Bercy examined Article 5 of the Social Security Funding Bill (PLFSS) 2024 to reduce the amounts people can receive in advance of the employment tax credit. In this way, the planned deployment of the system in certain activities is ultimately postponed and the Government justifies this measure as a means to limit fraud. The Federation of Individual Entrepreneurs of France (Fepem) criticizes this decision, arguing its negative impact on the purchasing power of many households.
An immediate advance effective from January 2022
Specifically, the tax credit allows you to deduct from your income tax a portion of the expenses incurred for the remuneration of a cleaning professional, for example. The sum has a limit of 12,000 euros per year (15,000 euros if the household has two dependent children) and can only represent 50%, that is, a tax deduction that is generally around 6,000 euros in total.
Since the refund is only made the following year, the Government has launched since January 2022 a mechanism for immediate advance payment of the tax credit for several categories of activities such as cleaning, gardening, school support or caring for older children. 6 years old. For a personal service billed at 200 euros, the individual must pay only 100 euros and the rest is paid directly by Urssaf.
Therefore, article 5 provides for a maximum limit of 6,000 euros per year and Bercy intends to reduce it. “A new maximum limit of immediate advance payment will be set at 3,000 euros from 2024, limiting the advance payment to half of the tax credit and, consequently, the unexpected effect for fraudsters,” reads the document “Point on fraud of the advance payment of the immediate tax credit” published by Social Security in September and consulted by Le Parisien.
A fraud estimated between 3 and 5 million euros
“It is clearly an attack on purchasing power,” Marie Béatrice Levaux, co-president of Fepem, denounces to Le Parisien. When we discovered this government project, we were stunned. We are reducing provisions for individuals even though they have nothing to do with it. Fraud is the companies.”
According to the same Social Security report, this type of fraud would have involved an embezzlement of between 3 and 5 million euros in just over a year. Some estimate it at almost 10 million euros, since several companies issue real invoices even though the personalized service has not been performed. “Sometimes with the complicity of individuals,” specifies the Ministry of Economy.
Nothing officially confirms the reduction of the maximum limit yet, but according to the same report, 90% of households benefited from an annual tax credit of less than 2,500 euros in 2021, that is, about 1,200 euros on average. A figure that allows Bercy to justify that lowering the maximum limit to 3,000 euros would only force a minority of households to resort to their cash flow. With a maximum limit of 3,500 euros, 320,000 households would lose out.
“We have 3.3 million individual entrepreneurs, of which nearly a million have chosen the immediate advance,” explains Marie Béatrice Levaux. We must not break this dynamic by mismanaging individuals’ cash flow.” Initially planned for next year, the expansion of the immediate advance, particularly to the care of children under 6 years of age, is currently postponed until 2026; and in 2027 for beneficiaries of the personalized autonomy allowance (APA) and the disability compensation benefit (PCH).
Source: BFM TV
