Saturday, June 27, 2009

Self-employment in France

From January 2009 a new form of self-employment was launched by the government under the 'auto-entrepreneur' scheme, basically allowing you to set up and run a small business, and pay tax and social charges only on income actually received. Most other forms of business registration are based on social payments being paid on an estimated basis, and have left many people struggling in their early years trying to pay huge social charges against minimal income. It was probably the greatest single disincentive to setting up a small business in France.

Already nearly 150,000 individuals have registered as auto-entrepreneurs since January, the vast majority being middle-aged consultants (!) followed by personal services (teaching, domestic help etc) and those in involved in computers (website developers through to assistance in case of a crash).

Very few artisans have registered, as they have found it difficult to secure the necessary insurances associated with virtually any trade connected to building and maintenance. There has also been a lot of lobbying by groups representing artisans registered with the Cambres des Métiers, and the government has given into pressure, effectively blocking any more applications from artisans wishing to adopt the auto-entrepreneur status. This is particularly difficult for craftsmen such as potters creating and selling their own work, for example, who will have to choose another route.

For the rest of us, the auto-entrepreneur scheme allows you to run a small service business - such as consultancy - up to a turnover of 32,000 euros (the limit under which you have to register for VAT), and a business classed as 'commerce' (buying and selling) up to just over 80,000. Tax and social charges are paid on actual income (no allowances for expenses) at around 20% for services and 13% for commerce. These are paid monthly or 3-monthly as you earn.