Guide to Micro-Entrepreneur Business in France

1. What is a Micro-Entrepreneur?
2. Business Registration
3. Social Security
4. Income Tax
5. Business Rates
6. Status of Spouse
7. Should You Elect for Micro-Entreprise Status?
8. VAT
9. Payment of Taxes and Social Insurance
10. Business Accounting
11. Running a Chambre d'Hôte
12. Multiple Business Activities
13. Professional Insurance
14. Second-Hand Sales

3. Social Security Contributions

Affiliation to the social security (and health) system takes effect from the date of business registration, as the government confirms: 'l'inscription à la Sécurité sociale pour les indépendants prend effet à partir de la date de début d'activité.'

In return, a business owner pays social security contributions, which go mainly to health cover and retirement pensions.

The social security charges system for micro-entrepreneurs is called micro-social.

Under micro-social you pay a fixed percentage social security contribution rate on your turnover.

Accordingly, your liability to social security contributions is based on your cash receipts, not your profit or loss.

If you wish to be taxed on the basis of your actual profit or loss, you cannot adopt micro-entrepreneur tax status. You will need to register your business on a different basis, called the régime réel.

As social security contributions are high, and accounting requirements for micro businesses low, low reporting of sales is not uncommon, a fact that has come to the attention of the government who in 2023 announced a reinforcement of tax controls on micro-entrepreneurs.

3.1. Start-Up Relief

Up until the end of 2019 all new micro-entreprise start-ups were entitled to three years social security contributions relief on a sliding scale.

The relief was granted at the rate of 75% in the first year, 50% in the second year and 25% in the third year.

The scheme under which relief is granted is called 'ACCRE' – Aide aux Chômeur Créateurs et Repreneurs d'Entreprise.

Since January 2020 the scheme has been substantially recast, reducing the relief to existing beneficiaries and restricting relief only to certain groups of persons. As a result, most new business start-ups will no longer be eligible.

For a new micro-entreprise created from 1st January 2020 relief is only available at the rate of 50% for the first year of activity and only to certain groups of persons.

Relief is no longer granted for the second and third years.

The rates that apply in the first year depend on the nature of your activity, as follows:

It is granted on a quarterly basis, not per calendar year.

Accordingly, starting your business at the start of a quarter (January/April/July/October) will grant more relief than starting in the middle of the quarter.

However, since 2020 the relief is no longer universal or granted automatically.

Eligible persons are:

• Registered unemployed and in receipt of unemployment benefit (allocation chomage) ;
• Registered unemployed not in receipt of benefit, who have been registered as jobseekers for six months within the last eighteen months;
• Recipients of allocation de solidarité or revenu de solidarité active;
• Persons aged between 18 and under 26;
• Persons under the age of 30 who are disabled or who do not meet the previous period of employment condition for entitlement to the unemployment benefit.
• Employees or persons made redundant from a business who take over all or part of the former business;
• Persons who have concluded a business support contract for a business project (contrat CAPE)
• Persons creating or taking over a business in a urban development area (quartier prioritaire - QPPV);
• Beneficiaries of the social security benefit complément de libre choix d'activité.

In order to claim you will need to complete the application form Demande de l'aide à la création et à la reprise d'une entreprise (ACRE) within 45 days of starting your business.

3.2. Standard Rates

The standard fixed rates payable (2024) depends on the nature of your business activity, as follows:

• Commercial Sales - A commercial sales business (ventes des marchandises), including restaurants, hotels and chambres d'hôtes pay at the rate of 12.30% in social security charges. A meublé de tourisme classée (classed holiday accommodation) pays at the reduced rate of 6%.
• Services/Trade - A 'service' based business (prestation de service) pays 21.20% of their turnover in social contributions.
• **Professional Services ** - If you are in one of the professions libérales, the rate applicable from 1st July 2024 is 23.10%/23.20%, depending on activity. Further increases are planned in 2025 and 2026. You can read more at Micro-entrepreneur Social Security Contributions.

In summary the rates from 1st July 2024 are:

You can read more in an article published in France Insider: Reduction in Social Insurance for Small Business Owners.

Some trade based activities are also commercial in nature (such as the building trade), and the dual nature of the activity makes them artisan-commerçant. The converse can also apply, ie commerçant-artisan. You will pay 22% social security contributions on the trade activity and 12.3% on commercial sales. Thus, the buying and selling of goods is the latter, whilst the construction and repair of property is the former.

This means they are subject to two different turnover limits on their activity (see Chapter 1), and they need to declare separately their turnover for each activity.

Those who merely sell products they produce do not need dual status.

3.3. Ancillary Contributions

To the above main social security contribution rates needs to be added some other small levies.

i. Professional Training Contribution

The first is a small charge towards professional training - la contribution de formation professionnelle.

The rate of this contribution depends on your business activity, as follows:

• 0.1% for commercial activities;
• 0.3% for trade/artisan activities;
• 0.2% for service activities and professions libérales.

Charge is collected on turnover from previous year.

ii. Chambre Contribution

Sales based businesses (commerçants) are also required to affiliate to their local Chambre de Commerce et d'Industrie (CCI) and trade based professions (artisans) to the Chambre des Métiers et de l'Artisanat (CMA). The charge is called Taxe pour frais de chambre consulaire.

The rates are as follows:

• 0.015% for resale/commercial activities/accommodation;
• 0.48% for trade activities;
• 0.22% for artisan sales
• 0.044% for service activities;
• 0.0% for the professions libérales, both RSI and Cipav

Artisans with a double affiliation to two chambres pay 0.007%.

As can be seen, the professions libérales pay no such contribution.

3.4. Summary

We can therefore summarise these standard contributions as follows:

Business Activity|Cotisation|CFP|Chambre|Total
|---|---|---|---
|Commercial Sales|12.30%|0.1%|0.015%|12.91%
|Trade/Artisan|21.20%|0.3%|0.48%|21.98%
|Service (Commercial)|21.20%|0.2%|0.044%|21.44%
|Service (Meublé de tourisme classée) |6.00%|0.2%|0.044%|6.24%
|Professional RSI |23.10%|0.2%|0%|23.30%
|Professional CIPAV| 23.20%|0.2%|0%|23.40%

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