For most foreigners living in France and wanting to run a small business, a micro-entreprise is the best solution. This article explains what it is and how to register.
Micro-entrepreneur is now the name for what were formerly known as micro-entreprises and auto-entrepreneurs. The two systems were amalgamated at the start of 2016 and some changes brought in.
What is a micro-entrepreneur?
A micro-entrepreneur is an individual who sets up as either an entreprise individuelle and opts for a simplified tax system called the “régime fiscal de la micro-entreprise (micro-BIC1 or micro-BNC2)”. This can be in a commercial or trade capacity (run by the Urssaf) or as a professional freelancer either regulated (nurses, doctors, lawyers etc) or non-regulated (pension rights run by CIPAV). The main advantage is that the simplified tax system allows you to pay contributions in arrears and only on what you have earned. If you earn nothing, you don’t pay anything. The contributions are a set percentage of turnover which varies depending on the activity.
The system is particularly suited to people who want to test a project or as a secondary activity for an employee or a pensioner to supplement their income. Or for anyone that hates paperwork and wants to keep it to a minimum.
Micro-entrepreneurs are subject to TVA (VAT), if they breach the thresholds in the same way as other forms of company.
Who can’t be a micro-entrepreneur
- Anyone who is already registered as a professional running a company
- Anyone who is already registered as an entreprise individuelle and not subject to the simplified tax system. However you can convert your existing business to EI if you are below the income threshold and you can also add an extra activity
- Estate and property agents
- Landlords of buildings let unfurnished for commercial/professional use
- Firms renting equipment and durable consumer goods
For some professions you are not allowed to set up a business unless you have either a qualification or at least 3 years’ experience which needs to be proved by pay slips, contracts or a letter on headed paper from a firm testifying that you have worked for them. This applies to a lot of trades jobs such as builders so do check with the relevant body what restrictions apply before setting out or see this list www.afecreation.fr.
British qualifications are no longer accepted post-Brexit, but experience still should be in most cases.
In order to carry on being registered under the system, your turnover (ex-tax of merchandise, goods and services) must not be more than the official limits, which in 2022 are:
- Purchase/resale: buying material goods to sell on without working on them
- Manufacture of goods from raw materials (eg bakeries, sewing, jewellery making)
- Sale of food either to eat in or takeaway
- Renting lodgings: hotels, B&Bs, unfurnished residential properties
- Provision of commercial services eg sales of intangible products (IT programmes etc)
- Provision of trade services eg building work, repairing client’s products
- Renting furnished lodgings
- Provision of professional services eg consulting, translation….
This amount is pro-rata’d in the first year of activity, so if you start on 1st May you can only earn 245/365 of this total i.e. €48,664 for services and €118,271 for goods.
If you are providing both goods and services your total turnover must not exceed €176,200 of which services cannot be more than €72,500
How to register
Up till now you could create an account and register on line at either www.autoentrepreneur.urssaf.fr or www.guichet-entreprises.fr, (you will need proof of identity). However the system is being supposedly streamlined and you are no longer able to register certain types of business on these, and will be redirected to Inpi. At the time of writing, Inpi is still very new and in need of a lot of debugging. Hopefully it will improve eventually. You can also use the CMA site www.cfe-metiers.com if the business you are registering comes under them.
The registration will then be treated by the relevant body for your business as shown in the table below:
|Trade||Chambre de métiers et de l’artisanat|
|Commerce||Chambre de commerce et d’industrie|
|Sales agent||Greffe du tribunal de commerce|
However, at least in my experience, for tradesmen if you go into your local CMA they will do their best to see if you are eligible, help you register and complete all the formalities with you for a fee. And CCIs will do the same thing for commercial companies.
People that are registered as unemployed and eligible or likely to be eligible to receive unemployment benefit (i.e. have been employed and paid contributions in the recent past) can apply to pay social security contributions at a reduced rate known as the Accre.
You must then choose
- how often you will pay your social charges (monthly or quarterly)
- which body you want to be registered with for health insurance and advise them of any dependents.
