Micro-Entrepreneur Turnover Thresholds Doubled
Friday 08 September 2017
The turnover levels for microentrepreneurs are to be doubled, but the measure is unlikely to be of significant value.
The micro-entrepreneur business tax regime has enjoyed enormous success since its introduction in 2009, and we are aware from your mails that many of you have chosen to adopt this status to run your small business in France.
One of the key characteristics of the status is that it is is subject to a maximum turnover, the level of which depends on the nature of your business:
These levels are generally increased each year, although not by a significant amount.
If your turnover exceeds these levels you are required to move to a different tax status – régime réel – although some leniency is granted if the limit is only exceeded for up to two consecutive years.
In the fulfillment of an election promise the government this month announced that these thresholds will be doubled for 2018 onwards.
Thus, the present limit of €33,200 will increase to €70,000 and the €82,800 limit will be increased to €170,000.
From 2019, those with an annual turnover of less than €5,000 will also be exempt from business rates - the cotisation foncière des entreprises (CFE).
However, the government have stated that there will be no increase in the VAT (TVA) registration exemption limit, which will remain at the previous levels (€33,200 and €82,800).
The decision to keep the VAT threshold has been made for a variety of different reasons - a wish not to incur the wrath of the professional associations who have railed against the allegedly favoured tax and accounting status of micro-entrepreneurs, the cost of an increased exemption to the public purse, and a potential row with the European Commission about such a concession.
Accordingly, if you exceed these turnover limits you will need to register for VAT and charge VAT to your customers, although those who only marginally do so can retain the exemption for a year.
If it is necessary to charge VAT it is questionable whether there would any advantage in retaining micro-entrepreneur status, as VAT registration creates significant additional tax and accounting requirements.
Only if the fixed tax allowances under micro-entrepreneur were materially lower than the tax relief that would be available under the régime réel would it be worthwhile. We considered this issue in our article Autoentrepreneur or Régime Réel?
One of the key characteristics of the status is that it is is subject to a maximum turnover, the level of which depends on the nature of your business:
- In a service based business, or a 'professional' activity, and for unclassified gîte accommodation, the turnover cannot exceed €33,200 per year.
- Those whose main activity is either sales based, cafe, restaurant, hotel, chambre d'hôte and classed gîte accommodation, have a turnover limit of €82,800 per year.
These levels are generally increased each year, although not by a significant amount.
If your turnover exceeds these levels you are required to move to a different tax status – régime réel – although some leniency is granted if the limit is only exceeded for up to two consecutive years.
In the fulfillment of an election promise the government this month announced that these thresholds will be doubled for 2018 onwards.
Thus, the present limit of €33,200 will increase to €70,000 and the €82,800 limit will be increased to €170,000.
From 2019, those with an annual turnover of less than €5,000 will also be exempt from business rates - the cotisation foncière des entreprises (CFE).
However, the government have stated that there will be no increase in the VAT (TVA) registration exemption limit, which will remain at the previous levels (€33,200 and €82,800).
The decision to keep the VAT threshold has been made for a variety of different reasons - a wish not to incur the wrath of the professional associations who have railed against the allegedly favoured tax and accounting status of micro-entrepreneurs, the cost of an increased exemption to the public purse, and a potential row with the European Commission about such a concession.
Accordingly, if you exceed these turnover limits you will need to register for VAT and charge VAT to your customers, although those who only marginally do so can retain the exemption for a year.
If it is necessary to charge VAT it is questionable whether there would any advantage in retaining micro-entrepreneur status, as VAT registration creates significant additional tax and accounting requirements.
Only if the fixed tax allowances under micro-entrepreneur were materially lower than the tax relief that would be available under the régime réel would it be worthwhile. We considered this issue in our article Autoentrepreneur or Régime Réel?
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