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Guide to Micro-Entrepreneur Business in France

  1. What is a Micro-Entrepreneur?
  2. Micro-Entrepreneur Business Registration
  3. Micro-Entrepreneur Tax Regimes
  4. Status of Spouse in a Micro-Entreprise
  5. Should You elect for Micro-Entrepreneur Status?
  6. Micro-Entrepreneurs and VAT
  7. Payment of Taxes and Social Insurance
  8. Micro-Entreprise Business Accounting
  9. Running a Chambre d'Hote

1. What is a 'Micro-Entrepreneur'?

Since 2009, a simple business status has been available to someone who wishes to establish a small business in France.

The status was originally called auto-entrepreneur, but it is now called micro-entrepreneur.

Those adopting this status run the business as a micro-entreprise.

The popularity of this status is generally because the formalities of business registration are easy to accomplish and the tax and accounting rules are less painful than other forms of business status.

What then is a micro-entrepreneur? We can distinguish a number of key characteristics.

i. Tax Status

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

It is only available to someone who is self-employed as an Entreprise individuelle (EI). That is to say, someone running the business as a sole trader, not through a limited company.

Accordingly, it is not available if you propose to run your business through a private limited company - such as a EURL or SARL - or other form of French company structure.

So, if someone says to you they have micro-entreprise status, what they mean is they are actually an Entreprise Individuelle (EI) that has chosen to be taxed as a micro-entrepreneur, rather than being taxed under the other main form of business taxation, called the regime réel.

We examine the differences between the micro-entrepreneur tax regime and that of the regime réel in later pages.

ii. Pay As You Go

There is no minimum level of social security contributions payable, in the same manner as occurs with other business statutes.

You pay your social insurance as you go, based on sales, and if you do not have any sales (actual income received) in a particular period (month or quarter) then you will pay none for that period.

Only if you declare no turnover for a period of two years do you lose the status.

iii. Accounting

A micro-entrepreneur is not required to keep any books of accounting, other than a day-book giving details of income received, although commercants (traders) are also required to keep a book registering their expenditure.

This simple accounting rules is often cited as one of the main advantages of running the business as a micro-entrepreneur, as there is no need to employ an accountant. That said, the use of an accountant is never compulsory; you can do it yourself if you feel you are competent enough to do so.

iv. Turnover Limits

The third important characteristic is that micro-entrepreneur tax status is only available if the business does not exceed certain turnover (sales) limits.

These turnover limits depend on the type of business activity you pursue.

In this respect the rules make a (rather bizarre) distinction between those whose business activity is 'service' or ‘professional’ based, and those main activity is 'sales'.

Prior to 2018 these maximum turnover limits were either €33,200 or €82,800, depending on the nature of the business activity.

Since 2018 (for 2017 income onwards) the maximum turnover thresholds have been doubled, and they are now as follows:

  • In a service based business, or a 'professional' activity, and for unclassified gîte accommodation the turnover cannot exceed €70,000 per year.
  • Those whose main activity is either sales based, cafe, restaurant, hotel, chambre d'hôte and classed furnished accommodation, have a turnover limit of €170,000 per year.

If the business does both types of activities (service and sales) then it can still retain micro status, provided total business revenues do not exceed €170,000, and the specific service based activity does not exceed €70,000 a year.

This is notably the case with those in the building trades, where the sale of building materials receives the upper limit, whilst the building construction activity itself is restricted to the lower rate.

If you exceed these turnover thresholds you cannot retain micro-entrepreneur status; you are obliged to adopt the tax status of regime réel However, a period of tolerance is granted for up to two consecutive years if you temporarily exceed these limits.

This tolerance is not available in the first year of the business and the turnover limits are applied pro-rata to the length of time the business has been in operation in the first year.

These turnover thresholds are, however, deceptive, due to the lower turnover limits for VAT exemption.

v. VAT

Prior to 2018 a business adopting the tax status of micro-entrepreneur could not charge VAT on their goods or services, and neither could they recover VAT paid on purchases.

If you wished to charge VAT you could not use micro-entrepreneur tax status.

However, since 2018, whilst the turnover limits to retain micro status have been doubled, the turnover limits for VAT remain unchanged; they are now half that of those for micro status - either €33,200 or €82,800, depending on the nature of your business activity, as above.

Accordingly, if your turnover limits are greater than either €33,200 or €82,800 (depending on business activity) you are obliged to charge VAT, even though you may still retain micro status. We consider the VAT issue in a later section of this guide.

vi. Exclusions

Finally, certain types of business are excluded from micro-entrepreneur status.

They include those who buy and sell property on a professional basis, estate agents, developers, finance companies, and agricultural professions, with certain other limits on artists, writers, scientific and sports based activities.

You need to check with your accountant, or your local Chambre de Commerce/Metiers, on the full list.

In addition, the letting of unfurnished accommodation is taxed under rules of revenus fonciers, which you can read about in our pages on Letting Property in France.

Next: Micro-Entrepreneur Business Registration

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