Setting up your French business as an Auto-Entrepreneur

You might have heard an Auto-Entrepreneur in France referred to as a ‘Micro-Entrepreneur’ or ‘Micro-Entreprise’—all of these terms refer to the same status. The former Auto-Entrepreneur status was renamed ‘Micro-Entrepreneur’ in 2016, which is now the official term. However, you will still hear many French people and even official sources (including the Auto-Entrepreneur website itself) refer to it as ‘Auto-Entrepreneur’.

Read more about the changes in our article the former auto-entrepreneur becomes ‘micro-entrepreneur’

If you are thinking of setting up a small business in France, the status of Auto-Entrepreneur (literally self enterprise), is the simplest way of starting off. It offers several important benefits:

Creating your business as an Auto-Entrepreneur in France is, by French standards, relatively simple and can be done quickly. However, you need to check that your proposed activity is not one that is excluded from this status and also carefully choose the category of activity that applies. You are not required to do a preparatory business course. However, some activities may require the appropriate qualifications or proof of experience.

For your social security contributions, it puts you into a pay-as-you-go system on a flat rate, so you avoid hefty unexpected bills appearing. There is no minimum contribution, so if you earn nothing during a period, you pay nothing. You can also opt to pay the income tax on your activity in the same way.

In most cases, you don’t need to maintain full accounting procedures, just a simple record of what has been paid in and paid out. Up to certain thresholds of turnover, you don’t need to handle VAT (TVA). Also, you are not obliged to have a separate professional bank account for your business if you have not exceeded an annual turnover of 10,000€ in two consecutive years.

The status of Auto-Entrepreneur in France is limited to a maximum turnover, which depends on the type of activity. (The figures given here are those published for 2021.)

72,600€ per year for supplying services, or selling your own creation of products.

176,200€ per year for buying and reselling products.

176,200€ per year for supplying accommodation (holiday rentals or B&B).

You can combine two categories under one business.  You will declare the turnover of each part separately and they will be treated slightly differently – see below. The overall threshold of turnover applied will be that of your principal activity (largest turnover). A tolerance on the separation is usually accorded if you clearly have a principal activity and are just occasionally stepping over into another category.

You are not required to handle VAT (TVA) if your turnover is less than :

34,400€ per year for supplying services, or selling your own creation of products.

85,800€ per year for buying and selling products.

85,800€ per year for supplying accommodation (holiday rentals or B&B).

This is known as “franchise de base en TVA”. You don’t add VAT to your invoices and you don’t claim back any VAT on your purchases.

As opposed to a classic self-employed business as an Entreprise Individuelle, your social security contributions are based simply on your turnover in a given period (the invoice payments that you have received). You can choose to declare this at the end of each month or each trimester (every three months). This is done on the social-security website.

A flat-rate deduction is applied to your turnover to represent your expenses :

34% for supplying services, or selling your own creation of products.

50% for buying and reselling products.

For supplying accommodation, the deduction is 50%, unless you have obtained an official star-rating, then it is 71%.

For your social security contributions, you pay a flat rate on the amount left after the above deduction :

22.1% to 22.8% for supplying services (depending on the exact activity).

12,9% for selling your own creation of products.

12,9%  for buying and selling products.

12,9%  for supplying accommodation (holiday rentals or B&B).

You will also benefit from a reduced rate in your first year of activity.

 

For your income tax, you declare the amount of your turnover on your annual tax form as either BNC or BIC, depending on the activity. However, you can opt to pay your tax at a flat rate along with your social security contributions. This is possible if your total declared income for year N-2 (for example in 2019 for 2021) was less than 27,795€ for a single person or 55,590€ for a couple. The flat-rate tax (impôt libératoire) is then :

1,7% for supplying services or selling your own creation of products.

1%  for buying and selling products.

1%  for supplying accommodation (holiday rentals or B&B).

2% for an activity classed as libérale (generally the activities relying on intellectual expertise or specialised qualifications).

You will also have to pay the CFE tax annually (Contribution foncière des entreprises). This is based on the notional rental value of the building space that you use for your activity. You will declare the details of this when you set up your business. This includes working from home, but in most cases, you will be taxed at the minimum rate applied by your local authority. If you have an annual turnover of less than 5,000€ you will not have to pay this tax.

You can find a full list of the allowed activities on the Legal Start website. Here are the main exclusions that you may need to know about:

• Agriculture and associated businesses, including market-gardening, pet breeding, gardening, and landscaping (unless small-scale work as part of a group of maintenance services), supplying accommodation (B&B or gite) when closely related to the farm setting.
• Artists whose production implies author’s rights (books, music, films, paintings, photos and graphic work). However, a secondary function associated with an artistic activity, for example a photographer who offers to re-touch photos, or a musician who offers private teaching, can be registered as an Auto-Entrepreneur in France, but solely for this part of the activity.
• Those working in live entertainment on a contract basis, known as intermittent du spectacle.
• Activities related to property transactions (real-estate); estate agent (other than an apporteur d’affaires bringing in sellers or buyers to an agency), property dealer (marchand de biens), or property developer (promoteur).
• Medical professions; nurse, doctor, nutritionist, psychiatrist, vet, and any therapies which are regulated (physiotherapist, speech therapist…). Certain activities related to medical practice are permitted; psychologist, hypnotist, massage, acupuncture, sophrology…)
• Accountants, and independent insurance agents.
• Legal professions; lawyers, bailiffs, jurists, auctioneers.
• Operators on the financial markets.
• Journalists.

