New French Social Security Laws – coming into force July 2017

Seminar on the French Social Security Decree, Monaco

On the 18th May 2017 there was a seminar in Monaco to discuss the recent decree regarding French Social Security payments for seafarers.

GEPY, PYA and IYM hosted the tri-association seminar in which a panel of experts addressed many unanswered questions that the yachting industry has on the subject. This was the first time that representatives from the French government had liaised with our sector in this way, so the answers relayed from this seminar were directly ‘from the horse’s mouth’.

The guest panel included:

• Patrick Chaumette (Professor of Maritime Social Security and Law at Nantes University)

• The lawyer for ENIM (the mariners’ social security regime)

• Representatives from Direction des affaires maritimes (DAM)

The agenda covered the following:

• Brief overview of facts and issues, including ILO maritime conventions, MLC 2006, explanation of the decree, the difference between residence and domicile.

• Questions and answers – the three associations have spent the past weeks collating many of the questions from our members. These have been submitted to the government representatives were present on the day, so that accurate answers can be prepared.

For more information on the conclusions from this event. please contact the PYA www.pya.org

Overview:

The impact of MLC 2006 continues to surface and France has now brought its social security laws in line with the mandatory requirements of the Convention.

Decree no 2017-307 of 9 March 2017, which comes into force on 1 July 2017, sets out the obligations for both yacht owners and yacht crew in respect of Standard A4.5 (paragraph 3) and Regulation 5.3 (paragraph 1) of MLC 2006.

This allows just enough time for yacht owners and crew to get their financial affairs in order, but we expect further revisions in the future as France moves to fully meet all of its obligations under the Convention.

Together with a major maritime law firm, Lesia Employment Services has studied the Decree and developed a summary sheet and flow charts to guide yacht owners and yacht crew to navigate this piece of legislation and arrive at the best solution for their particular circumstances. 

Key Points of the New French Social Security Legislation 

• All seafarers, irrespective of nationality, resident or otherwise domiciled in France, will be required to make social security contributions to ENIM, the French mariners’ social security agency.
• Seafarers who are making social security contributions to an official agency of another country (which is an EU Member State or a State which has a bilateral social security convention with France) will not be asked to make contributions to ENIM. They may, however, be asked to provide evidence that contributions are being made. 

• Non-resident Employers of seafarers who are required to make social security contributions in France will need to provide a “bond of guarantee” from a bank, failing which a “security deposit” will be payable to ENIM in accordance with the published contribution rate.
• Non-resident Employers may appoint a French-based agent to act on their behalf to make their contributions to ENIM.

• Where a monthly computerised declaration is being made, the declaration must be made by the 25th day of the month, following the month in which the seafarer performed the duties. Where the declaration is made on a quarterly basis, the declaration is to be made by the 25th day of the calendar month following that quarter.
• The penalty for late payment of contributions is 0.5% for each day of delay, calculated on the amount of contribution owed.
• Failure to pay the contributions could constitute a criminal offence and ultimately lead to the arrest of the yacht.
• In accepting the contributions of the employer and seafarer, ENIM will provide the seafarer with health/medical care and retirement benefits.
• ENIM will provide a full retirement pension when the seafarer has completed 25 years of contributed service and is at least 50 years old. The pensionable age shall be 55 years old, upon request, if the seafarer has completed less than 25 years of service.
• Seafarers completing at least 15 years of contributed service will qualify for a pro-rata retirement pension; however this cannot be taken until the seafarer has reached 55 years of age.
• There are provisions to pay retirement benefits to certain family members in the event of a seafarer’s death. 

– See more at: http://www.onboardonline.com/industry-article-index/legal-and-finance/new-french-social-security-laws-implications-for-yacht-crew-and-owners/#sthash.DsVax5kh.dpuf

Comments:

• Comment by: John Cook – 03/04/2017 9:19am (1 month ago)

Hello Emmanuel, Thank you for your follow up comments. Firstly I must stress that the following does not constitute legal or tax advice. There are four main residency tests in France. 1. It is the habitual abode of you and/or your family. 2. It is your principle place of sojourn. 3. It is the centre of your economic interests. 4. It is the centre of your business interests. You only have to meet one of the four to be regarded as resident in France. If the four tests are inconclusive there are other factors that will be taken into account and considered. Seafarers are in a very unique position in that they can pay their income tax to one country and social security to another. Any advice that you get from your tax adviser will of course be relative only to you. Each individual case must and will be judged on its own merits. ENIM are in the process of holding implementation meetings to determine how to apply the Decree, so we will know more once those meetings are completed. John

• Comment by: Emmanuel Martin – 02/04/2017 5:44am (1 month ago)

Hello John, are you sure about fiscal residency and social residency? To pay income tax in France, you have to meet at least with one of the following: *Live in France more than 183 days per year or *Work in France or, this is where it gets interesting, *Have in France your main financial investment. So, even if you live 1 day per year in France, do not work in France but have your main financial investment in France, you have to pay income tax in France. Therefor, my questions remains, if you are a fiscal resident in France, does that make you a social resident? I believe these are two complete different definition of the word ‘resident’. Regarding income tax, Poland has similar laws than France. Since both are EU countries, i cannot pay income tax twice and, my choice goes to France as income tax is much cheaper in France than it is in Poland. Weird, but i live less than 183 days in Poland, yet again, i live more in Poland than in France, i work at sea, my earnings are from abroad, and i own more properties in France than in Poland…I will keep you posted, i am awaiting the final answer from my Tax attorney, but, nevertheless, i believe this decree talks about social residency and not fiscal residency. Lets say you are a Dutch national, work 200 days in France on a yacht based in Cannes, pay your income tax in the Netherlands and do not pay any social contribution in the Netherlands, i believe, you will then have to pay social contributions to ENIM as this makes you a social resident of France.

• Comment by: John Cook – 27/03/2017 3:47pm (2 months ago)

Hello Emmanuel, Thank you for the email. If you are paying income tax in France it means you meet the residency requirements of that country. You would not be paying tax in France unless you are resident there, unless there has been a misunderstanding between you and the tax office. If you are truly resident in Poland you should be paying income tax to the Polish tax office.

• Comment by: Emmanuel Martin – 27/03/2017 9:46am (2 months ago)

What is the definition of resident? I pay my income tax in France but i live in Poland. Does that make me a resident in France? This decree only talks about residency without specifying your fiscal residency. I cannot find any definition of residency within any french laws. Please advise. Thank you.

• Comment by: John Cook – 21/03/2017 5:22pm (2 months ago)

Hi Dick, The legislation applies to ALL seafarers resident in France, irrespective of the activity of the yacht.

• Comment by: Dick Howell – 21/03/2017 2:00pm (2 months ago)

Hi, is this for commercial yachts only?

• Comment by: John Cook – 21/03/2017 12:13pm (2 months ago)

Thanks for the question Kevin.The sentence “All seafarers, irrespective of …” is the same as your quote from the Decree. The term “French resident seafarer” means any seafarer that meets the residency requirements in France. This does not mean French nationals that are resident in France, it means all seafarers resident in France. This is in keeping with the obligations France has as a ratifying country to MLC, 2006.

• Comment by: kevin autiere – 20/03/2017 12:32pm (2 months ago)

Are you sure about “All seafarers, irrespective of nationality, resident or otherwise domiciled in France ?” The first part of the Decree is “gens de mer marins résidant en France et embarqués sur un navire battant pavillon d’un Etat étranger, non soumis à la législation de sécurité sociale d’un Etat étranger” meaning, just the French resident seafarer are concerned by the new decree. link: official gouvernent website https://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000034165297&dateTexte&categorieLien=id