Guide to Micro-Entrepreneur Business in France
- What is a Micro-Entrepreneur?
- Business Registration
- Social Security
- Income Tax
- Business Rates
- Status of Spouse
- Should You Elect for Micro-Entreprise Status?
- Payment of Taxes and Social Insurance
- Business Accounting
- Running a Chambre d'Hôte
- Multiple Business Activities
- Professional Insurance
5. Business Rates
A micro-entreprise is liable for business rates, called the Cotisation Foncière des Entreprises (CFE).
The rates are determined from the value of the real estate you use to run the business, or the rent you pay if you are a tenant.
Even though you may work from home you are still liable for the tax, although normally only at a minimal rate.
Only that part of your home where you undertake the business activity will be liable for the tax. Thus, if you use a room or a workshop on the property, it is only that space you need declare for the tax.
There are a number of exemptions from the tax, some permanent and some temporary.
The CFE is not payable if your turnover is no greater than €5,000.
The rates are not payable in the start-up year, and payable at the rate of 50% in the second year.
One of the most significant permanent exemptions are artisans who work alone or within a family business. Others include artists/authors and certain business activities in development areas. Seasonal based businesses can obtain a reduction in the tax.
Owners of a chambre d'hôte or classified gîte accommodation are also exempt (unless the local council decides otherwise), provided the property is either their principle residence or second home. Rural gites and meublés de tourisme, chambres d'hotes and certain hotels in classified rural development areas (Zones de Revitalisation Rurale) can also obtain exemption from local rates (the taxe d'habitation and taxe foncière) by submitting each year Form 1205-GD-SD and Form 6671-D-SD to their local tax office before 31 Dec. The exemption applies provided the local council have made a policy decision to that effect.
In the first year of your business your local tax office will send you a Form 1447-C-K to complete. Some of the form will have already been completed by them, which you are required to confirm or amend, and to then complete the remainder of the form. If you seek an exemption from the CFE there is a section on the form for that purpose.
The level of the rates payable is determined locally, but within parameters set by central government, revised upwards each year in line with inflation.
The rate bands depends on the turnover of the business, as follows for 2021/22:
|Between €5,000 - €10,000||€223-€534|
|Between €10,000 - €32,600||€223-€1,061|
|Between €32,600 - €100,000||€223-€2,229|
|Between €100,000 - €250,000||€223-€3,716|
|Between €250,000 - €500,000||€223-€5,307|
Most smaller councils set the minimum rate towards the lower end of each range, although that is not the case for all of them. It you only occupy a small amount of workspace you should only be charged a few hundred euros a year. If in doubt, then ask the local tax office.
The reference year used for determining the turnover figure is two years prior to the year of imposition.
It is collected via the national tax authority, who will send you a tax notice, either paper or on-line. They also collect a small management charge on behalf of the councils and themselves, which is added to the rates payable.
The tax is payable by mid December each year, and can also be paid monthly by prior registration.
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