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

3. Social Security Contributions

Under the system of social insurance for micro-entrepreneurs, your liability to social security contributions is based on your turnover (receipts), not your profit or loss.

That said, for the first three years as a micro-entreprise you obtain a heavily discounted rate, so it remains a good choice for most start-ups.

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.

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.

3.1. Start-Up Relief

Since January 2019, for the first three years of a new business a reduced rate is payable, and the rate you pay will depend on the nature of your business activity.

The scheme was previously known as ‘ACCRE’ (Aide aux Chômeurs Créateurs ou Repreneurs d’Entreprise), and was restricted to the unemployed and young persons, but has now been extended to all new start-ups.

It has been re-baptised as ‘Exonération de début d’activité de création ou reprise d’entreprise’, the official acronym for which is eagerly awaited.

In the first year there is a reduction of 75%, in the second year 50% and in the third year a reduction of 25%, with the full rate then payable in year 4.

Accordingly, the rates payable are as follows:

Business Activity Year 1 Year 2 Year 3 Year 4
Commercial Sales 3.2% 6.4% 9.5% 12.8%
Service/Trade 5.5% 11% 16.5% 22%
Professional CIPAV 5.5% 11% 16.5% 22%

There are different rates for landlords of furnished accommodation, which depends on the type of accommodation. You should refer to our detailed guide at Taxation of Furnished Accommodation for a full explanation.

The reduction is subject to a maximum notional profit figure of €40,000 based on turnover, with the fixed cost allowance that is used for income tax used to determine the figure.

The exemption limit is applied pro-rata to commencement date of the business in the first year.

Relief is granted automatically for all new businesses starting from 1st Jan 2019, so there is no need to make separate application. If you started the business before this date you are not eligible.

3. 2. Standard Rates

After three years, in the fourth year of your business, you start to pay social security contributions at the standard rate.

The rate will depend on the nature of your business activity, as follows:

  • Commercial Sales - A commercial sales business (ventes des marchandises), including restaurants, hotels, meublés de tourisme, 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 can be summarised thus:

Business Activity Contribution Rate
Sales 12.80%
Service 22.00%
Professional RSI 22.00%
Professional CIPAV 22.00%

You do not get a choice of the insurance fund to which you are affiliated; it is determined by the activity you pursue.

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;
  • 0.2% for the professions libérales (CIPAV).

If the income from your business is lower than a minimum figure each year you are exempt from paying this contribution. The assessment is carried on the turnover for the previous year. So for 2019 your income in 2018 needs to be below circa €5,000 in order to be exempt.

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 rates are as follows:

  • 0.0015% for resale/commercial activities;
  • 0.48% for trade activities;
  • 0.044% for service activities;
  • 0.0% for the professions libérales, both RSI and Cipav

As can be seen, professional service businesses 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% 0.0015% 12.90%
Service (Artisans) 22.00% 0.3% 0.48% 22.78%
Service (Commerical) 22.00% 0.3% 0.044% 22.34%
Professional RSI 22.00% 0.3% 0% 22.30%
Professional CIPAV 22.00% 0.2% 0% 22.20%

Next: Income Tax

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