Some reforms in the French Auto Entrepreneur Scheme are about to take place as that have finally been passed by the Senate.
A few questions you might have about the new laws.
When will the new law changes start.
The Loi Pinel is expected to come into effect on January 1, 2015.
How are existing firms affected?
Many elements, such as the limits on annual turnover (€32,900 for trades and services, €82,200 for sales of goods) stay the same. As before, you can remain in the scheme as long as you do not hit these limits over a two year period – in which case you must switch to a “classic” regime.
With regard to the tax Cotisation Foncière des Entreprises (CFE), which replaced the old taxe professionnelle, the Pinel Law confirms the 2014 Finance Law’s abolition of the three-year exoneration auto-entrepreneurs previously enjoyed (apart from for the set-up year).
Auto-entrepreneurs’ body the Fédération des Auto-Entrepreneurs says the latest rules mean the tax applies to all auto-entrepreneurs, which Evo’Portail, a partner site advising those in the sector, says means everyone can expect to pay it this year unless they set up in 2014. CFE is payable by mid-December.
Evo’Portail states auto-entrepreneurs can expect to pay a fixed rate set by their communes, from €210-500 for businesses with turnover of €10,000 or less; €210-1,000 for turnover up to €32,600 and €210-2,100 for higher turnovers.
The site adds it is still hoped that final concessions will be made on arrangements for this tax (which is already paid by other businesses). The Federation insists that CFE for auto-entrepreneurs should be at a percentage of turnover or else risks being punitively high for those earning small amounts. A working group on the issue meets this month.
Less controversially – a tax for frais de chambres consulaires (towards running costs of the chambers of trade or of commerce) will mean a slight rise in charges paid from January 2015, of 0.044% of turnover for services, 0.015% for selling and 0.007% for artisans..
All artisan auto-entrepreneurs will also be required to register at their chamber on the Répertoire des Métiers (RM) and those involved in selling will have to register with the equivalent Registre du Commerce et des Sociétés (RCS). The requirement previously only applied to artisans, and only if the artisan work was their main activity.
Auto-entrepreneurs will be have to provide proof of professional insurance, in sectors where it is obligatory, notably the assurance décennale for building sector artisans. This must also be mentioned on devis (quotes) and factures (bills), as must artisans’ qualifications.
The law provides for an optional support scheme to help business owners once firms reach 50% of the turnover ceiling. Details of this are due later this year. It also provides for optional end-of-year social charge top-ups for those who have not worked enough to build up a full four quarters of pension rights.
I plan to become an auto-entrepreneur. What changes for me?
If you are an artisan, you will have to attend a four or five-day training course when you enrol, intended to help get your business off to the right start. As for other artisans, it will be compulsory and you will have to pay for it.
What about people registered under other small business set-ups?
The Loi Pinel does away with the differences between the auto-entrepreneur setup and the “traditional” micro-entreprise set-up of which it was designed to be a simplified version.
Both will now be called micro-entreprises and will share the same “pay as you go monthly or three-monthly social charges as well as the same taxation options – which include a choice of a similar tax regime or alternatively an annual tax declaration with a fixed expenses deduction.
It is planned that there will still be an alternative réel system for those who want to deduct actual business expenses, not a set amount.
Simplifications are meant to be worked out for those wanting to take advantage of the EIRL scheme, which allows sole traderships including auto-entrepreneurs a form of limited liability.
Is the AE status open to all work?
No. Some types of activities are not allowed, for example, lawyers, finance companies, hire companies and estate agents. People with revenue from royalties (artists, writers, software designers etc.) are also excluded.
What are the main pros and cons?
The auto-entrepreneur is relatively easy to set-up and run and it is compatible with a salaried job.
An important downside is that you will pay tax and charges on any expenses you invoice. If your activity is likely to incur significant costs, you should look into classic business set-ups.
You can read more on this story on The Connexion- France’s English Language Newspaper
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