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Business Rates and Auto-Entrepreneurs 2011

Thursday 05 May 2011

Very few of you who are registered as auto-entrepreneurs should be paying business rates in 2011, despite demands having been sent out to many.

The brouhaha at the end of last year over the liability of auto-entrepreneurs to business rates meant that many of you received demands for business rates for which you were not in fact liable.

To recap, in January 2010 the government abolished the former tax regime of business rates, called the taxe professionelle.

However, as French bureaucrats never like to do things in a straightforward manner, this tax was replaced by two taxes - the Cotisation Foncière des Entreprises (CFE) and the Cotisation sur la Valeur Ajoutée des Entreprises (CVAE).

In practice, a small business will only be liable for the first of these taxes, and there are particular exemptions from the CFE for auto-entrepreneurs.

Initially, the government stated that only auto-entrepreneurs who had opted for income tax deducted at source- the prélèvement libératoire de l’impôt sur le revenu - were entitled to this exemption.

However, when it also became apparent that auto-entrepreneurs who had no sales were also being charged business rates, the rules were revised.

In December 2010 the law was changed granting an exemption for all auto-entrepreneurs in the year of the creation of their business, and for the following two years.

This was not before many auto-entrepreneurs had actually received a demand for business rates.

Those of you who have received a demand, should make application for a refund (reclamation) to your local tax office.

In order to benefit from this exemption, the owner, or other immediate family members, must not have previously exercised a similar activity during the previous three years.

Otherwise, you also need to formally request exemption by 31st December in the year of creation of the business. If it was created after 1st October, then the application must be made within three months of creation of the business.

So if you start your business in 2011, you will not be liable for business rates until 2014.

If you are registered as a micro-entreprise, and you have opted for the tax regime of micro-social then you are granted the same entitlement.

Once the exemption period ends, then the local council will determine the amount payable, based on the information you are required to supply to them.

A minimum amount will be payable, which may range from €200 to €2000, depending on the decision of the local council.

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