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Tax and social aspects of the Micro Enterprise

FBA team — Thu, 30 Jan 2025 16:28:47 +0000

Article of 31/01/2023 updated on 30/04/2026

The micro-enterprise, often praised for its administrative simplicity and flexibility, is subject to a specific tax and social regime in France. Whatever activity you wish to carry out, whether it is a secondary activity or your main activity, it is possible to set up a micro-enterprise quickly and at very low cost. We already specify that this type of company only concerns very small companies subject to income tax with the possibility of opting however for corporate tax provided they waive the tax regime of the micro-enterprise.

I-CONDITIONS OF ACCESS TO THE MICRO-COMPANIES REGIME:

1-Registration with an administration:

The registration of a micro-enterprise in France is done via the one-stop shop, a centralized platform set up to simplify administrative procedures for entrepreneurs. This portal allows you to declare the creation of the activity, choose the tax and social regime, and register with the competent organizations such as URSSAF, the SIRENE directory, and the tax services. The key steps include creating a user account, entering personal and professional information, selecting tax and social security options, as well as submitting the necessary supporting documents. Once the declaration has been validated, the entrepreneur receives a SIRET number, essential to legally start his activity. This system aims to make formalities more accessible and reduce processing times for new businesses.

Accessible from INPI site, the one-stop shop allows companies to carry out their formalities in conjunction with the administrations concerned. Any formality carried out on this site follows a validation circuit with INSEE or the competent public institutions.

The main supporting documents to be provided in addition to the registration request are as follows:

a sworn declaration of non-conviction and parentage (if the activity is commercial or artisanal);
for micro-entrepreneurs of French nationality and nationals of a member state of the European Union or of a member state of the European Economic Area, (residing or not in France), a copy of both sides of the valid national identity card or passport;
for micro-entrepreneurs of foreign nationality, a title or residence permit with a reason allowing them to carry out a self-employed activity in France;
Proof of occupation of the professional address;
Possibly, proof of information for the spouse on the consequences of professional debts on joint properties.

It is also necessary, if the activity is regulated, to verify that the entrepreneur meets all the required conditions.

2-The legal structure:

The self-employed regime is applicable regardless of the activity of the entrepreneur and the tax category to which his income falls (Profits Industrial and Commercial, Liberal Professions or Farmers), whether taxed according to a real tax regime or according to a micro regime.

The entrepreneur automatically holds two assets upon registration:

Professional assets made up of the property, rights, obligations and sureties he holds and which are useful for the activity or the plurality of independent professional activities he exercises;
Personal assets made up of personal items such as the main residence or a vehicle not used for professional purposes, and liabilities such as the loan for the purchase of a personal vehicle not included in the professional assets.

Thus, the creditors of the professional assets cannot seize assets appearing in the private assets and conversely, the private creditors are not entitled to any guarantee on the professional assets.

However, this regime suffers from several exceptions, of which here are two examples:

The individual entrepreneur may, for a specific commitment, the amount of which must be determined or determinable, waive the protection of his personal assets;
The separation of assets is not opposable to the tax authorities for tax debts owed on a personal basis, but whose base includes the results of the professional activity.

The self-employed worker also benefits from two other prerogatives:

Right to training: Self-employed people contribute to professional training and can thus access training to develop their skills.
Recourse in the event of a dispute: Self-employed people can resort to commercial courts to resolve professional disputes. They can also call on the business mediator in the event of commercial conflicts.

3-Excluded activities:

The following activities are excluded from the “MICRO” scheme:

Stock market operations ;
Associations and non-profit activities ;
Real Estate Broker and Real Estate Agents;
Building rental activities;
Liberal activities that come under a pension fund other than Cipav or social security for the self-employed, ie: Notaries, bailiffs, judicial auctioneers, etc., lawyers. Doctors, dental surgeons, pharmacists, midwives, nurses, physiotherapists, pedicurists, speech therapists, orthoptists, veterinarians, etc. General insurance agents, Chartered Accountants and Statutory Auditors;
freelance journalists;
Artistic activities remunerated by royalties.

