Auto-Entreprises: New changes going after small businesses

Little Guy

In 2013 there was massive debate in France on the future of the Auto-Entrepreneur regime, various lobby groups putting on the pressure, citing unfair competition, especially in the building trade.

A commission looked into the charges brought against the regime and for a while the 800,000 Auto-Entreprises felt threatened, with no certainty as to whether they would be allowed to continue.

People keep asking me: “What happened? Can we still set up as Auto-Entrepreneur? What changes have there been?” Here, then, is a brief review of the changes decided by French parliament in June 2014, which will come into force from January 1st, 2015.

Cotisation foncière des entreprises (CFE) is to be paid by all Auto-Entreprises, except for the first year. Previously the exemption had been three years. The CFE is a local business rate determined at municipal level and can vary from €200 in a small village to as much as €800 per year in a big city.

Compulsory registration for trading activities (commercial) with the Registre du commerce et des sociétés (RCS) and artisans with the Répertoire des métiers (RM). This will entail a small registration cost and reintroduce another layer of bureaucracy that we thought had been dispensed with. The idea being that the RCS and RM will somehow “vet” new businesses and weed out the cowboys and unqualified.

Those registered via the RCS and RM will have to pay a tax for joining these organizations; 0.15% of turnover for commercial activities at the RCS and 0.48% for artisans at the RM.

Artisans will have to attend a 5-day training course with the Chambre de Métiers at a cost of €180. This replaces the existing half-day course and reverts to the 5-day course that used to exist before the creation of the Auto-Entreprise system in 2009. A total waste of time, as anyone who has ever attended will tell you. “Just take a good book, sit at the back of the class, and make sure you get your attendance card stamped!”

Optional support for Auto-Entreprises reaching 50% of the turnover ceiling (€32,900 for artisans and white-collar professions, €82,200 for commercial activities). The objective being to provide information for small businesses that are likely to exceed the thresholds. One imagines that this will be available at the RCS and RM, and – dare I say it! – sounds like another waste of time, as most Auto-Entreprises (by definition) want to stay within the thresholds and continue to juggle official work and cash payments.

Artisans in the building trade will be obliged to feature their “Décennale” insurance on their quotes and invoices.

The creation of a single status of Entreprise Individuelle (self-employed, sole trader), whereby the current micro-entreprise will in effect merge with the Auto-Entreprise system of “pay as you earn” for tax and social security.

The annual turnover limits will stay the same (as above, €32,900 and €82,200), but there will be a requirement to pay online (via www.netentreprises.fr) once you exceed 50% of these limits, rather than filling in the existing paper forms, Déclaration trimestrielle des revenus.

All in all, is this progress or a step backwards? It will no doubt calm the ardours of the anti-AE brigade, especially those in the building trade, but personally I just see it as more complication and bureaucracy, more “stealth taxes”, more obfuscation, and no abatement of the massive cash economy that Hollande – with his 13% approval rate – and his government continue to encourage by imposing such high levels of social security contributions.

Trop d’impôt tue l’impôt.