Guide to Micro-Entrepreneur Business in France
- What is a Micro-Entrepreneur?
- Business Registration
- Social Security
- Income Tax
- Business Rates
- Status of Spouse/Partner
- 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
- Second-Hand Sales
6. Status of Spouse/Partner
Where a spouse/civil partner plays a regular part in the running of a business, even though it may be run primarily by their partner they are legally obliged to be registered in the business.
In part this is to ensure the spouse has some form of social protection in the event of the death of their partner, but it is also to control the use of undeclared labour.
A law passed in 2018 reinforces the penalties for a failure to declare a spouse/partner, as we set out in Declaration of Spouse in a French Business.
Where the spouse/partner is involved in the running of a micro-entreprise business there are three options:
i. Separate Registration - As a general rule, it makes no sense for the spouse/partner to also register separately as a micro-entrepreneur, for although each may perform different roles there is only one business entity and sales.
That said, if there are two distinct set of products or services that can be invoiced separately then separate registration might make sense.
ii. Salaried Employee - It is possible for the spouse/partner to be a salaried employee of the business, but the social security obligations of this option are such that it would be an expensive and unnecessary route to take; the salary and employment costs of the spouse would not be tax deductible, as would be the case in a company structure.
iii. - Associate - A more sensible solution is for the spouse/partner to become a conjoint collaborateur in the business.
Since 1st January 2022, it is also possible for those cohabiting, but neither married or in a civil partnership, for one to opt for the status of conjoint collaborateur.
The social security and tax implications of conjoint collaborateur status are considered below.
6.2. Social Security Contributions
In terms of social security contributions (cotisations) a conjoint collaborateur pays at the standard fixed percentage micro-entrepreneur rate that applies for the type of activity.
That is to say, for 2022 the basic rates are as follows:
- Commercial Activity - 12.80%
- Service Activity - 22.0%
- Liberal Activity - 22.0%
However, unlike the main owner who pays the fixed rate on 100% of the turnover of the business, the conjoint collaborateur has the choice of paying that standard fixed rate on either:
- A lower percentage of the total turnover of the business, or;
- A notional profit figure.
The choice of which option to use is up to the business owner and their spouse. You need to carefully do your maths, as the differences can be significant. As a general rule, where your actual turnover is lower than the notional profit figure it is more advantageous to adopt the percentage of turnover option.
i. Percentage of Turnover
Under this option the spouse pays cotisations on either 58% or 46% of the turnover of the business. The 58% figure applies to all business activities except for those in one of the CIPAV professions libérales who pay on 46% of the total turnover, although other service based professions libérales pay at the rate of 58%.
So the formula for determining the amount payable, depending on business activity, is as follows:
- Commercial Activity - Turnover x 58% x 12.80%
- Service Activity - Turnover x 58% x 22.0%
- Liberal Activity - Turnover x 46% x 22.0%
Thus, by way of example, if you are in a commercial activity, and you declare monthly income of €2,000, the social security contributions payable by the spouse would be 12% X €1,160 = €139.
The percentage cotisations rate will increase if the spouse also opts to pay income tax with their social security contributions (see below).
ii. Notional Profit
The basis of the calculation with this option is a notional profit formula set by the government. So it has nothing to do with the turnover you declare each accounting period.
The notional profit figure is based on one-third of the 'plafond annuel de la sécurité sociale'. That one-third figure is €13,712 in 2022. A notional turnover figure is then established using the cost allowances 71% for commercial activities, 50 % for service activities, and 34% for liberal activities and then the percentage share payable of that turnover figure, either 58% or 46% as in option 1.
Thus, in 2022 the notional (rounded) figures by type of business activity are:
|€11,200 (58% of €13,712/71%)
|€15,900 (58% of €13,712/50%)
|€23,390 (58% of €13,712/34%)
|€18,550 (46% of €13,712/34%)
In practice, these charges are not always being collected, as we set out in an article we published in our Newsletter in Sept 2020, which you can find at Microentrepreneur Spouse Social Security Contributions.
6.3. Income Tax
In terms of income tax the total income of the business is taxed as part of the household income under the personal income tax system, although it is possible to opt for separate fixed percentage income tax deductions, which we set out in our section on Income Tax.
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