It is best to consult the CFE (Centre de Formalités des Entreprises) that relates to your sector of activity (see above) to be sure that your qualifications or professional background allows you to set up your business. Here are some typical examples :

In general, a builder, or an associated trade or profession, requires an adequate diploma, but as an alternative, you can offer proof of at least three years experience. However, a person offering maintenance services that do not involve the fabric of the building does not need any qualification or experience.

An estate agent directly handling property sales transactions or long-term rentals requires the corresponding qualification and a carte professionnelle. A salaried or freelance agent working for the agency may need appropriate experience and must be registered with a specific official body (régistre des agents commerciaux). However a freelancer finding properties for sale, or introducing buyers to the agency (apporteur d’affaires), or simply helping with English language communication (prestataire en communication), can legitimately slip through the net.

As you would expect, all medical or legal professions require an equivalent qualification recognised in France.

Firstly, check that your chosen activity is allowable as an Auto-Entrepreneur and any required qualifications or experience.

For simplicity, France is moving towards a one-stop operation on a single online system, whatever your sector of activity. You can find it here in English: Guichet Entreprises. This allows you to do your application and upload the necessary documents. Your application will be transmitted to the relevant CFE.

You will need to define your principal activity that you are going to register. This determines the code APE that you will be given, which will be shown on your business registration documents and is also freely accessible to anyone to consult via the internet. If you are vague about what you intend to do it can create difficulties with the CFE, so it is best to try to fit into one of the recognised and well-defined activities, but also to make a description that is as flexible as possible for any future changes or extensions of your activity that you may wish to make. If you mention any work that may start to approach a regulated profession, or one which requires a qualification or experience, be prepared to be questioned on this aspect.

At this stage, you may be tempted to hand over your inscription procedure to one of the many paid services that you can find on the internet (search for comment s’inscrire en auto entrepreneur). They offer a clear way of at least entering the necessary information and uploading the required documents, but you may still have some tasks to complete yourself with the CFE or other bodies, depending on the service offered. However, you have at least a helpline to guide you (although not necessarily in English). The clearest and most thorough service seems to be via the website Portail Auto-Entrepreneur, although, again this is not available in English.

The official website Guichet Entreprises in English remains the most logical method and it is free to use. In all cases, you will have around 250€ to pay in official fees to register as a micro-entrepeneur.

Note that if you go over the threshold of turnover, you can always upgrade later to the classic self-employed status of Entreprise individuelle. However, back-tracking to go down to the auto-entrepreneur status, whilst legally allowed, is not yet thought out with most of the administration bodies involved and there appears to be no defined way to do it.  You may have to deal with several months of justifying your request…

What you will need for your Auto-Entrepreneur application:

• A copy of an identity document such as your passport and your titre de séjour showing that you are allowed to work in France.
• Attestation de non-condamnation et de filiation – This is simply a hand-written signed declaration that you have not been excluded from creating and running a business by a court decision. Filiation – You need to include the names of your parents to avoid any confusion with someone of the same name. You can easily find templates for this document on the internet.
• Proof of your home address, dated less than 3 months (usually an invoice for electricity, gas, water, or local tax (taxe d’habitation), in your name, although you can also ask your local mayor’s office to provide a document).
• Any documents that may be required to prove your qualifications or experience.
• You will need to have decided on whether you wish to pay your tax as you go (impôt libératoire) and also whether you wish to declare your turnover monthly or every three months. If your business would benefit from opting into the VAT system, even though below the threshold of turnover, it’s best to establish this at the start.

Once you have successfully completed your application, you will receive the identification number for your business (numéro SIRET), the code for your sector of activity (code APE), and your inscription number (numéro RCS or numéro RM).

The CFE will normally pass on your inscription details to the different official bodies, social security, tax office, and pension. You may have some tasks to do with these to finalise things, and in particular, setting up your online account with each.

For instance, you will need to set up your account on the social-security website to be able to declare your turnover and pay your social security (and the flat-rate tax if you have opted for this).  Your first declaration of turnover must be done within 3 months of the creation of your business, but the administration needs up to 3 weeks to take you into account and allow this. If initially you have zero turnover, or at any other time, you still need to declare this.

Additional things to remember

You will need to set up liability insurance for your business.

Your quotations and invoices have to show mandatory information.

For more detailed information on setting up your business as an Auto-Entrepreneur and answers to frequent questions, you can consult the Academie section of the  Portail – Auto Entrepreneur website. This site is a mine of clear information on this status, although it is in French.