Guide to Micro-Entrepreneur Business in France

  1. What is a Micro-Entrepreneur?
  2. Business Registration
  3. Social Security
  4. Income Tax
  5. Business Rates
  6. Status of Spouse
  7. Should You Elect for Micro-Entreprise Status?
  8. VAT
  9. Payment of Taxes and Social Insurance
  10. Business Accounting
  11. Running a Chambre d'Hôte
  12. Multiple Business Activities
  13. Professional Insurance

Details of the financial assistance available to small business owners as a result of Covid-19 can be found at Hardship Grants for Small Business Owners.

3. Social Security Contributions

Affiliation to the social security (and health) system takes effect from the date of business registration, as the government confirms: 'l'inscription à la Sécurité sociale pour les indépendants prend effet à partir de la date de début d'activité.'

In return, a business owner pays social security contributions.

The social security charges system for micro-entrepreneurs is called micro-social.

Under micro-social you pay a fixed percentage social security contribution rate on your turnover.

Accordingly, your liability to social security contributions is based on your cash receipts, not your profit or loss.

If you wish to be taxed on the basis of your actual profit or loss, you cannot adopt micro-entrepreneur tax status. You will need to register your business on a different basis, called the régime réel.

3.1. Start-Up Relief

Up until the end of 2019 all new micro-entreprise start-ups were entitled to three years social security contributions relief on a sliding scale.

The relief was granted at the rate of 75% in the first year, 50% in the second year and 25% in the third year.

The scheme under which relief is granted is called 'ACCRE' – Aide aux Chômeur Créateurs et Repreneurs d'Entreprise.

Since January 2020 the scheme has been substantially recast, reducing the relief to existing beneficiaries and restricting relief only to certain groups of persons. As a result, most new business start-ups will no longer be eligible.

Details of the new arrangements are set out below.

i. Existing Businesses - 2019

For those who started their business in 2019, although relief for 2019 was maintained at the same rate (a reduction of 75% on the standard rate), for the second year relief has been reduced to 25% (down from 50%) and to 10% (from 25%) in the third year.

Accordingly, the start-up relief rates that apply for such businesses are as follows:

Business Activity Rate 2019 Rate 2020 Rate 2021
Sales 3.2% 9.6% 11.6%
Service 5.5% 16.5% 19.8%
Professional 5.5% 16.5% 19.8%

Those who run a meublé de tourisme classée have a lower standard rate of 6%, giving start-up rates of 3%, 4.5% and 5.4%.

ii. New Businesses - 2020 Onwards

For a new micro-entreprise created from 1st January 2020 relief is only available at the rate of 50% for the first year of activity and only to certain groups of persons.

Relief is no longer granted for the second and third years.

The rates that apply in the first year depend on the nature of your activity, as follows:

Business Activity Contribution Rate
Sales 6.40%
Service 11.00%
Meublé de tourisme classée 3.00%
Professional 11.00%

It is granted on a quarterly basis, not per calendar year. Thus, if you start your business in March 2020 the period of relief will end December 2020, not in 2021.

Accordingly, starting your business at the start of a quarter (January/April/July/October) will grant more relief than starting in the middle of the quarter.

However, since 2020 the relief is no longer universal or granted automatically.

Eligible persons are:

  • Registered unemployed and in receipt of unemployment benefit (allocation chomage) ;
  • Registered unemployed not in receipt of benefit, who have been registered as jobseekers for six months within the last eighteen months;
  • Recipients of allocation de solidarité or revenu de solidarité active;
  • Persons aged between 18 and under 26;
  • Persons under the age of 30 who are disabled or who do not meet the previous period of employment condition for entitlement to the unemployment benefit.
  • Employees or persons made redundant from a business who take over all or part of the former business;
  • Persons who have concluded a business support contract for a business project (contrat CAPE)
  • Persons creating or taking over a business in a urban development area (quartier prioritaire - QPPV);
  • Beneficiaries of the social security benefit complément de libre choix d'activité.

In order to claim you will need to complete the application form «Demande de l'aide à la création et à la reprise d'une entreprise (ACRE)» within 45 days of starting your business.

3.2. Standard Rates

The standard fixed rates payable depends on the nature of your business activity, as follows:

  • Commercial Sales - A commercial sales business (ventes des marchandises), including restaurants, hotels and chambres d'hôtes pay at the rate of 12.80% in social security charges. A meublé de tourisme classée (classed holiday accommodation) pays at the reduced rate of 6%.
  • Services/Trade - A 'service' based business (prestation de service) pays 22.00% of their turnover in social contributions.
  • Professional Services - If you are in one of the professions libérales, the rate applicable is also 22.00%.

These rates (2021) can be summarised thus:

Business Activity Contribution Rate
Sales 12.80%
Service 22.00%
Meublé de tourisme classée 6.00%
Professional RSI 22.00%
Professional CIPAV 22.20%

Some trade based activities are also commercial in nature (such as the building trade), and the dual nature of the activity makes them artisan-commerçant. The converse can also apply, ie commerçant-artisan. You will pay 22% social security contributions on the trade activity and 12.8% on commercial sales. Thus, the buying and selling of goods is the latter, whilst the construction and repair of property is the former.

This means they are subject to two different turnover limits on their activity (see Chapter 1), and they need to declare separately their turnover for each activity.

Those who merely sell products they produce do not need dual status.

3.3. Ancillary Contributions

To the above main social security contribution rates needs to be added some other small levies.

i. Professional Training Contribution

The first is a small charge towards professional training - la contribution de formation professionnelle.

The rate of this contribution depends on your business activity, as follows:

  • 0.1% for commercial activities;
  • 0.3% for trade/artisan activities;
  • 0.2% for service activities and professions libérales.

Charge is collected on turnover from previous year.

ii. Chambre Contribution

Sales based businesses (commerçants) are also required to affiliate to their local Chambre de Commerce et d'Industrie (CCI) and trade based professions (artisans) to the Chambre des Métiers et de l'Artisanat (CMA). The charge is called Taxe pour frais de chambre consulaire.

The rates are as follows:

  • 0.015% for resale/commercial activities/accommodation;
  • 0.48% for trade activities;
  • 0.22% for artisan sales
  • 0.044% for service activities;
  • 0.0% for the professions libérales, both RSI and Cipav

Artisans with a double affiliation to two chambres pay 0.007%.

As can be seen, the professions libérales pay no such contribution.

3.4. Summary

We can therefore summarise these standard contributions as follows:

Business Activity Cotisation CFP Chambre Total
Commercial Sales 12.80% 0.1% 0.015% 12.91%
Trade/Artisan 22.00% 0.3% 0.48% 22.78%
Service (Commercial) 22.00% 0.2% 0.044% 22.24%
Service (Meublé de tourisme classée) 6.00% 0.2% 0.044% 6.24%
Professional RSI 22.2% 0.2% 0% 22.40%
Professional CIPAV 22.2% 0.2% 0% 22.40%

Next: Income Tax

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