Small business owners who use the micro form of business tax status pay flat-rate social security contributions based on turnover, not profit.
These flat-rate contributions include a portion allocated to pension rights, subject to a minimum level of turnover per accounting period.
In a case recently heard in the Paris Court of Appeal, a micro-entrepreneur contested the basis on which their pension fund, the Caisse interprofessionnelle de prévoyance et d’assurance vieillesse (CIPAV), had calculated their pension.
CIPAV has historically been responsible for the social insurance of many of the liberal professions. However, since 2018, most micro-entrepreneurs have been affiliated to the general insurance scheme, rather than with CIPAV.
The central legal question before the court was on what basis should retirement points for micro-entrepreneurs be calculated?
CIPAV had relied, for certain years (2009–2015), on turnover reduced by a fixed 34% allowance applied for income tax purposes.
The claimant argued that this method was unlawful and that gross turnover (chiffre d’affaires) should be used instead.
The Paris Court of Appeal ruled decisively in favour of the claimant. It held that the legal framework governing micro-entrepreneurs requires contributions to be calculated on actual turnover, not a notional or adjusted income figure.
Consequently, retirement points must be determined using the same base.
CIPAV had justified these reductions by claiming that the state did not provide the required compensation for micro-entrepreneurs. The court ruled that this lack of compensation could not justify reducing contributors’ rights. CIPAV was therefore ordered to recalculate and retroactively credit the missing points.
This decision follows years of administrative dysfunction and errors by CIPAV, where quarters of contributions were not accounted for or were undervalued, depriving self-employed individuals of their full entitlements.
However, the decision does not mean that CIPAV will now recalculate the pension rights of all its affiliates. Those who consider that their pensions rights have been underestimated will need to challenge the calculation directly with CIPAV and, if necessary, pursue legal action.
To that end an effective association of CIPAV members, called, CIPAV.info, offers access to a panel of specialised lawyers and legal fees may be covered by legal protection insurance.
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