The auto-entrepreneur business status in France
Under French law, there are two main types of legal structures for businesses:
- sole proprietorship or sole trader;
The sole proprietorship or sole trader status is known as an entreprise individuelle.
This type of business entity comprises all freelancers working under one of two different forms of business taxation: the traditional régime réel and the micro-entreprise (formerly auto-entrepreneur).
The auto-entrepreneur status was introduced in January 2009. This status simplifies the process of registering and running the smallest sole-trader businesses. It applies to those who wish to run a business under the Micro-BIC or Micro-BNC tax régimes. The thresholds of the auto-entrepreneur status in 2023 are:
- €188,700 for those re-selling goods or materials (micro-BIC);
- €77,700 for those offering services (micro-BNC).
However, VAT exemption (one of the major advantages of this business status) is effective only up to the tolerance thresholds of €39,100 and €101,000 on condition that these tolerance thresholds are not exceeded by 31st December. Beyond these thresholds, the auto-entrepreneur will have to invoice VAT and pay it back to the State from the initial turnover thresholds of €36,800 and €91,900. This obligation comes into effect from Day 1 of the month of overrun.
There is no turnover limit in the first year. You will need to apply the prorata temporis rule if, in the year following the year of creation (N+1), your turnover exceeds the thresholds of auto-entrepreneur status (€77,700 or €188,700). In fact, whatever your turnover, it's only when you exceed the maximum turnover for two consecutive years that you switch to the régime réel system in the 3rd year. Where turnover remains above the initial threshold but below the tolerance threshold for two consecutive years, the auto-entrepreneur will be required to invoice and collect VAT from 1st January of the following year (loss of VAT exemption). To retain the advantages of VAT exemption, it is therefore necessary to alternate a year under the initial threshold and a year within the tolerance threshold.
For a business offering both types of activities (services and sale of goods), it can be classified as a micro-entreprise provided that total annual revenues do not exceed €188,700 with the specific service-based activity not exceeding €77,700.
As in previous years, these turnover thresholds are considered exclusive of tax.
The process of registering as a micro-entreprise business is a self-declaration process that can be done very easily online via the site https://www.inpi.fr/acces-au-guichet-unique. A scanned copy of an approved piece of ID (carte de séjour or passport) must be uploaded at the end of the process.
Additionally, businesses that are commercial or artisanal in nature are required to register with (respectively) the Registre du Commerce et des Sociétés (RCS) or the Répertoire des Métiers (RM).
Certain types of businesses are excluded from the micro-entreprise (auto-entrepreneur) status. These notably include all businesses involving the buying and selling of property on a professional basis, estate agents, developers, finance companies, hire companies, etc. Certain restrictions also exist with respect to artists, writers, scientific and sports-based activities. The full list of businesses that are non-eligible for this status can be obtained from your local Chambre de Commerce or Chambre des Métiers.
Registration - SIREN and SIRET
Following the online self-declaration, an automated receipt is sent from the website, followed by a formal receipt (récépissé) from the CFE (Centre de Formalités des Entreprises). Once the declaration has been processed, the business registration number (SIREN and SIRET) will be supplied and the business officially registered.
Tax and Social Charges – “Micro-Fiscal” and “Micro-Social” options
Auto-entrepreneurs pay social charges (cotisations sociales) under a system known as the micro-social simplifié. These charges are paid either monthly or quarterly based on a fixed percentage of the previous month’s or quarter’s turnover.
- 12.30% of turnover for those re-selling goods or materials;
- 21.20% of turnover for those offering services;
- 6% of turnover for fully furnished living quarters;
- 21.20% of turnover for those in “liberal” professions where their pension is handled by the Caisse d’assurance vieillesse of the CIPAV;
- 21.10% of turnover for those in “liberal” professions where their pension is handled by the Sécurité Sociale des Indépendants.
Auto-entrepreneurs can also opt to pay their income tax under a system known as the micro-fiscal simplifié. This is also known as the versement or prélèvement libératoire de l’impôt, where the income tax due is paid on a “pay-as-you-earn” basis. Again, payments are monthly or quarterly, based on turnover, and are:
- 1% of turnover for those re-selling goods or materials;
- 1.7% of turnover of turnover for those offering services of a “commercial” or “industrial” nature;
- 2.2% of turnover for those in the “liberal” professions.
Eligibility for the versement libératoire de l’impôt is subject to the household’s revenu fiscal de référence (reference fiscal income) for year N-2. For 2023, the revenu fiscal de référence in 2021 must not exceed € 26,070 per part de quotient familial (French income-splitting tax policy). An annual income tax declaration form must still be filled out, but no further income tax will be due.
Where the auto-entrepreneur is not eligible for the versement libératoire de l’impôt, an annual income tax declaration form must be filled out with the taxable profit being determined by the tax authorities. This taxable profit is calculated based on the declared gross turnover minus a fixed allowance for professional expenses of:
- 71% of turnover for those re-selling goods or materials;
- 50% of turnover for other activities under the BIC;
- 34% of turnover for those in the “liberal” professions (BNC).
