When it comes to running a business in France on a self-employed, or freelance basis, there are taxes and filing requirements you need to be aware of. We asked the experts at Sanderling Expat Advisors who specialise in advising US expats on tax and finance matters, to explain the requirements when it comes to freelancing in France.
Working as a solo entrepreneur in France
France is famous for its sometimes onerous administration system, but for the past 15 years, there has been ongoing work and changes to systems to make it easier to run your own business. For a start there’s been an expansion of choice of passports and work visas available to foreigners. And the government has been investing to make administration a lot simpler for the nation’s small businesses, artists, artisans and freelancers. Among the most popular changes has been the introduction of a reporting system for solo entrepreneurs making it far, far easier to run your own business in France. You need a work visa in order to qualify and if you do have that, here is how to take advantage of France’s freelancing-friendly rules.
Are you a micro-entreprise?
The new status of micro-entreprise (in English, “micro-business”) was begun in 2009, originally named auto-entrepreneur. The idea was to provide an inexpensive and much streamlined process for reporting income without the hassle and cost of registering a formal business structure. This concept works well for a whole host of freelancers, artists, authors, artisans and people trying to earn a little extra income. You can use the micro-entreprise régime as long as you work alone. If you have employees or business partners, then you will need to create a formal business structure. And your annual turnover should not exceed the threshold which is currently set at €77,000 if you are providing professional services and €188,700 if you are selling goods [2023].
What does it mean in practice?
The micro-entreprise régime is based on business turnover. Put simply, it means the amount of sales or service income you receive before you deduct any costs or expenses of the business. And that is significant because one of the most important components of the micro-entreprise régime is that you will not need to do any traditional bookkeeping. The law requires only that you keep a copy of your business receipts and a record of all the invoices and payments made by your clients in case you are ever audited.
From the amount of your reported turnover, the tax office will take an automatic 34%, 50% or 71% off the to. The figure depends on the type of business activity. They will then calculate for you the taxes and social charges based only on the rest. Thankfully for those of us from the U.S., the micro-entreprise is also exempt from the TVA (value-added tax) system.
Registration for small business and freelancers in France has also been simplified – at least theoretically. Beginning on January 1, 2023, the government site for registering business trademarks, INPI, became the guichet unique (“single portal”). Despite a rocky launch, the site now seems to be functioning.
It allows you to do every type of filing related to your business activity – starting with the first registration – from one spot. The portal automatically passes on your necessary information to an assortment of French government agencies that handle different aspects of economic life in the country. All of this means that once you create your account at INPI and register your business activity, you should have just one place to keep everything going.
What you should know
When you get started, you have option on how your estimated taxes are paid, including whether you want social charges and income taxes to be paid at a flat rate.
Taxes are all paid online. And you will be invited to use something called a PEIRL form to list all the equipment and resources you use in your business activities. Thanks to recent changes, this simple form creates a separation between your business activity and personal resources to give you some legal liability protection.
Is the micro-entreprise régime right for you?
Not surprisingly, the auto-entrepreneur business status has been resoundingly popular in France. According to François Hurel, Président of the union of auto-entrepreneurs, France sees a whopping 3,500 new micro-entrepreneur businesses registered every day. And to date there are about 3 million auto-entrepreneurs in total. Of these, some 30% are commercial or artisanal businesses. The rest are in the French category of “professions libérales,” a catch-all for everything from lawyers to translators and wellness coaches.
French business law still offers a variety of formal business structures that might work better for you, and if you anticipate having higher turnover, need to take on employees, have business partners or plan to grow the business, you need to consider other options.
If you’d like help setting up your accounts and taxes in France and with taking care of reporting and tax requirements in the US, Sanderling Expat Advisors can help: sanderlingexpat.com
