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Collection of social security contributions from a sole trader's personal assets

Published on September 04, 2023 by Pierre Belhache - 3 mins reading time
Professionals Procedures Urssaf Self-employed

A recent clarification has been made concerning the threshold for recovery of social security contributions from a sole trader's personal assets in the event of serious and repeated non-compliance with social security obligations.

Details of the new legal status for entrepreneurs

The law of February 14, 2022 created a single status for individual entrepreneurs, phasing out the status of limited liability entrepreneur (EIRL). As of February 15, 2022, it is no longer possible to create an EIRL. Effective May 15, 2022, the new single status for sole proprietors applies to all new sole proprietorships, and takes over the advantages offered by the EIRL.

The main advantage is the separation of personal and business assets. In effect, the entrepreneur's personal assets become exempt from seizure by professional creditors, whereas previously only the principal residence was protected.

However, there are exceptions to this principle. For example, when an entrepreneur has committed fraudulent maneuvers or serious and repeated non-compliance with his social security obligations, thereby preventing payment of the social security contributions he owes, the debt-collection agencies can take legal action against him on both his personal and professional assets. The only condition is that the amount of social security contributions concerned must exceed 1,000 euros.

What situations constitute "serious and repeated non-compliance"?

The Social Security Code lists the situations in which serious and repeated non-compliance is observed:

  • Non-payment or partial payment of contributions by the entrepreneur of at least: 2 of the last 4 half-yearly instalments, 2 of the last 8 quarterly instalments, 6 of the last 24 monthly instalments, 4 instalments of a contribution payment plan or schedule;
  • Failure to file or improper completion of at least 2 social declarations (nominative social declaration, income tax declaration, sales declaration, etc.) within the last 4 years in accordance with the conditions laid down by law;
  • The fact of having committed a breach of Social Security legislation identified as a result of controls or verifications which led to observations without adjustment or to definitive adjustments.

Thedecree of July 17, 2023 allows social security bodies to claim payment of contributions due on all the entrepreneur's assets and rights in the event of serious and repeated non-compliance, provided that the amount of social security contributions due exceeds 1,000 euros. In this case, the entrepreneur's personal assets are liable without limit. Certain actions on the part of the company director therefore blur the boundary between his personal and professional assets.