4-Turnover limits:

Annual turnover must not exceed the following limits from 2026 to 2028 year:

€ 203 100 H.T. (without VAT) for the activities of selling goods or providing housing;
€ 83 600 H.T. for service providers and the liberal professions;
€ 129 200 H.T. (average turnover over three years) for farmers;
€ 15 000 H.T. for unclassified furnished tourist rentals.

5-Transition from a MICRO scheme to a real scheme:

The taxpayer subject to the Micro Enterprise tax regime can opt for a real regime. The main reasons are:

The operator wishes to have a partner and therefore modify the legal structure of the company;
The activity has changed;
The actual charges are greater than the standard abatement;
Option for corporation tax.

In the event of the taxpayer’s voluntary option for a real regime, he must inform his tax department before the deadline for filing the overall income statement (statement no. 2042) subscribed for the year preceding that under which this option applies.

The period of validity of the option exercised by entrepreneurs covered by the micro-BIC (or BNC or BA) for a real tax regime is set at one year and tacitly renewed each year for one year, as long as the taxpayers have not waived his option or this did not become null due to the increase in the turnover. The waiver of the option can be made until the deadline for filing the declaration subscribed in respect of the results (declaration no. 2031-SD or 2035) of the year preceding that for which the waiver applies.

The option for liability to corporation tax must be made before the end of the third month of the financial year for which the individual entrepreneur wishes to be subject to this tax.

On the other hand, as soon as the turnover of the company exceeds the thresholds, the transition to a real plan becomes compulsory under the following conditions:

As soon as the company’s turnover exceeds the thresholds for two consecutive years, the transition to a real scheme becomes compulsory from the following year.

In case of business creation, if the operator does not opt for a real scheme, the micro regime is automatically applied for the year of creation and the following.

In principle, the year of creation or cessation of activity, the turnover must be adjusted in proportion to the operating time of the company during that year.

When the turnover of a company subject to the real regime falls below the limits of the micro regime, the real scheme remains applicable during the whole year during which the turnover fell below the threshold. Thus, the micro regime applies automatically for the following year, unless there is an option for a real tax regime.

It should also be noted that there is a mechanism for neutralizing the effects of the change in the tax regime for agricultural profits and non-commercial profits. This process makes it possible to avoid either double taxation or the absence of taxation on debts during the change of regime.

II-FUNCTIONING OF THE TAX SYSTEM OF THE MICRO-ENTERPRISE:

1-Simplified formalities:

Companies placed under this regime should only keep a journal with daily details of their receipts. Those engaged in the sale of goods must also keep a register detailing their purchases.

The entrepreneur only indicates the amount of his annual turnover in the appropriate frame of his general income tax return (model N ° 2042). His taxable profit and the amount of his tax will be determined by the tax office of his domicile.

In some case and under certain conditions, the entrepreneur may opt for a lump sum payment of his income tax. If this option is made, the tax will be paid monthly or quarterly at the rate of:

1% of turnover for the activities of selling goods or providing housing,
7% of turnover for service providers,
2% of turnover for non-commercial income holders (B.N.C).

This option is not applicable to farm incomes.

2-Determination of taxable profit:

The micro entrepreneur is exempt from filing a professional declaration of results for the purposes of “Industrial and Commercial Profits (B.I.C.)”, Non-Commercial Profits (B.N.C.) or Agricultural Profits (B.A.). As we wrote above, he only indicates the amount of his turnover on his annual tax declaration.

The net taxable profit is determined by the tax administration which applies a deduction on the amount declared. This allowance, which includes all operating expenses, amounts to:

71% of turnover for the sale of goods or supply of housing,
50% of turnover for service delivery activities,
34% of turnover for the liberal professions,
87% of the average turnover of the last 3 years for agricultural profits.

