Self-employed in France ©Kzenon

The French government introduced measures aimed at reducing the taxes and financial costs of running being self-employed or running a small business in France. The system has evolved and a new law introduced further changes in 2015. While in 2016 the name was changed to micro-entrepreneur, you may still come across websites and printed forms referring to it under it’s original name of auto-entrepreneur.

It is important to note that the term micro-entrepreneur (formerly known as auto-entrepreneur) is the usal term for the régime micro-social. It is not a legal form (the legal status is still that of the entreprise individuelle), but a simplified reporting system and payment of contributions and social charges by a proportion of turnover, according to the principle of “no turnover, no dues”.

Prior to the auto-entrepreneur new status, a small business was charged a maximum fixed percentage of their turnover in social charges. The micro-entrepreneur (formerly known as auto-entrepreneur) system charges small businesses a “pay-as-you-go” percentage of their actual turnover in social charges and French income tax instead.

An improvement in the business registration process also resulted in (relatively) less cumbersome paperwork for small businesses. The regime, which came into force on the 1st January 2009, was adopted by providers of services, including those that are commercial in nature, such as sales, bar/restaurant and accommodation owners. It also applies to independent professionals, including some ancilliary health and well-being professionals, paralegals, surveyors, accountants, consultants and other entrepreneurs.

Social charges or cotisations et contributions sociales obligatoires:

Under this regime, social charges are based on actual earnings, calculated from previous months’ turnover submitted by the business owner. Those whose business activity is service-based should expect to pay 22,9% of their annual turnover if professions libérales attached to the Cipav, or 23.1% for artisans attached to the RSI, whilst those providing a more commercial business will pay 13,4%. It should be noted that failure to submit a declaration may incur in fines and a zero-revenue declaration for 24 consecutive months may trigger the loss of the micro-entrepreneur status.

 

Turnover ceiling:

The micro-entrepreneur (auto-entrepreneur) is not registered for VAT and limits are placed on annual turnover: €82,200 for commercial businesses and €32,900 for service professionals and artisans. The regime has fewer restrictions on those working from home, and is particularly helpful to the self-employed, or as a seconday income, including British expats or retirees looking to make a little extra income from home; in the previous system they would have faced high social charges, with a yearly increase for the first three years, regardless of whether any income had actually been made.

How to sign up:

The auto-entrepreneur status is conceived as an additional or secondary tool so it is not suitable for an existing micro-entreprise to transfer to auto-entrepreneur status. It is also not for people who want to form a company (such as a Sarl or SA). The process of registration is straightforward. There is no requirement to register as an enterprise other than by completing a form available at the local chamber of commerce (CFA) or online. A further information kit with registration details and an example of the form can be found on the auto-entrepreneur website.

What changed in 2015

The Loi Pinel Under pressure from registered tradesmen (particularly from the building trade) the Autoentrepreneur system will be brought closer in line to the requirements that artisans have to comply with in their businesses. The micro-social (auto-entrepreneur) and the micro-fiscal régimes are blending into one, the “micro-entreprise“. What changes in practice?

  • All micro-enterprises will have to pay the CFE cotisation foncière des entreprises. The 3-year grace period that was gradually being phased out is no longer applicable. (Check your activity because some are exempt from CFE).
  • All micro-entreprises will pay the frais de chambres consulaires. Formerly autoentrepreneurs did not have to pay this fee. It amounts to 0,044% of gross turnover for services, 0,015 % for resale of goods and 0,007% for artisans registered in the Répertoire des Métiers (RM).
  • An additional tax to the Cotisation Foncière des Entreprises (CFE) of 0,48% if gross turnover for services, and 0,22% if resale of goods.
  • Micro-entreprises may opt at the end of each year for a minimum charges package (pack de cotisations minimales) to guarantee the validation of their 4 trimestres for retirement calcuation purposes. As a guideline, the minimum charges valid on 2014 are 1,600 € for artisans and commerce and around 2,100 € for independent professionals (professions libérales).
  • In the case of artisans, the professional qualifications must be mentioned on all estimates (devis) and invoices (factures) as well as the mandatory 10-year insurance (decennale) with details of validity, geographical area and contact information of the insurer.
  • For new artisans, the 4-day SPI training session (stage préalable à l’installation) in the Chambre des Métiers is now mandatory. There is a fee involved, check with the appropriate chamber for your area.

What changed in 2016

  • The name: auto-entrepreneur becomes ‘micro-entrepreneur’
  • A reduction on maternity rights in case of low turnover
  • A slight increase in micro-social contribution percentages

 

For more information visit www.lautoentrepreneur.fr for further details of the taxes and charges involved or download the guide in PDF format.

This article is for general information purposes only and does not constitute legal, or other professional advice. We advise you to seek professional advice before acting on this information.

Source: Myae.fr, Net-iris.fr, Service-public.fr

End of CFE tax exemption for autoentrepreneurs