Wage Portage Through an Umbrella Company in France
What is wage portage (portage salarial) in France? How does this scheme work and how can you do to join an umbrella company in France (société de portage salarial) ? What are the pros and cons of wage portage?
Definition: Wage portage (portage salarial) allows someone to work independently and find his customers on his own while being bound to an umbrella company (société de portage salarial) by a contract. The umbrella company (société de portage salarial) perceives the business incomes and give it back to the entrepreneur in the form of a salary, a net of social charges and management fees.
Working through an umbrella company in France can be a good alternative to working freelance (micro-entreprise). It is particularly true for businesses that don’t need huge investments or business premises like consultants or commercial agents, and in a broader perspective, any kind of sale of services.
Note that personal services (services à la personne) business aren’t allowed to enroll with an umbrella company in France.
How Does an Umbrella Company in France Works?
The “salaried-entrepreneur” (entrepreneur-salarié) searches for his clients himself. He has full autonomy to negotiate and quote his prices. He doesn’t receive the payments himself but asks his clients to pay to the umbrella company’s bank account.
A fixed term or permanent contract is needed between the worker and the umbrella company in France. It’s a specific wage portage (portage salarial) contract. If it’s a fixed term contract, it can be renewed twice, as long it doesn’t exceed 18 month in total length.
The “salaried-entrpreneur”’s (entrepreneur salarié) income depends on the sales revenue he gets from the umbrella company (société de portage salarial). Most of the times, it’s 50% to 60% of the sales revenue the entrepreneur brings back to the umbrella company in France (société de portage salarial). If one month the “salaried-entrepreneur” (entrepreneur salarié) has no sales revenue, his salary will be 0€.
As we’ve seen before, it is the umbrella company that presents an invoice to the entrepreneur’s client. This bill matches the service provided by the entrepreneur at the rate negotiated by the “salaried-entrepreneur” (entrepreneur salarié).
Pros and Cons of Joining an Umbrella Company in France
In France, wage portage (portage salarial) has a number of advantages:
- Unlike the freelancer status (micro-entreprise) joining an umbrella company in France gives you access to unemployment benefits. It’s a good thing in case you lose or have to stop your business. It is also possible to combine unemployment benefits with this status’ incomes.
- The salaried-entrepreneur is covered by the cooperative’s insurance.
- He is under the general regime for Social Security (régime général de la Sécurité Sociale) and has a mandatory health plan.
- Most of the times, the umbrella company provides the tools, software and apps needed to edit quotes, invoices, expense accounts or even keep accounts.
- Wage portage allows the entrepreneur to have all the freedom of action he needs. All without having to care for the administrative aspects of managing a business.
- Another advantage is that you don’t have to pay corporate property tax (Cotisation Foncière des Entreprises – CFE). This tax is mandatory for all the others legal status, including freelancing (micro-entreprise).
- Finally, you can move some of your business expenses to the cooperative (travel or accommodation expenses for example): even if they will be deducted from your wage, it allows you to save on social charges.
Like all the other statuses, joining an umbrella company in France can also have some disadvantages:
- You can only sell services if you work in an umbrella company in France. Craftsmen and traders cannot benefit from this status (however, they can join an employment and activity cooperative, which is similar).
- This is not a good status if your business has high growth potential, because you can’t hire, sign certain contracts or answer certain tender processes.
- The “salaried-entrepreneur” has no SIRET number (numéro SIRET) to his own name. Although he can use the cooperative’s, his activity has no real identity.
- The regulation regarding umbrella companies in France is unstable. It could evolve in the years to come (hopefully in a way that’s favorable to entrepreneurs).
- Wage portage faces competition from the freelancer status (micro-entreprise). Freelancing comes with no surprises and is at least as simple as joining an umbrella company in France.
How Can I Learn More About Business Entities in France?
If you have trouble finding the right status to start a business in France, it may be because you don’t have all the information you need to make an informed choice.
In that case, before even reading about other kinds of businesses, you need to work on your project’s business and financial plan. Our Excel financial and business plan template is here for that, all free and ready to download!
Once you have all the information about your project written down, you can find which business status matches it the best by reading our articles about starting up in France:
Don’t forget to check our overview of legal statuses in France.
You may also want to know what a simplified joint-stock company (SAS) is…
And don’t forget to read about french sole proprietorships!
And finally compare wage portage with employment and activity cooperatives!