French Social Security Laws: what you need to know.
Regardless of whether you are a yacht owner, a new crew member or a seasoned professional, the latest piece of French Social Security legislation for Mariners is something you need to get up to speed with.
Potentially one of the largest changes-in-law to affect the yachting sector in years, it has been a major subject of discussion in management offices and crew messes up and down the coast this year. The new laws are due to come into force on July 1st, meaning that if you’ve not made preparations already now is maybe the time to start panicking!
The legal stuff
Decree no 2017-307 of 9 March 2017, which comes into force in France 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. France is essentially bringing its own laws into line with what is set out in the Convention and is one of the first nations to do so.
So, what does this mean? Well, the official MLC line in question is as follows:
5.3 (1) Without prejudice to the principle of each Member’s responsibility for the working and living conditions of seafarers on ships that fly its flag, the Member also has a responsibility to ensure the implementation of the requirements of this Convention regarding the recruitment and placement of seafarers as well as the social security protection of seafarers that are its nationals or are resident or are otherwise domiciled in its territory, to the extent that such responsibility is provided for in this Convention.
What this essentially amounts to is an obligation on the behalf of ship owners and seafarers to make some sort of social security contribution when stationed in France for over 182 days in a year- either to the French system or to their home systems. This kind of makes sense on an ethical level and is a bit of a kick up the backside for those crew members who don’t have their taxes in order and who wish to remain working on the Riviera.
However, the main issue for yachts operating in French waters is that this is very much a ‘one size fits all’ approach to a niche industry which is as diverse as it is glamorous. Each yacht’s operating policy is different from the next, and the multitude of nationalities which can make up a single yacht crew could cause a real headache for anyone trying to understand the implications of this new social security requirement.
Who is likely to be affected by this?
The PYA, Hill Robinson Yacht Management and a whole host of other French yachting businesses have been working tirelessly to make sense of these changes and to prepare the industry for the coming months.
First, it’s important to understand just how applicable to the yachting industry this legislation is. It is generally recognised that crew and yachts will be subject to these changes in France if one of the following situations occurs:
A. The yacht spends ‘significant time’ in French waters over a calendar year; significant being defined as more than 181 days (remember that!)
B. If the crew member is a French Resident, which is a little more applicable to yacht crew than it sounds. To put it (quite) simply, you are a French Resident if one of the following applies to you.
Your home is in France – which generally speaking applies if your family home is on French soil, meaning French workers with a spouse or children at home in France can still be taxed if they work abroad. Captains – take note!
Your principle place of abode is in France. If you spend the majority of your time (over 181 days in a calendar year) on French soil, even if it’s in a hotel, or on a superyacht at anchor off Villefranche, this rule applies to you.
You engage in a business activity constituted in France.
You have a Centre of Economic Interest in France. This could be your main investment activity or perhaps apply to you if France is the place you generate most of your income.
ENIM: Who are they and what is their role?
ENIM is the French Mariners Social Security Organisation, a kind of trade union for seafarers, and is spearheading the move towards better social security for French sailors. The scheme is designed to cover members of ENIM for eventualities such as maternity, accidents, death & disability, which for some French nationals in the commercial maritime sector is an attractive proposition. The blanket coverage of these laws across the wider marine sector means that the yachting world in France is going to need to adapt for the benefit of the larger body of sailors hailing from La Republique.
The requirements of ENIM are similar to any social security scheme you would find across the globe. Employers should submit pay declarations and the related contributions at the end of each month, and new employees are to be registered with the scheme upon commencement of work in France, with proof of nationality submitted accordingly.
How will the ENIM charges work?
No one is entirely sure…yet. The exact percentage to be levied and paid by employers and employees has yet to be announced, but it is presumed that they are likely to be calculated on average salary bands across crew rankings. (Captain, mate, deckhand etc.)
The process that yachts will have to follow, however, has been sketched out recently during talks held at the very official-sounding “Tri Association Seminar”, held in Monaco in May (which was somewhat ironic, as of course Monaco will not be affected by any of these legislation changes).
