What any potential entrepreneur in France should know about the micro-entreprise. The micro-entreprise is a type of corporation – the default, starter pack corporation in France. Its advantages are that it has a simplified accounting (i.e., you don’t have to hire an accountant to manage your turnover), and a simplified tax regime to take business expenses into consideration.

Social charges

The best advantage of the micro-entreprise is that the rate of social charges: 22% instead of 40%.

What are social charges? It’s what you as an entrepreneur are paying into the system, that covers sick leave, disability, retirement, etc. For every other corporate structure, approximately 40% of the company’s profit goes to paying URSSAF, the French social security agency. This explains my earlier article on rethinking a move to France, when an old professor told me that for every three euros his firm earns, he only keeps one euro.

Finances

There are two numbers you should keep in mind for a micro-entreprise (these numbers are for 2022, and are increased marginally each year):

• 36,500€ • 72,600€

The first number, 36,500€ is about Value Added Tax (TVA, in French). TVA for intellectual assistance is 20%. If your activity, for example, is teaching or external consulting, and you only earn 20,000€ yearly, then you don’t have to pay TVA of 20%. You send out invoices for the amount without including any value added tax.

The first month you earn above 36,500€, you have to start including the TVA of 20% in your invoices.

The second number of 72,600€ pertains to staying on the micro-entreprise status. So long as your total earnings are less than 72,600€, you can remain on the micro-entrepreneur status. If your turnover (chiffre d’affaires) is above 72,600€ two years in a row, you’re obligated to leave behind the micro-entreprise status and graduate onto a more formal corporate structure.

Photo source: "hard at work" by Mathieu! is licensed under CC BY-NC-SA 2.0.

Taxes

Let’s say you had 50,000€ in turnover, and that you spent 6,000€ on professional expenses during that year. Do you deduct that 6,000€ from the turnover?

No – it’s actually more advantageous than that. For Micro-entreprise, they made it very simple: the French authorities esteem that 34% of your turnover was spent on business expenses. So, they would have you deduct 34% of 50,000 (which is 17,000€) as the assumed amount of money you spent on professional expenses. So, you’d be taxed as if you had only earned 33,000€. This standardized deduction 34% in French is called an “abattement forfaitaire”.

Conclusion

Let’s end by clearing up the terms. Clients often ask me about “Auto-entrepreneur”, and this was merged into being the same thing as “micro-entreprise” in 2016. A “micro-entrepreneur” or an auto-entrepreneur running a micro-entreprise, it’s all describing the same thing.

Regarding the immigration procedure, I regularly see applicants filing for the Entrepreneur/Profession Libérale visa, and once it’s obtained, they create a French micro-entreprise. Should you wish to pursue the Entrepreneur/Profession Libérale visa, or a similar category of entrepreneurial visa in France, feel free to contact me to set up a consultation.

Born and raised in San Diego, California, Daniel is a dual-qualified French-US attorney, and practices exclusively French in-bound immigration, with a focus on private clients.

Are you an entrepreneur? Interested in France? Learn about how to navigate the French system 👉 reach out to Daniel today!