Companies subject to the “MICRO” tax regime cannot deduct deficits.

3-VAT franchise (VAT exemption):

Companies taxed under the “MICRO” scheme automatically benefit from the VAT exemption scheme. Thus, the company does not charge VAT to its customers, but it cannot recover the VAT it pays to its suppliers on its purchases, expenses and investments. This regime can be penalizing for activities requiring expensive equipment.

The company must display on its invoices the following statement:” TVA NON APPLICABLE ARTICLE 293B DU C.G.I.”.

The thresholds of turnover allowing to benefit from the franchise are of:

€ 85 000 (initial threshold) and € 93 500 (increased threshold) for the activities of sale or supply of housing;
€ 37 500 (initial threshold) and € 41 250 (increased threshold) for the activities of service delivery and liberal professions.

If the turnover exceeds the initial threshold, without exceeding the increased threshold, the taxable person becomes liable for VAT from January 1^st of the following year.

If the increased threshold is exceeded, taxable persons become liable for VAT from the day it is exceeded, and no longer from the first day of the month in which it is exceeded.

In addition, since January 1^st 2025, there has been a Community exemption. Thus, small businesses established in France that carry out operations in other Member States are also allowed to benefit from a Community base exemption scheme, provided that their turnover in the European Union does not exceed an annual ceiling set at €100,000.

Farmers are in principle subject to VAT under the flat-rate reimbursement scheme. But they may be subject to the simplified VAT system (where the amount of turnover calculated over two consecutive years exceeds € 46,000) or on option. In addition, the flat-rate reimbursement scheme is not applicable for certain agricultural professions.

When the turnover of the business exceeds the thresholds above, the “MICRO” regime remains applicable as long as the company has not reached the thresholds of maximum turnover for the application of the “MICRO”.

4-Contribution on value added (C.V.A.E.):

Companies subject to the “MICRO” regime whose turnover is over € 152 500 are subject to the “C.V.A.E.”.

The amount of their added value for the calculation of “C.V.A.E.” is set at 80% of the difference between the amount of the receipts and the purchases made during the tax year.

However, these companies must declare their added value but are liable for the “C.V.A.E.” only when their turnover exceeds € 500 000.

III-FUNCTIONING OF THE “MICRO SOCIAL” REGIME:

The regime below automatically applies to all entrepreneurs subject to the tax regime of the company “MICRO”.

This plan takes into account the following contributions:

Maternity health insurance,
Retirement insurance,
Invalidity death,
Family allowances (allocations familiales),
S.G. and C.R.D.S.

The entrepreneur must declare his turnover on his account in URSSAF website (Accueil – Autoentrepreneur.urssaf.fr) each quarter or month according to his option.

Contributions are paid on a lump sum basis as a percentage of turnover which is (in France):

Purchase/resale of goods (BIC) 12.30%
Provision of commercial and artisanal services (BIC) 21.20%
Other services (BNC):
- 60% from January 1^st 2025
- 10% from January 1^st 2026
Relevant regulated liberal professions of Cipav (BIC or BNC) 23.20% (from July 1^st 2024)
Rental of furnished tourist accommodation classified 6.00%

At these rates is added the contribution to training at the rate of 0.1 to 0.3% depending on the activity.

This scheme does not exist for agricultural activities which in any case continue to contribute on the basis of the net profit determined by the “MICRO B.A.” method.

CONCLUSION:

The Micro tax system brings significant advantages, the main one being the simplicity of the system.

But we must draw your attention to the fact that in addition to the disadvantages that we have mentioned in this article, the operators subjected to a micro regime cannot benefit most of the time from certain fiscal advantages such as the tax exemptions for the creation of business in certain geographic areas.

You can help you to make your choice for a tax regime, don’t hesitate to contact us!

