Tax breaks for auto-entrepreneurs in France

Eddie SammonInvestments

What are auto-entrepreneurs? 

An auto-entrepreneur is a legal status for a self-employed individual in France with income below certain limits. An auto-entrepreneur manages a micro-entreprise. Before 2016, there were differences in micro-entreprises and auto-entrepreneurs but now both terms are used to describe the same legal status. There are tax and cost benefits for those who qualify.

 

What are the income limits? 

It depends on the type of work you do. To simplify, there are two main categories:

Businesses who sell services: €77,700

Businesses who sell products: €188,700

These are not profit or takings limits but revenue (turnover) limits.

 

Is it open to all professional activities?

No, it is not possible for many health and legal professionals, for example. You can read the rules on exempt activities here.

 

What are the tax benefits? 

For income tax,  you have two options, the abattement forfaitaire or the versement libératoire:

 

The abattement forfaitaire

If you choose this option, also known as the imposition classique, your revenue will be reduced by a signifiant percentage before any income tax is applied, known as the abattement forfaitaire. The percentage depends upon the nature of your business and the amounts are as follows:

  • 30% for certain tourism property rental services
  • 34% for non-manual, “intellectual”, service providers (professions libérales)
  • 50% for commercial and artisanal services
  • 71% for businesses based on selling products 

However, you generally cannot claim any expenses, these amounts are given instead of reducing your revenue by expenses. After these reductions, your income is taxed at the standard income tax rates, each tranche of your income is taxed as follows in 2024:

Up to €11,294: 0 %

€11,295 to €28,797: 11 %

€28,798 to €82,341: 30 %

€82,342 to €177,106: 41 %

Above €177,106: 45 %

 

The versement libératoire

Rather than l’abattement forfaitaire, you can choose the income tax option of the “le versement libératoire“. If you choose this option then you will pay income tax either monthly or quarterly, rather than annually. If you choose this option, you could pay the following lower rates of income tax (impôt sur le revenu):

  • 1% for certain property businesses
  • 1.7% for commercial and artisanal service providers or people who let furnished property
  • 2.2% for “non-commercial” and “intellectual” services, such as consultants, computer programmers etc (liberal professionals).

These rates may sound extremely low and you generally cannot choose this option if your income two years earlier was at least €27,478. However, social charges are far higher and are the same for both options, le versement libératoire or le régime classique (abattement forfaitaire).

 

How much are the social charges? (cotisations sociales)

This depends upon your business activity and the rates are as follows with simplified descriptions:

  • Food and accommodation services: 12.3%
  • Non-regulated non-manual and “intellectual” services: 21.1%
  • Regulated non-manual and “intellectual” services: 21,2 %
  • Other services (BIC): 21.2 %
  • Classed tourist property lettings: 6 %

These tax rates are based upon your business turnover and are entirely separate to the income tax rates and reliefs mentioned above.

 

Reduce your social contributions with ACRE

For up to the first 12 months of your micro-entreprise, in certain circumstances,  you can reduce your social charges either entirely or partially by claiming ACRE (L’Aide aux Créateurs ou Repreneurs d’Entreprise). Note that if you qualify for this, you must make the application to URSSAF very soon after you create your business. You can find more information here.

 

Can I claim expenses to reduce by taxes further? 

Auto-entrepreneurs cannot claim expenses to reduce their taxable income like a traditional business, but they can exclude expense reimbursements from their business revenue (chiffre d’affaires) if your client’s business name is on the receipt and not yours. These are known as frais de débours.

 

Pay attention to sales tax (TVA)

As well as income tax and social charges, you may have to pay sales tax, known as TVA in French (taxe sur la valeur ajoutée). The income thresholds from which this applies are as follows:

  • €101,000 for the sale of goods (€91,900 if your turnover exceeds this amount for two consecutive years)
  • €39,100 for services (or €36,800 if your turnover exceeds this amount for two consecutive years).

Note that rules regarding TVA are complex and also depend upon the nature of your service and the location of your clients, we recommend that you hire an accountant if your business income exceeds these thresholds. If you are subject to TVA, you may also be able to claim the TVA on your purchases to reduce your liabilities to this tax.

 

Are there other taxes?

Yes, there are other taxes that auto-entrepreneurs are subject to, such as the following:

  • Professional training contribution (La contribution à la formation professionnelle – CFP): between 0.1 and 0.3% of your income depending upon your activity and it enables you to have a CFP account which can help you to fund your own training and qualifications
  • Chambers of commerce and artisans taxes (les taxes pour frais de chambre consulaire): a small tax for non-liberal professions such as shop keepers and artisanal workers. The rates vary from 0.007% to 0.48% (or a bit higher in Alsace and Moselle)
  • Business property tax (la cotisation foncière des entreprises – CFE): you are exempt in the first year of your auto-entreprise but afterwards the amounts range from €0 to approximately €3,794 for auto-entrepreneurs. This tax also applies to home-run businesses and for rented property.

 

Financial help for auto-entrepreneurs/micro-entreprises 

Other financial incentives have been put in place to encourage and help small businesses, such as ARCE (Aide à la reprise ou à la création d’entreprise), which can be claimed in complement to ACRE (mentioned above). A more complete list of support available to auto-entrepreneurs can be viewed here.

 

How Aisa International France can help you

We can provide you with regulated investment advice and introduce you to tax advisers for regulated tax advice. Feel free to contact get in touch via email.

 

Useful links

 

The views expressed in this article are not to be construed as personal advice. Therefore, you should contact a qualified, and ideally, regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. Consequently, if you do not, then you are acting under your own authority and deemed “execution only”. Additionally, the author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Importantly, this article is dated and is based on legislation as of the date. It should be noted that legislation changes, but articles are rarely updated. Sometimes a new article is written; so, please check for later articles. Additionally, check for changes in legislation on official government websites. Finally, this article should not be relied on in isolation.