How do you set up as self-employed or freelance in France – and what are the pros and cons of the micro-enterprise system as the French call it? We asked Tracy Leonetti, paperwork professional and founder of LBS in France who have helped many expats to start a new life in France. Here she highlights the key points of registering as an auto entrepreneur, self-employed.
Understanding the terminology – Auto-entrepreneur, micro-enterprise, Entrepreneur Individuelle
Auto-entrepreneur (AE), Entreprise Individuelle (EI) and micro-entreprise (ME): when you’re setting up as self-employed in France, you’ll come across all these terms. The confusion is due to fact that the Auto-entrepreneur used to be another facet of the self-employment system but was merged with ME in 2016. So effectively, these represent the same type of business structure, just from a different perspective. The most important to know is that all are self-employed status.
The ‘Enterprise Individuelle’ is the legal form for a sole trader. The’ Micro Entreprise’ is the tax and social structure of a sole trader.
Phew. I’d like to say that’s the hard bit over with. It’s not! Though the purpose of the ME system is to simplify admin, this is France, and there’s plenty of life and paperwork left in that admin task list even if it has been “simplified.”
So, let’s start by highlighting below some of the key points of this business structure and the key questions my clients ask me during a consultation.
Advantages
- Good to test your idea, minimum risk
- No accountant needed, so less cost
- Simplified fiscal system for tax and social contributions, no surprises
- No VAT to charge (up to certain earnings limits)
- Access to healthcare in France from first day of set up (formalities will still need to be followed)
Disadvantages
- Limited earnings levels
- No reduction for costs
- No VAT charged (or deducted) which is not good if you are in sales
What are the Earnings levels for auto entrepreneurs
You are restricted to a certain level of earnings as a micro-entreprise, and if you exceed the set amount, you’ll have to scale up to the next business status level.
These limits can be adjusted each year. If you know you will earn more than the limit in year 1, you should look at a different structure like ‘Entreprise Individuelle au réel’. It’s important for me to spend time understanding my client’s business so that I can help them to choose the right structure, if you get it right up front, it can save a lot of paperwork down the line. Most people just assume there’s only one way to go – there isn’t, but it takes expertise to know the right route.
The earnings limits for an ME differs according to what sort of activity they are engaged in – which includes the classifications BIC or BNC. BIC refers to industrial and commercial profits, BNC refers to non-commercial profits.
- €188,700 for the sale of goods, sales for consumption on the premises and the supply of accommodation (excluding furnished rentals other than furnished tourist accommodation or bed and breakfasts) (1st category);
- €77,700 for the provision of services falling under the category of industrial and commercial profits (BIC) or non-commercial profits (BNC) (2nd category).
- €15,000 for unclassified furnished tourist rentals
Note – there is an exemption from paying TVA (the French equivalent of VAT) on services and sales made by the micro-enterprise – as long as you don’t exceed the limits set €36,800 service activities, €91,900 for sales of goods, accommodation.
How much will you pay on your business earnings?
Like any business in France, you will contribute into the social system via the URSSAF, the collection arm for these contributions. The social contributions are collected either monthly or quarterly based on your earnings. You simply enter in how much you’re earned to the URSSAF online declaration system, it will immediately notify you how much you should pay, you confirm, and the amount is deducted at a date notified. There are set dates for inputting and if you miss one, you may be fined.
The percentages are reviewed each year, but the following is a good overview of what you can use as a guide to how much social contribution is to be paid:
12.3%: sales and trading activities, gites, bed & breakfast. Commercial services linked to Chambre de Commerce
21.2%: Manual activities (hairdressers, electricians, commercial services & consultancy services…)
*23.1%: Professionals attached to CIPAV under BNC system.
* This will be increasing over 3 years for this BNC category up to 24.6% in 2025, 26.1% in 2026.
How do I set up my activity?
Since January 2023 all creations, modifications and closing of micro-entreprise activities are handled from one website, this is called the INPI. It is not the easiest of portals to work with, but I can tell you, after much experience, it is starting to work better.
Portail e-procedures (inpi.fr)
The creation of your activity is relatively simple once you know which category you fall under, but that in itself can also be challenging as there are many choices of categories. And choosing the right category is very important as this defines what tax/contributions you will pay. You will also, of course, need to prove your ID and address in France. Modifications of businesses via this INPI system are complex as digital IDs are needed.
Once you have created your activity, your file will be sent to several different organisations (INSEE, CPAM, Tax office….). You will receive your SIRET number (business registration number) which must go on all your legal documents and invoices. You must also state EI on all your invoices – a recent ruling.
This is of course a summary of setting up as self-employed in France and the system generally works well. But if it all sounds a bit much, too time consuming when you’re trying to get a business up and running, or need to spend your valuable time managing and growing the business, help is at hand. I’ve helped many many expats over the years to set up all sorts of successful businesses from setting up as ME, to work permits, declaring social charges, communicating with various government bodies help with tax and legal requirements etc.
If you’d like more information and help setting up your business in France or management of your business, get in touch with Tracy at www.lbsinfrance.com
There’s also a very helpful LBS podcast which cover all things living in France: buzzsprout.com/LBS
