Running Multiple Businesses in France
Tuesday 05 August 2014
What is the legal and fiscal base for simultaneously running more than one business in France?
Contrary to popular belief it is not necessary to set up a separate business entity for each business.
Indeed, for a sole trader it is not actually possible to do so. This is because a sole trader can only be registered once with the Régime Social des Indépendants, the social security agency for the self-employed.
However, this does not mean you cannot run several businesses in France, although the rules operate in different ways for different business structures.
Indeed, you would have no reason to do so, for it is quite in order to carry out a subsidiary activity (activité complémentaire) without prejudice to the legal and fiscal status of the main business. An auto-entrepreneur/micro-entreprise is quite entitled to run several different businesses under a single registration.
If the two activities are distinct, to the extent that there are different rates of social security contributions that are payable, these are identified and paid separately, unless in one case the activity is an incidental extension of the main business, in which case a single rate of contribution is paid.
In both cases, the turnover limits for an auto-entrepreneur must be respected, and here the rule that applies depends on the nature of the business activities being pursued:
- If they fall within the same business category the turnover limits for the two businesses must not exceed the maximum for that category;
- If the two businesses are distinct it is possible to apply the maximum turnover limits for each activity.
So, for example, if one of the activities is 'commercial' in nature then a turnover limit of €82,200 will apply for that activity; if the other business is 'artisanal' by nature, then it will have a turnover limit of €32,900. If both fall into the same business category, then only one limit applies. You cannot go above the turnover threshold of the main business.
If over time the complementary business becomes larger than the original business you merely need to change the basis of your registration with the business registration authorities.
There are separate regulations that also govern entitlement to enter any business profession, notably those relating to qualifications and/or experience.
Limited Company and Auto-Entrepreneur
A business owner who is the main shareholder of a company is not entitled to separately set up as an auto-entrepreneur.
Neither is an auto-entrepreneur entitled to set up another business through a limited company as the majority shareholder.
The reason for this is to prevent the owner dividing turnover and profits between the two businesses so as to optimise their tax position.
However, a company shareholder who does not have a majority stake (and who therefore is paid on a salaried basis) does have an entitlement to set up separately as an auto-entrepreneur.
The same applies to a company director who has an equal share (50/50) in the company with another director.
What is important here is the tax status of the owner, whether salaried or self-employed.
The situation is a little different for someone who wishes to run several different businesses through a limited company, such as a SARL.
In this case it is quite possible to be the main shareholder in several different companies through which each business is run.
Once again, the social security contributions that will be payable will be based on the total profits of all the business activities.
Agricultural Business Activities
The rules are slightly different for those who wish to run an agricultural business alongside a non-agricultural business.
The general rule that applies here is that an agricultural business cannot undertake activities that are considered to be commerciale, artisanale or libérale.
However, it does depend on the scale and nature of the two activities, and advice would need to be taken in each case. In practice, the solutions are not as difficult as the regulations imply.