Captains, owners and yacht management firms have been advised that the following sequence of events will form the ENIM submission process:
1. The employer will need to provide crew details, including the salary of those who are residents of France.
2. ENIM will calculate the monthly contribution and multiply it by six and this will be security deposit to be paid by the employer.
3. This process will be repeated every six months, with leavers and joiners being taken into account.
4. Statements need to be submitted on 25th of each month.
5. Late payment of contributions will incur a 0.5% penalty for each day of delay, calculated on the full contribution owed. Ouch!!
Is there a way to avoid being registered for ENIM?
If you do qualify as a French resident, but are registered and contributing to another social security or national insurance scheme in your home country, then you have an obligation to (and you should) declare it to ENIM before July 1st. You’ll need to provide proof of regular NI payments over the course of a few months: and while we don’t think you can register last-minute and pay a single contribution in order to gain an exemption, we would be interested to hear if anyone has been able to do this successfully (of course, if this is your approach to managing your taxes then it’s probably best to remain quiet!). On the other hand, some sources seem to think that proven history of NI contributions is less important, and you are only required to opt to pay into one or the other by July 1st.
What we do know is that “this offer has been extended to seafarers who are currently 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).” These seafarers will not be asked to make contributions to ENIM.
Perhaps more cryptically, EU social security harmonisation across member states means that, if another EU scheme is already in place and being correctly complied with, the new decree would now supersede it. If you don’t know if that applies to you or not right away, the odds are that it probably doesn’t.
What are the real-world effects of this legislation going to be?
Well, first and foremost if you’ve missed the July 1st deadline for getting your tax affairs in order then you will need to register for ENIM immediately before deciding what to do next.
The yachting industry in France has been extremely vocal about the obvious economic impact of this legislation across the local sector, as it is likely to reduce the number of yachts basing themselves in France, and thus have a knock-on effect on local yachting businesses. It may also, of course, make yacht owners and captains less keen to hire French crew or indeed French residents- which could directly impact the way agencies like us operate as we vet candidates for our clients. Antibes is (currently) the centre of the crew-agency world, but it would make for strange times indeed if experienced local candidates suddenly became few and far between…
You might also think that Italian and Spanish yachting businesses have been rubbing their hands together at the news, and we are seeing large yachts gravitating towards places like Barcelona and Genoa in recent years, but it is likely that this change in France will expand across the EU in the not too distant future.
The legal challenge to ENIM, which has been bought by Hill Robinson Yacht Management and Ince Law, is unlikely to achieve a favourable ruling in the short term, and therefore it may be some time before the social security system adapts itself to the yachting sector.
Are there any benefits to the changes in law?
In chairing the Monaco Tri-Association seminar between the PYA, GEPY and Italian Yacht Masters associations, Norma Trease raised a valid point: the point of ENIM is to bring social security benefits for professional mariners into line with those enjoyed by shore-based employees in France and in nations further afield. Crew members who are genuine French residents would enjoy real, tangible benefits such as health care, maternity cover and improved employment rights under the provisions of the scheme. As mentioned earlier, it’s likely that this law will become the norm across the EU in a matter of years – so from an employee’s point of view it would be beneficial for everyone if this became the norm, rather than a thorn in the heart of the industry as it seems to be viewed as for now.
Perhaps the sudden, urgent, requirement for better management of financial affairs might prove useful to crew members who traditionally have buried their heads in the sand as they’ve travelled the world ‘tax-free’, without consulting any professional crew tax advisors on what the best way to handle their money might be.
It may also be the case that those experienced crew seeking work, who have taken the time to address the tax issue and can prove that they have their tax affairs in order (whilst making social security or NI contributions) could immediately be appealing to a potential employer looking to fill a position…
I feel depressed, what’s next?
In summary, the real thing to consider here is that this legislation is in a very early stage of implementation, and developments are announced almost every day. If you think that you might be affected by the French Social Security changes, then you should keep abreast of what’s going on and make sure you are following the advice of professional tax advisors like CrewFO, or the dedicated financial experts at your yacht’s management company. After all, there are only two constants in life: death, and TAXES!
NOTE: The information provided in this article is a guide only and its contents do not constitute legal or tax advice.