2024 has been an interesting year for freelancers and business owners in France. We've been through a roller coaster of never-ending, or more precisely about to happen changes. If you followed French politics, the change of Government in June, wait for a new prime minister, wait for a new government and finally wait for the 2025 budget meant that we've been on a cliffhanger.
Questions we’ve had for 6 months include: Will the micro entrepreneur turnover threshold change for services? Will the anti AirBnB law also called “Le Meur Report” be voted? When will the new VAT threshold be implemented? Or will the flat tax on dividends increase from 30% to 33%?
Even I started to despair when I read about Prime Minister Michel Barnier being overthrown on 4th December. This means that the search for a new Prime Minister and Government has started again... This is likely to result in another 2-month delay, before the 2025 budget gets discussed, voted and implemented! In the meantime, the 2024 budget and rules still apply until a new budget is voted.
1 - What can we expect in 2025 for freelancers?
I expect that changes mentioned in the current budget draft about Airbnb, VAT and dividends will happen, as the Government needs to make up for its deficit - meaning savings and more taxes.
I can also see that the Government wants freelancers and small businesses to get more professional “se professionnaliser”. Not in terms of services they provide, but from an accountancy point of view. They want some micro entrepreneurs to move up to the next business structures, such as enterprise individuelle under réel simplifié, EURL, SARL or SAS, with full accountancy rules in place.
As time goes on, I can see that it will make more sense tax-wise for some micro entrepreneurs to leave this regime and move to entreprise individuelle, EURL, SARL or SAS. And yes, for those it will be to their advantage, for instance, some gite owners with a high turnover or high level of expenses.
But this means that you will have to prepare for it and learn the rules of your next legal structure and tax regime, to avoid basic pitfalls - such as not saving enough for your social charges.
2 - Know your business numbers
Your role as a freelancer or small business owner is to dig into your business numbers and understand them. What are your running expenses? How much taxes will you pay? What are your taxes based on?
You can’t “just hire someone to do this for you” or expect your accountant to do it for you. The reality is that your accountant only compiles your numbers for the loss and profit account. By the time you get a copy (3 months after the end of the financial year), it's a bit too late to save the right taxes.
Believe me, I've had a few examples of this in 2024. Freelancers paying hard cash for bookkeepers and accountants and still not saving enough for their taxes, because they didn't understand their tax regime.
I'm not knocking down accountants here, as I work with them every week... and selected reliable English-speaking ones (a rare breed). Just know that in France, your accountant isn't going to be keeping track of your numbers on a monthly or quarterly basis and give you a call if they are down, or if your margin is low. It's up to you.
3 - Future-proof your French business
Here's what I recommend you start doing from the 1st of January 2025 to future-proof your French business.
- Start tracking your expenses. Yes, even as a service provider or micro entrepreneur. If you want to know how much you would earn, as a micro entrepreneur versus an enterprise individuelle or incorporated business, you need these numbers. This will enable us or any accountant to run a quick check next November. Hence you making informed decisions about your future business.
- Know which tax regime you are under. I’m talking about social charges here also known as “regime social”. Are you under regime micro social (micro entrepreneur) or réel simplifié (entreprise individuelle, EURL, SARL) or régime assimilé salarié (SAS, SASU). This dictates how much you need to save. 90% of freelancers' horror stories I come across are directly linked to this - not knowing which and not saving enough. This will also impact when you need to declare and pay your taxes. Same thing for your VAT regime (en franchise, régime réel simplifié or mini réel).
- Get some training. It's worth investing in your micro entrepreneur to fully understand it and know how to manage it on your own (invoicing, bookkeeping, turnover and income declarations, health cover set up, pension, training fund). The Manage Your Micro Entrepreneur course does just that by giving you direct access to how-to videos, plus yearly support with monthly group calls and a private forum.
- Look for punctual feedback. There is nothing worse than the feeling of getting stuck or speaking to a couple of accountants and still not having a clear answer. Ask for help and book a Power Hour when you want clarifications on your specific situation.
4 - Is it getting harder to freelance in France?
No, it's not getting harder to freelance in France. And the micro entrepreneur is still the easiest option for many to start with. Some freelancers might even stay as micro entrepreneurs for 10 years or more, as there is no limit in time.
But as your business grows, it will make more sense to move to a different business type. And this is when you will have to restart the process of 1) Research 2) Prepare and compare 3) Learn new skills.
5 - Tips to kickstart 2025 as a freelancer
Here are my 6 extra tips to kickstart 2025 as a freelancer in France.
- Have a dedicated bank account for your business. Don't mix your personal and business finances - even as a micro entrepreneur. I recommend using N26 as it enables you to have sub-accounts. Perfect to save your social charges with an automation rule. For instance, as a consultant micro entrepreneur, have 23.1% of whatever comes into your bank account, and place it in a sub-account called URSSAF. Same thing with your VAT.
- Get your gite and Airbnb classified with Atout France. This is a must-do for all gite owners registered as micro entrepreneurs, as your turnover is likely to be capped without it with the future budget/ loi de finance. This is top of your list as it will take some preparation and probably a bit of delay before an inspector comes to assess your gite.
- For property buyers and future owners in France, check with the Mairie that they will allow you to run a gite or Airbnb. Check if the current owners had a “déclaration de meublé de tourisme” with the Mairie and have it signed under your name once you have bought the house. The right order is 1) Buy the house 2) Apply for a business visa 3) Move to France and 4) Register your gite business. For property owners not planning to move to France, it's likely that from 2025 the previous LMNP regime won't be interesting anymore and you will choose between enterprise individuelle réel simplifié, an SCI or an incorporated business.
- Understand your taxes. Know which regime you are under and how much you will pay, to save the right amount for your social charges.
- Set up a proper bookkeeping system. Write invoices plus log your income and expenses. Even as a micro entrepreneur you need to keep your invoices, livre des achats, livre des recette for 10 years! All this is covered in the Managed Your Micro Entrepreneur group course.
- Keep up to date with changes that will impact your business by subscribing to my fortnightly newsletter or watching my YouTube videos.
