Wednesday, 15 July 2009

Self Employment in France - Auto Entrepreneur

2009 has become the year for anyone looking for self employment in France and the reason why is the introduction of the 'Auto Entrepreneur System' which allows individuals to register and start a business where instead of paying tax on an assumed income, which may or may not be realised, you only pay tax on actual earnings.

It was pretty clear under the old regime that working on the black market was a temptation many could not resist because of the uncertainty surrounding whether you would actually earn any money from a new enterprise and potentially having to pay tax on a business that didn't actually take off.

Not declaring your business and not paying tax is of course totally illegal and in my opinion not worth the risk so the introduction of this new system will be a godsend to many people, being self employed in France just got easier.

There are limitations on the new system, for instance your business must turn over less than €80,000 per year gross if you are selling products or providing catering and/or accommodation.

If you are providing a service, like website design or soft furnishings make up (but not supplying materials) then the turnover must be below €32,000 per year.

Tax can be declared and paid on a monthly or quarterly basis and the rate of tax is either 12% for those reselling products and 21.3% for those selling services (in simple terms). This is under the 'micro-social simplifie' system.

For the 'micro-fiscal simplify' system the percentage of turnover is 1% for those reselling products and 1.7% for those selling services.

So to cover your social and tax charges combined, resellers would pay a total of 13% and service providers would pay a total of 23%

You can apply to become an Auto Entrepreneur on line, the form is in French but is relatively straight forward to complete. I would only apply if you are sure that this is the best route for you, if you are not sure then it would be wise to seek the advice of an accountant before taking the plunge.

Both my wife and I live and work in the Languedoc Roussillon region of the South of France, my wife operates a Soft Furnishings Business and I operate a Website Design Business Either of us can be contacted via our websites and we both offer very affordable services in France with free, no obligation quotes.

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  1. I'm curious as I've thought about moving to France and I heard about this. Is this an income tax that you pay or is it like a sales tax? If reselling is 13% the total percent of tax you pay?? or are there other taxes you pay as well? Thanks, your blog is very informative and helpful.

  2. This is an income tax, actually it is income tax and what we call national insurance payments in the UK bundled into one payment when it is the 13% level.

    So what you are paying in total is your income tax and your payments towards the national health service and welfare system. I know in the States health insurance tends to be paid for privately but in the UK and France it is mostly done through the State with some top up or private insurance as an optional extra.

  3. Ok, got it. Is there any type of sales tax that you have to collect and pay when selling products? In the US we have a sales tax, state tax and federal tax. Also if you incorporate here you then also have a corporation tax you pay.

  4. Yes there is a TVA tax which runs at 19.6% normally but is reduced significantly under some circumstances. For example if you have renovations done the builder can supply the materials and he would only pay something like 5.6% TVA (don't quote me, its about that)then he can pass those saving on, but of course you still have to pay him for the work he does.

    Not sure on the rules for when it kicks in i.e. at what level you have to register as a TVA business. The rules here are quite complicated and as I don't have to worry about it too much I have not looked into it.

  5. Ok, thank you so much for the info. You have been very helpful! I will be visiting France some time next year and maybe I can visit your Gite :)

  6. You are very welcome, you may also be interested in my latest post on hope you don't mind me using your website as an example, thought it would be free publicity, but let me know if its a problem and I will change it.

  7. Oh forgot to say if you want to visit the gite you are also very welcome but if you want to book make sure you do it early as it goes pretty quickly.

  8. No problem using my website as an example and yes I will book in advance if coming to your gite :)

  9. Hi we enjoyed reading your blog, me and my husband love this stuff! Michele


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