On 1 January 2016, the auto-entrepreneur business system in France name will be replaced by micro-entrepreneur. Existing auto-entrepreneurs will not be impacted too much, as only a little will change for them, e.g. the name and a slight increase of social charges rates.
Differences between auto-entrepreneur, micro-entreprise and micro-entrepreneur
Until 31 December 2015, there are three regimes possible as an entreprise individuelle:
- Auto-entrepreneur: with a maximum yearly turnover, no TVA and a fixed rate of social charges based on the turnover.
- Micro-entreprise: with a maximum yearly turnover, no TVA and social charges based on a forfait. This means that there is a call for social charges appel de charges sociales (about 3,000 euros in year one) and a lump sum of social charges to be paid once the yearly turnover has been confirmed. This used to be the main regime used by entrepreneurs, until the auto-entrepreneur was introduced in 2009. Since then there has not been many micro-enterprise registrations, but there is still a large number of companies under this regime that will have to switch to the new micro-entrepreneur in the future. The government mentioned a three year delay to do so.
- Reel simplifie: with no turnover limit, liability to TVA and social charges representing about 46% of the net profit.
The aim of the government was to simplify the choice by merging the auto-entrepreneur and the micro-entreprise. This will be called micro-entrepreneur, but in practice it will work as the auto-entrepreneur does, i.e. a limited turnover, no TVA and a fixed rate of social charges based on the turnover.
This change of name could also be justified by the fact that the auto-entrepreneur has suffered from bad press and consistent attacks from Chambre de Metiers emphasising on unfair competition. The micro-entrepreneur name aims to start with a clean sheet, although it will create of lot of confusion for many small entrepreneurs, not knowing what to expect.
So to summarise, on 2016 auto-entrepreneur + micro-entreprise = micro-entrepreneur
New micro-entrepreneur regime from 1 January 2016
Micro-entrepreneurs who start their activity in 2016 will be subject to the same rules as the current auto-entrepreneurs. It will no longer be possible to choose the former micro-enterprise tax system (explained above). In short... everyone will become auto-entrepreneurs in practice, but they will be called micro-entrepreneurs!
Social charges rates for micro-entrepreneurs in 2016
Contribution rates in 2016 for micro-entrepreneurs (and former auto-entrepreneurs) will increase slightly, with:
- 13.4% for purchasing activities and resale (against 13.3% in 2015),
- 23.1% for services activities and manual activities (against 22.9% in 2015)
Summary of micro-entepreneur charges
| Activity | Social charges rate | Income tax rate | CFP | TFC | Total |
|---|---|---|---|---|---|
| Trading, resale, gites, chambres d’hotes | 13.4% | 1.0% | 0.1% | 0.015% | 14.515% |
| Manual services (artisan) | 23.1% | 1.7% | 0.3% | 0.48% | 25.58% |
| Services relating to Chambre de Commerce | 23.1% | 1.7% | 0.3% | 0.044% | 25.14% |
| Professions libérales relating to RSI for pension | 23.1% | 2.2% | 0.3% | 0% | 25.6% |
| Professions libérales relating to CIPAV for pension | 22.9% | 2.2% | 0.2% | 0% | 25.5% |
Micro entrepreneur turnover threshold
The turnover threshold for micro entrepreneurs in 2016 will remain similar to the former auto-entrepreneur regime:
- 82,200 euros for trade, resale, accommodation and food
- 32,900 euros for services (artisans and profession libérale)
As per the former auto-entrepreneur, micro-entrepreneurs will have a slight leeway enabling them to stay within this regime as long as they do not go over the maximum turnover threshold called plafonds majors of:
- 90,300 euros for trade, resale, accommodation and food
- 34,900 euros for services
Micro entrepreneur and income tax
As per the former auto-entrepreneur regime, micro entrepreneurs will have the two choices to pay their income tax:
- Regime micro: i.e. declared once a year. The micro-entrepreneur’s turnover will be declared with the French income tax form Impot sur le Revenu in May/June the following year and will be paid in September/October. For example the 2016 turnover will be declared in June 2017 and the income tax paid in September 2017.
- Impot liberatoire: i.e. the micro-entrepreneur choose to pay an extra percentage of his/her turnover towards the income tax. This tax will be paid on a monthly or quarterly basis, at the same time as the social charges. The micro-entrepreneur will only be able chose impot liberatoire if his/her reference income foyer fiscal is 26,764 euros/person.
Reminder of the income tax for micro-entrepreneur under impot liberatoire:
- 1% for trade, resale, accommodation and food
- 1.7% for services relating to Chambre de Metiers and Chambre de Commerce
- 2.2% for profession libérale (consultants, language teachers etc.)
Micro-entrepreneur and pension
The French pension system is based on the validation of pension quarters. You have to validate four quarters per year and 161 quarters in total (for someone born in 1949) to 172 quarters (for someone born in 1973) in order to get a full pension.
In 2016, micro-entrepreneurs will have to go over the following turnover threshold in order to validate 1, 2, 3 or 4 quarters.
| Activity | Turnover for 1 quarter | Turnover for 2 quarters | Turnover for 3 quarters | Turnover for 4 quarters |
|---|---|---|---|---|
| Trading, resale, gites, chambres d’hotes | 4,971 euros | 9,941 euros | 14,912 euros | 19,883 euros |
| Services relating to Chambre de Commerce or Chambre de Metiers (BIC) | 2,883 euros | 5,766 euros | 8,649 euros | 11,532 euros |
| Profession liberale (BNC) | 2,185 euros | 4,368 euros | 6,552 euros | 8,736 euros |
For instance a micro-entrepreneur with a turnover of 12,000 euros providing some services, with validate 4 pension quarters.
Micro-entrepreneur and health cover
Health services and maternity cover will be decrease in 2016 for auto-entrepreneurs with very low income. If your average yearly income over the last 3 years is below 3,698 euros, the maternity cover will be reduced to 10% of its original value, i.e. daily indemnities and resting allocation allocation de repos maternel.