The French government is inching towards a rationalisation of existing business structures, notably by fusion of the micro-entreprise and auto-entrepreneur tax regimes.

The uncertainty over the future of the auto-entrepreneur business tax regime is nearing an end, with the prospective submission to the government of a report on the issue by a parliamentary commission headed up by a socialist député Laurent Grandguillaume.

He was given the unenviable task of undertaking a comprehensive review of small business structures by the Prime Minister Jean-Marc Ayrault, who intervened in proposals being touted by his Minister of Small Business, Sylvie Pinel, to reduce the turnover limits for auto-entrepreneurs and to limit the duration of the status.

It is a hotly contested issue, with huge pressure having been mounted over the past couple of years from the strong construction lobby who consider auto-entrepreneurs have an unfair competitive advantage compared to those on the main tax regime.

In turn, the auto-entrepreneurs have organised their own campaign of opposition to any changes, succeeding in mobilising a petition containing 85,000 signatures against the proposals of the Minister.

The report of the parliamentary commission has yet to be published, but the indications are that there will propose harmonisation and simplification of the various business statutes.

Far from a wholesale reduction in the auto-entrepreneurs tax advantages, it seems that the commission is proposing that the existing turnover thresholds be retained and that the status is not time limited. That will come as a huge embarassment for the Minister of Small Business, Sylvie Pinel.

The commission is proposing that no social security contributions become payable until the business generates sales, thereby ending the minimal level of cotisations.

By contrast, all new business owners will be liable to business rates (Contribution Foncière des Entreprises - CFE), but as the government had already indicated the auto-entrepreneurs temporary exemption would be ended, this merely confirms an earlier announcement. The level of the rates will have regard to the size of the business, and will be subject to a maximum of €500 pa for 'des contribuables les plus modestes'.

More generally, the commission is proposing a rationalisation of the main business statutes, of which there are a confusing number - EIRL (Entreprise Individuelle à Responsabilité Limitée), EURL (Entreprise Unipersonnelle à Responsabilité Limitée), and EI (Entreprise Individuelle). Others remain, not even talked of being absorbed.

The aim will be to create a single status which offer some form of limited liability cover to all business owners. That is quite a target.

Micro-entreprise and auto-entrepreneur businesses operate as an EI (Entreprise Individuelle), that is to say, as sole traders without limited liability.

There are many roads to travel down before the details of all of this are clarified and implemented, and we shall be posting regular updates as the plans develop.