Self Employment in France - Try Being an 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.

Another way of working without registering a business was to operate under a self employed basis and be paid through the bank via a 'cheque d'emploie' which essentially was an option where your employer paid the bank for your services, the bank took a portion out to pay for tax and social security payments and you got the balance. This did work reasonably well if you could find an employer who could be bothered with the hassle of setting it up and who gave you regular employment, not so clever if you were operating for multiple clients and or doing one off commissions as many people wanted to.

So what with one problem or another, 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 or alternatively having to go through a bit of an administrative nightmare setting up arrangements with individual employers who needed to be cooperative enough to set up the 'cheque d'emploie' to pay you through their banks.

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. Having said that there is no initial earnings level before you pay tax, as soon as you earn you pay, doesn't really seem that fair for those that only manage to generate a modest amount of business but overall it is a better option than the previously enforced payment on assumed earnings that I mentioned earlier.

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%

One final note, if you can afford it then it is worth having a consultation with an accountant, you never know what benefits you can extract given your specific personal circumstances and it may well be possible that you could avoid paying any tax at all if your earnings are low.