French self-employment : the Microentreprise scheme
You would like to be self-employed but are not sure of how self-employment works in France? This post was written for you!
The “Microentrepreneur”, or self-employment scheme, was created to simplify setting up a business. It was originally created for people who want to have an activity alongside their job, or for people who want to test a business idea without jumping through all the hoops of French administration and so on. But today, this simplified tax and social regime status has seduced many, and there are over 2.5 million “auto-entrepreneurs” in France in 2023. Depending on your activity, this scheme can be used for a very long time (if not forever!).
Although it is a very simplified status, it is not possible to go over every detail in one blog article. So here is the main information about the French self-employment scheme, there will be more to come.
What is the « Microentrepreneur » (ex auto-entrepreneur) scheme?
This option is a very simplified scheme for self-employment : you benefit from simplified admin formalities for setting up your business, and day-to-day management. But beware, it does have limits : there is a flat rate deduction for expenses depending on your type of activity, your annual turnover is limited, etc. Find more info below !
If registered as self-employed under the micro-entreprise scheme in France, you are legally a sole proprietorship, “Entreprise Individuelle” (EI). When you opt for the micro-entreprise option, you are opting for a particular social regime and taxation status.
Social regime for self-employment
As a Microentrepreneur, the social charges will be calculated on your monthly or quarterly turnover. You will have to create a URSSAF account here. Then you will have to declare your turnover monthly or quarterly on your URSSAF autoentrepreneur account. The social charges are a percentage of your turnover and depend on the activity you have:
- “BIC” services (industrial and commercial services) : 21.20%
- “BNC” services (non commercial services) : 21.10%
- Sale of goods : 12.30%
In addition to these social contributions, you must pay for a contribution towards training (CFP – Contribution à la Formation Professionnelle). The percentage of the turnover depends on your activity and it is from 0.1% to 0.3% of your turnover.
Tax status for self-employement
As self-employed, you will be on the “Impôts sur le Revenu (Income-based)” tax status. But the scheme does offer 2 options: an annual tax return or the “Versement libératoire” (pay-as-you-earn tax payments).
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Yearly income-based, the default scheme.
You will declare your turnover when doing your yearly tax return. When using this option, you will have an automatic deduction from your turnover before tax is calculated:
- 34% for “BNC” services (non commercial)
- 50% for “BIC” services (industrial and commercial)
- 71% for sales of goods
Example : If a joiner has earnt 60 000 € selling materials and 25 000 € providing services (BIC services in this case), then he will be taxed on this amount: (60 000 -71%)+(25 000 – 50%) = 17 400 + 12 500 = 29 900 €, although he had a turnover of 85 000 €.
Please note when you are completing your tax return you must declare the full amount of turnover over the year. The tax office will apply the percentage deduction.
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“Pay-as-you-earn”, under certain conditions.
The « Versement libératoire » option allows you to pay directly for tax at the same time as you declare your social charges with the URSSAF. Taxation will be based on your turnover and the percentage will depend on your activity:
- 2.2% for “BNC” services (non commercial)
- 1.7% for “BIC” services (industrial and commercial)
- 1% for sales of goods
Self-employment turnover limits and VAT
Self-employement : what are the turnover limits?
The Microentrepreneur status has turnover limits. If your turnover exceeds certain amounts, you may have to opt for another status. Here are the turnover thresholds for self-employment (2023-2025):
- Sales of goods – 188 700 € / year
- Services – 77 700 € / year
When you do sales and provide services then your global turnover mustn’t exceed 188 700 € and your service providing turnover must be below 77 700 €.
If your turnover is above these limits for 2 consecutive years, then you will have to change schemes and will not be allowed to stay under the “Microentrepreneur” classification. If you go over only for 1 year, then you can stay in the self-employed scheme.
Self-employment : what are the VAT rules?
When you register as self-employed in France, you are not automatically registered for VAT. You benefit from the “Franchise en base” which means you do not claim nor collect VAT. It is only when your turnover goes above a certain threshold that you have to register for VAT :
- Providing services: 36 800 €, but tolerated up to 39 100 € for a year. If you go over the threshold the following year then you have to register for VAT.
- Sales of goods: 91 900 €, but tolerated up to 101 000 € for a year. If you go over the threshold the following yeaar then you’ll have to register for VAT.
If you want to, you can register for VAT from the word “go”. When registered via the Impôts, you must collect VAT from your clients and you can claim VAT back on all your expenses. You will have a VAT number that you will have to indicate on your invoices.
As long as you are not registered for VAT, you have to mention the following on your invoices : «TVA non applicable, art. 293 B du CGI».
How to set up as self-employed?
The French government has just re-organized the system and there is now only one place to do this: the INPI website. Up to now, and depending on the type of activity, you would register in different places. Today, whether you have a craft, commercial or freelance activity, your set-up will go through the INPI.
Depending on your activity, you may be asked for different supporting documents. The main supporting documents are proof of identity, proof of residence, proof you can set up a business in France if you aren’t French, proof you are entitled to do this activity if it is a regulated one, etc.
To set up your business on the INPI website, you’ll need to connect via France Connect +. You can only do this by setting up an account for “Identité Numérique” with LaPoste. To be entitled to setting up an account you must be French, EU citizen or have a resident permit (for over 5 years). If you cannot set up your “Identité Numérique”, we can help you set up as a Microentrepreneur.
Once you have your SIRET number, which is your company registration number, you must create your online account with the URSSAF and with the Professional Tax site.
Managing the admin of my Microentreprise
The day-to-day admin is very simple.
- Accounting: you must keep track of costs and income in a chronological sequence.
- Invoicing: you must keep track of your invoicing and the invoices must be numbered in a continuous chronological sequence.
- Declaring your turnover and paying your social charges: you must declare your turnover to the URSSAF monthly or quarterly.
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FAQ
Must I have a specific bank account for my Microentreprise?
Under 10 000 € you do not need a specific account for your business. If your turnover is over 10 000 € two consecutive years then you’ll have to get a separate account for your business. Banks will say you must have a professional account but this isn’t mandatory by law.
Do I need insurance?
This depends on your activity, but it is recommended that you seek insurance (RC Pro – responsabilité civile professionnelle).
For some regulated activities, insurance is mandatory (building, medical, etc.). Check if your activity is regulated here. If you use a vehicule or have premises, you’ll have to insure these too.
Can I be self-employed when already employed?
Yes, this is a possibility, but you have to check that your work contract allows this.
Can I claim expenses back?
No, this is one of the limits of this scheme. When declaring your income on your yearly tax return, there will be an automatic deduction of a percentage of your turnover (34 to 71% depending on your activity). This deduction is considered to be your expenses. If your expenses are above that percentage, it may be interesting to move to another type of business setup.
Is my activity regulated?
You can check if your activity is regulated here. If your activity is regulated, you must prove you are entitled to pratice it.