Among the support mechanisms available, the Unemployment Benefit (ARE) is a key tool for securing the start of an entrepreneurial project. It allows a job seeker to create a business while receiving a replacement income.
The objective of this presentation is to provide you with a clear understanding of the ARE in the context of business creation, taking into account recent changes.
IMPORTANT POINTS TO KNOW ABOUT THE A.R.E.
1- R.E. definition:
- What is the Back to Work Allowance (ARE)?
ARE is a replacement income paid by France Travail following job loss. This benefit is intended, in particular, to support job searching. It is awarded according to the regulations in force on the date of termination of the last employment contract (or on the date the dismissal procedure was initiated).
- What conditions must be met to be eligible?
- be registered as a job seeker with France Travail;
- have involuntarily lost your job: dismissal, end of a fixed-term contract or temporary work assignment, or early termination initiated by the employer;
- have resigned for a reason considered legitimate;
- have lost your job through a negotiated termination agreement;
- not have reached the legal retirement age;
- reside in an area covered by unemployment insurance;
- not have been declared unfit for work;
- actively seek new employment or undertake training;
- have worked at least 130 days (or 910 hours) during the last 24 months for those under 55 years old (during the last 36 months for those over 55).
- How is the amount of ARE calculated?
Since April 1st 2025, ARE is paid monthly. The amount is calculated on a fixed 30-day calendar basis, regardless of the month. It is calculated as follows:
- either 40.4% of the daily reference wage + a fixed amount of €13.18;
- or 57% of the daily reference wage.
The higher amount is applied.
Note: The reference salary corresponds to all gross remuneration relating to the reference period. This salary is divided by the duration of compensation, before application of the coefficient of 0.75 to obtain the daily reference salary.
- When does the allowance stop being paid?
- When reach the legal retirement age and have accrued the required number of quarters to qualify for a full pension;
- when reach the maximum retirement age, regardless of the number of quarters;
- if you are eligible for a full pension due to a long career;
- if you are no longer registered on the list of job seekers (e.g., failure to update your status, removal from the register for non-compliance with obligations, etc.).
2- Difference between A.R.E. and the aid for business start-up and takeover (A.R.C.E.):
- The eligibility criteria for the ARCE (Aid for Business Creation or Takeover) are as follows:
- being a job seeker and creating or taking over a business;
- having obtained the ACRE (Aid for Business Creation or Takeover), a partial or total exemption from social security contributions for up to one year;
- receiving unemployment benefits (ARE).
Unemployed individuals who took over or created a business before the end of their employment contract are not eligible for the ARCE.
- Amount of the ARCE: For contracts ending after July 1st 2023, the ARCE consists of a lump-sum payment of 60% of the remaining unemployment insurance benefits. This lump sum is paid in two payments, the first half upon creation of the business and the second half six months after registration.
- How to choose between maintaining unemployment benefits (ARE) and receiving the ARCE?
These two forms of aid cannot be combined, the entrepreneur must choose between one of the two from the start of their business. The selection criteria are as follows:
Immediate need for cash flow: The ARCE allows you to quickly access capital to launch your business. The capital represented by the ARCE strengthens the entrepreneur’s equity and can therefore facilitate obtaining a bank loan.
In return, ARE provides a monthly income (unemployment benefits), which allows time to test the business idea. With the ARCE, the entrepreneur no longer receives monthly benefits, even if the business doesn’t take off immediately. In this case, it’s best to have contracts or predictable income from the first few months.
Note: Since April 1st 2025, the ARCE and the ARE combined with self-employment income are subject to the same cap of 60% of existing entitlements.
Social protection: Choosing to maintain unemployment benefits (ARE) allows the entrepreneur to remain affiliated with the general social security system, and therefore benefit from social protection, including the validation of pension quarters. Conversely, opting for the lump sum payment (ARCE) does not allow for the validation of pension quarters.
Taxation: Both ARE and ARCE are subject to income tax for the entrepreneur in the category of wages and salaries. However, opting for ARCE, if the entire capital is paid out in the same year, may result in higher taxation.
BUSINESS CREATION AND BACK-TO-WORK-ALLOWANCE (A.R.E.)
- How to start a business while maintaining unemployment benefits (ARE)?
Combining unemployment benefits (ARE) with business income can be influenced by the legal structure of the business. For example, the question of the manager’s remuneration differs depending on whether it is a sole proprietorship or a company. Thus, when creating a simplified joint-stock company (SASU) or a single-member limited liability company (EURL) subject to corporate income tax (IS), the minutes of the sole shareholder’s decision or the company’s articles of association must state that the manager receives no remuneration. The same applies when creating a SAS or a SARL.
On the other hand, in the case of the creation of a sole proprietorship, everything will depend on its results: if the business generates profits, they will be considered as remuneration, but if you do not make any, it will be possible to maintain the ARE.
It is also possible to create a micro-enterprise with the option to declare revenue monthly. This make possible to retain 100% of unemployment benefits (ARE) for each month, provided you receive no revenue.
When revenue is received, the amount of the ARE is reduced.
- What is the procedure for receiving unemployment benefits (ARE) as a self-employed individual?
You can:
- either register as a job seeker with France Travail;
- or complete dedicated training as part of a PPAE (Personalized Employment Access Project).
In addition, you must:
- register with France Travail within 12 months of the end of your employment contract (you must also have worked for at least 6 months during the last 3 years);
- be proactive in your job search;
- update your benefits on the France Travail website.
- How to update your rights on the France Travail website?
The business creator must inform France Travail monthly of their earnings by submitting the following documents:
- his payslip if he is an employee;
- the turnover declaration in the case of a micro-entrepreneur (the declared income corresponds to the turnover amount minus a standard deduction for business expenses and charges);
- if the applicant does not know his earnings (sole trader under the actual profit regime), he will not be able to provide documents proving his revenue before the benefit payment deadline. Therefore, France Travail will calculate provisional benefits, which will subsequently be adjusted based on the business’s declared income.
- When is the allowance paid?
It can be paid as early as the beginning of the month following the start of the compensation period. The allowance will be paid after you updating the status on the France Travail website (between the 28th and the 15th of the following month).
The monthly allowance payment is transferred to your bank within an average of three days and at the latest five days after your update.
For business creators and buyers, unemployment benefits (ARE) remain a valuable support mechanism, providing financial security in the early stages of a business. Since April 2025, the rules have been strengthened to more strictly regulate the combination of unemployment benefits and self-employment income.
Therefore, one of our chartered accountants can assist you in preparing your project, choosing the most appropriate legal structure, and navigating the necessary steps to successfully complete your project.
