Setting up a business in France; the French micro-entreprise regime
Many expats who move to France, do so to set up as a sole-trader in their new location. One of the most popular methods through which to set up a business in France is as a micro-entreprise or auto-entrepreneur as the formalities are a little easier to complete and the tax and accounting requirements are less rigorous than with other types of tax status. In this case, it’s important to understand the micro-entreprise tax regime and how this affects how you run a business.
The micro-entreprise regime involves you essentially paying a fixed percentage of your gross income in tax and social security contributions with no allowance for expenses. By paying a fixed percentage, your contributions are calculated based on actual income, which will allow for any fluctuations in income.
The process to calculate what is owed is comparatively more simplified than many other regimes. If, there is no income generated for a period, the regime allows for a ‘nil return’ to be submitted and no payment will be taken. Equally, you are able to work full or part-time or work intermittently under the micro-entreprise regime and even combine it with another occupation. There are limits on the turnover under the regime though.
The ‘social charges’ element is calculated on incomings not on profit. This does of course pose rather a disadvantage for businesses which have a lot of costs, for example through the purchasing of raw materials etc. The regime will not cover all occupations and all areas of work. It is necessary to check which areas of work are covered with an accountant, or with a local Chambre de Commerce/Metiers.
To comply with the accounting requirements, the business will need to have a separate bank account which is separate from personal finances, but there is no need for an accountant. The regime does not enable you to employ someone but it is possible to collaborate with another auto-entrepreneur.
It is always advised that qualified legal advice be sought concerning the establishment of a business in France, or for any changes to legal requirements.
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