- whether you want to pay a small percentage of turnover as tax (versement libératoire de l’impôt sur le revenu) and exempt yourself from further liability, or prefer to wait to fill in your tax return.
- if you want to be lose the right to have your property kept separately from the business for debt recovery purposes.
- how your spouse is to be treated if they will be helping with the business
INSEE (Office of National Statistics) will then assign you a company number (Siret) and a code for your business type (APE) and you will be registered with all the bodies that you need to be for tax and social security purposes.
- You must open a separate bank account for your business within one year of registering. This does not have to be a business account, but a lot of banks insist that you pay for a pro account if they find out you are running a micro-entreprise. Anyone earning less than €10,000 is exempt from this until they go over the limit 2 years running.
- If you are a sales company/shopholder you will be registered with the registre du commerce (RCS).
- If you are a tradesman you will be registered with the registre des métiers (RM).
- As mentioned above, for certain trades you have to show that you are qualified to do the job. The list of regulated trades is at www.afecreation.fr.
- Sales agents have to register with the registre spécial des agents commerciaux. Again this should happen automatically but if not it can be done on line at www.infogreffe.fr
- All micro-entrepreneurs should take out professional insurance suitable for their activity and insurance for your own and clients’ property. Builders must have a 10 year guarantee backed policy by law, and must put the details on their invoices.
Social & Tax Charges
|Activity||Amount inc training contribution||Versement libératoire
de l’impôt sur le revenu
|Min T/O for pension rights
Selling on goods
Sales of food to eat in or take away
Renting lodgings (BIC) except furnished lodgings
(Rated tourist accommodation is an exception at 6.0%)
Renting furnished lodgings
Supplying services (BIC)
|Supplying services (BNC)||22.2%||2.2%||€2402|
|Regulated professional activities (BNC)||22.4%||2.2%||€2421|
These amounts cover all charges for your social security protection including sickness and maternity benefits, sick pay (only payable from 2nd year of business and not for professionals), invalidity and death, basic pension, compulsory additional pension, family allowances, CSG-CRDS (contribution to social charge)
NB if you think that you will only be earning such a small amount that you will not pay enough to earn pension rights then you should opt for the régime classique and pay lower contributions. Get in touch with URSSAF before the end of the 3rd month following the date you set up the business, or by 31st December for the following year. But be aware that 1. if you are getting the Accre you will only be eligible for one year rather than the normal three. 2. Your charges will be paid on your income (declared once a year) rather than your turnover. 3. Your charges will be provisional and recalculated according to your actual turnover at the end of each financial year.
If you start your business part way through a quarter and are declaring quarterly you will have to complete your first declaration at the end of the first full quarter of business i.e. if you start in May, you don’t have to submit your return until October after the completion of the next full quarter. A timetable is available here.
Company Property Tax
Most, but not all, micro-entrepreneurs are liable for this tax from the 2nd year of business. Builders etc. are often exempt if operating from home, as the tax is based on the rental value of the premises where the business is carried out. You must register using form 1447 C in your first year of business and register as a professional on the government tax site. You can apply for an exemption if you earned nothing.
What happens if you earn too much?
If you earn too much in your first year of turnover you will no longer be classified as an micro-entrepreneur from the second year.
From the second year on, you can earn up to €91000 or €35200 for 2 years running without being losing your status as a micro-entrepreneur. If you continue to earn too much you will be reclassified from the 1st January of the next year. You will be subject to TVA/VAT from the first day of the month that you went over the threshold. You will not be able to claim exemption from being taxed on the whole of your income (i.e. lose the right to the régime libératoire) from the 1st January of the year that you passed the threshold.
If you don’t declare any revenue for 24 months in a row or 8 quarters, you will automatically be removed from the register of micro-entreprises.
|1.||BIC = Bénéfices industriels et commerciaux = sales and industrial profits|
|2.||BNC = Bénéfices non commerciaux = Non sales profits|