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Auto-Entrepreneur Reforms Stalled

The proposed reform of the auto-entrepreneur regime has been suspended pending a broader review of all small business structures.

It is clear that a spirited debate is currently taking place within French government and parliamentary circles about the proposed reform of the auto-entrepreneur regime.

As we reported last month, the Minister of Small Business, Sylvie Pinel, has proposed to substantially reduce the turnover limits for auto-entrepreneurs and to limit the duration of the status.

She is doing so under pressure from the strong construction lobby who consider auto-entrepreneurs have an unfair competitive advantage compared to those on the main tax regime.

However, all the indications are that the Prime Minister, Jean-Marc Ayrault, is far less enthusiastic about these proposals than his Minister, and has succeeded in pushing the issue into the long grass by establishing a parliamentary commission to undertake a wider review of small business structures.

The commission will start their work this month, with the report expected early next year. It will then be debated in parliament, and the final conclusions are unlikely to come into full effect until 2015.

As a further sign of the hesitation about this measure, it was noticeable last month that the draft law on the changes to the auto-entrepreneur regime presented to the French cabinet omitted any mention of specific maximum turnover figures.

It is also clear that there are many voices within the majority socialist party who are uncomfortable with the manner in which their Minister has yielded to corporatist pressure.

Most auto-entrepreneurs in France earn well below the minimum wage, and an expert panel set up to review the regime last year concluded that claims of unfair competition were grossly exaggerated.

So we are some way off the cataclysmic prognosis of one English language newspaper in France, which last month reported that the turnover limits for auto-entrepreneurs were to be ‘slashed’ by 40%.

The chairman of the small business commission Laurent Grandguillaume has already spoken of his desire to simplify the complicated range of small business structures that exist in France and to encourage entrepreneurship.

If he succeeds in doing so then any changes to the auto-entrepreneur regime may well be less painful than some have suggested, although all scenario's are still possible.

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This article was featured in our Newsletter dated 03/09/2013

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