Value Added Tax
Auto-entrepreneurs can neither charge nor reclaim Value Added Tax (TVA in French) below the tolerance thresholds of €36,500 and €94,300. The notice “TVA non applicable, article 293 B du CGI” must appear on all invoices.
From 2020, an auto-entrepreneur who earns more than the tolerance thresholds of €36,500 and €94,300 will be required to start invoicing and collecting VAT from the initial turnover thresholds of €36,800 and €91,900. Important: the invoicing of VAT requires the use of regulatory accounting software, which is not the case below the tolerance thresholds.
Auto-entrepreneurs are exempt from paying business tax during the year of creation of their activity. From Year 2 on, this business tax will be due even if you work from home and a minimum contribution will be required (determined by each city council).
Auto-entrepreneurs are required to keep a ledger of all revenues received.
Auto-entrepreneurs re-selling goods or materials, or providing furnished accommodation, must also keep a ledger of all business expenses.
Copies of all invoices, receipts and formal offers/quotations must be kept.
If turnover exceeds the tolerance thresholds during the year, regulatory accounting software will be necessary for the part of turnover subject to the invoicing of VAT.
About the Fédération des Auto-entrepreneurs
The Fédération Nationale des Auto-entrepreneurs (Fnae) is a non-profit organization founded in March 2009 by Grégoire Leclercq, its current president, following the creation of the auto-entrepreneur status in January 2009.
The purpose of the FNAE is to:
- Gather and federate micro-entrepreneurs* in France, and by extension all regional micro-entrepreneur clubs and associations registered in a region or in a group of regions, as well as other independent associations promoting the development of micro-entrepreneurship.
- Provide information, individual consultations, individual or group training, coaching, consulting, conferences and seminars, as well as product recommendations to members of the Federation via its website and regional club meetings/events.
- Bring national recognition to local actions taken by the regional micro-entrepreneur clubs by structuring the national network and using the media to communicate on the missions fulfilled.
- Provide technical support to the regional clubs through communication means, management facilities, specific tools and reference documentation.
- Represent, lobby and defend the interests of micro-entrepreneurs with respect to the public authorities.
- Make different publics aware of the various aspects of entrepreneurship, especially young people, students, women, senior citizens, people from difficult areas, disabled people, and help those who are members of the Federation prepare their project.
* New name for auto-entrepreneurs since 1 January 2016.
Our fundamental principles
An operational, pragmatic and concrete approach:
- Help for business start-ups.
- Detailed diagnostics.
- Local and personalized business coaching.
- Sharing of experiences.
- Federation around a common goal and project.
- Information and training in professional development.
- Reflection on future opportunities and constraints.
Our top priorities
Our team is committed to:
- Defending the interests of our entrepreneurs.
- Playing the role of institutional spokesperson: observer, opinion leader and position statements, federator of the freelance ecosystem.
- Representing our members with the public authorities, clients, and business creation and support structures.
- Designing ever more useful, effective, relevant and active tools and content.
- Providing a venue for solopreneurs to meet, network and exchange, based on an open, collaborative and participatory model.
- Promoting entrepreneurship and new entrepreneurs.
Our scope of action
The Fédération works in partnership with all of the main business creation structures: ADIE, BGE, CCI, CMA, Pôle Emploi, URSSAF, SSI, CIPAV, etc.
It acts as spokesperson in the media and with the public authorities to defend, analyse, and further develop the auto-entrepreneur status, or micro-entreprise status as it has been known since 1 January 2016.
As freelancers traditionally work alone, often from home, the Fédération also exists to inform, guide and help sole traders find the answers to their administrative or tax questions as well as providing networking opportunities. Regional and national information meetings and events are open to everyone, independent of membership of the Fédération des Auto-entrepreneurs. Additional services are available to members, including counselling, legal assistance, professional insurance, etc.
Some of the services offered by the Fédération des Auto-entrepreneurs and available to all include individual consultations and professional training.
The individual consultations are designed to help you address various issues related to your freelance business. Two options are available:
- You have a very specific question about your existing activity: choose the 15-minute consultation (price €15).
- You need more detailed advice on how to set up your solopreneur business in France, what legal and/or status to choose (micro or réel), what your administrative and fiscal obligations are (declaring your activity and revenue, paying social contributions, taxes, etc.), what your social security coverage is, how to expand your business, etc.: choose the 1-hour consultation (€60).
As a training organization, the Fédération offers a comprehensive series of professional individual and group training sessions and workshops for entrepreneurs in all aspects of the creation, management and development of their freelance businesses.
Traduction réalisée par Kathryn Smyth, Traductrice technique Français - Anglais
Translated by Kathryn Smyth, French - English technical translator