9. Taxation of Business Profits in France

1. 9.1. Main Options
   9.2. Micro-Entrepreneur
   9.3. Régime Réel
   9.4. Company Tax
   9.5. Dividends

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9.2. Micro-Entrepreneur Business in France

There are four main points to note about micro-entreprise (or auto-entrepreneur) status:

i. Tax Status - First, a micro-entreprise is not a legal business structure – it is a specific tax status that benefits from simple tax and accounting rules.

ii. Turnover Limits - The second important qualification is that micro tax status is only available if the business does not exceed certain turnover limits. These turnover limits depend on the type of business activity you pursue.

iii. VAT – A business adopting the tax status of micro-entreprise cannot charge VAT on their goods or services, and neither can they recover VAT paid on purchases.

iv. Exclusions - Finally, certain types of business are excluded from micro-entreprise status eg estate agents.

With effect from January 2009 there are two types of micro-entreprise tax regimes, although in large measure they probably amount to the same result:

1. i. Régime de base - Your liability to tax and social security contributions is calculated after deduction of a fixed rate allowance against annual turnover.
2. ii. Micro-Social/Fiscal – You pay a (lower) fixed percentage of your total turnover in social security and tax payments.

Whether or not you should adopt micro or auto-entrepreneur tax status depends on a lot of factors. As a general rule, it is more suited to those businesses with a low cost structure, and those seeking to run a small business as a secondary source of earnings.

There are some disadvantages of micro-entreprise status that you need to consider, which we consider in our full guide.

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