business pays, I imagine most of that will go towards healthcare but again I’ve never seen a breakdown. The contributions for training, CSG etc are tiny fractions of a percent.
There’s also the question of contributions towards CAF, which I don’t think those who only pay cotisations subsidiaires will pay anything towards although they could well qualify for family allowances.
A tangled web…
I had no idea anyone paid contributions towards CAF specifically.
I’m just glad I didn’t rush into running a gite via a business structure before this change came in. It’s a pain chasing up my ex for him to chase up HMRC for an S1 renewal each year (and having a period without cover as they never get it here on time before my carte vitale is stopped by CPAM) and I was going to do something like that to resolve that problem but I’m going to be very careful now to do my sums to make sure I’d have enough income to be sure I don’t end up paying 8% of my foreign rental income. I could be better off just doing it without a business structure and just gritting my teeth over the annual stress over S1 renewal.
So in my case, France may have got some contributions that they won’t now (as we don’t use the system much in our case it would have been money for nothing 
) and maybe not even social charges as I may give up the idea of going down the rental income route here altogether.