Micro-entrepreneur in France

Please note that the information herein is of a general nature and you should not act or refrain from acting on it without professional advice on the specific facts of your case. No liability is accepted by the author or Sykes Anderson Perry Limited in respect of this article. Tax law is a complex subject and the above is a basic outline only and is intended only as a general guide. Nothing herein constitutes financial advice.

The French equivalent of a UK’s freelance contractor is a “micro-entrepreneur”. A “micro-entrepreneur” is a contractor who has opted for a simplified tax and social security regime to carry on a small independent business activity. It has proved very popular in France.

Who can become a “micro-entrepreneur”?

Anyone can become a “micro-entrepreneur”. This activity can be exclusive or complementary to another activity (e.g. student, employee...).
What are the conditions?

A “micro-entreprise” is not a company but only a specific tax status which benefits from simple tax and accounting rules. This is why the “micro-entreprise” is only available to someone who is self-employed as a sole trader in an “entreprise individuelle (EI)”, not trading through a limited company.

From 2018, the turnover of a “micro-entreprise” must not exceed:

  • €70,000 per year in a service based business: taxi driver, doctor, plumber, electrician ...

  • €170,000 per year in a commercial sale based business: cafe, restaurant, hotel, bed and breakfast...

A “micro-entrepreneur” is not required to keep any accounting books.

What obligations?

The formalities of business registration are easy to carry out. The “micro-entrepreneur” must:

  • Register at the register of companies (RCS),

  • Have a qualification or work experience for activities such as building trades,

  • For craftsmen, be enrolled with a chamber of trade.

  • Have professional insurance,

  • Open a bank account solely for this business activity.

Taxes

After registration at the RCS, the “micro-entrepreneur” will receive a SIRET number which allows him to declare his turnover to the tax authorities either monthly or quarterly.
Micro-entrepreneurs are taxed on a net profit calculated after application of a standard deduction for expenses (34% for liberal profession, 50% for services and 71% for sales). This is why a “micro-entrepreneur” cannot deduct the usual expenses such as telephone, travel or equipment.
Social contributions, from 12.8% to 22%, are calculated on the turnover. So, if there are no sales in a particular period (month or quarter) then you pay no contributions for that period.

Finally, the “micro-entrepreneur” is exempt of VAT (no invoicing, no recovery) up to €91,000 for a sale activity and €35,200 for a services activity.

Clients

If you contract with a micro-entrepreneur it is important he is not viewed as your employee. Otherwise you will be liable for his social contributions which are high in France. It is important he is genuinely independent and provides his own equipment, does not work fixed hours and has other customers. It is not unknown for micro-entrepreneurs to claim that the business relationship was a sham and that they were employees and that their employer is liable for all the social charges.

March 2018
David Anderson
Solicitor-Advocate and Chartered Tax Adviser