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Some information to help business leaders to choose their social status

FBA team — Tue, 15 Oct 2024 07:55:54 +0000

Article of 15/04/2024 updated on 15/10/2024

The choice of the social security system for the company director is a strategic decision that can have significant implications in terms of social security contributions, social protection and taxation.

Depending on the legal structure of the company and the director’s participation in the share capital, the latter may be subject to either the self-employed workers’ system (TNS) or the general social security system. Each system has advantages and disadvantages, both in terms of social security coverage and financial charges.

It is therefore crucial to analyze these options to optimize the personal situation of the director while taking into account the company’s objectives.

I – What will be your mandatory social system depending on the legal structure or your shareholding in the company?

Business leaders who are considered salaried are:

The non-associated managers of EURL;
Minority or equity managers of SARL (Holding up to 50% of the shares);
The presidents of SAS (or SASU) and the general managers;
The chairmen of the board of directors, the chairman of the supervisory board and the managing directors of SA;
The unassociated and remunerated manager of a partnership.

Business leaders who are self-employed (TNS) are:

Individual entrepreneurs (including micro-entrepreneurs);
The sole managing partner of EURL;
The controlling shareholders of SARL (Holding more than 50% of the shares)
The partners of SNC.

II – The main characteristics of the salaried status

1 – The advantages of this status

This status allows the manager to obtain the same benefits as an employee, a better pension plan as leaders affiliated with the TNS regime, a disability insurance as well as the payment of capital in the event of the death of the manager. In some case it is possible to be covered for unemployment, but this requires the conclusion of a contract of employment independent of the management mandate that it will be very difficult to get admitted by the unemployment insurance service.

The manager contributes to social security in France at the same rate as an employee.

It should also be added that when the equivalent salaried manager does not receive remuneration, no minimum contribution is payable.

In addition, if he is also a partner of the company, the dividends he receives are not subject to social security contributions. This status therefore makes it possible to perform “salaries-dividend” arbitrations quite easily.

2 – The disadvantages

We can first notice that the cost is very high. A salaried assimilated manager costs about twice as much as a self-employed worker for the same net income without being able to benefit from unemployment insurance.

The manager must also compile pay slips, send monthly nominative social declarations (DSN) and tele-declare social charges (monthly or quarterly). These constraints cause an additional cost for the company.

III – The main characteristics of the self-employed (TNS) status

The risks of unemployment are not covered, accidents at work and occupational diseases are very poorly covered or even not at all in some cases. The pension plan is less advantageous. On the other hand, the contributions are lower than those of an employee and payment of contributions is postponed for one year.

During the first year of operation, contributions are paid on a low basis, this constitutes a cash facility at the beginning of the activity. But it must be added that minimum social security contributions are due even if the manager receives no remuneration (as we will see in the table below).

Important note: In addition, distributed dividends and current account interest may be subject to social security contributions.
This concerns the following managers:

Individual entrepreneurs who have opted for corporate tax, for the portion that exceeds 10% of the net profit amount;
Non-salaried managers of companies subject to corporate tax (majority manager of SARL, manager of EURL, partner of SNC), their spouse or civil partner or their minor children. In this case, the portion subject to contributions concerns the fraction exceeding 10% of the share capital, issue premiums and amounts paid into a current account held by the self-employed manager.

In addition, the operator can improve and even personalize his social security by subscribing private insurance contracts. If the contract conforms to the “Madelin” law, the contributions paid may be deducted from the tax profit.

Below you can see a comparative table of social coverage between the two regimes.

SALARIED STATUS

TNS STATUS

Hospitalization: 80%

High risks: full reimbursement

Small risks: 70 – 65 – 60 – 30 – 15%

Capped daily sickness-maternity benefits

Work accidents: full coverage + higher benefits

Supplementary executive pension (if salary at the ceiling)

Family allowances

Hospitalization: 80%

High risks: full reimbursement

Small risks: 70 – 65 – 60 – 30 – 15%

Daily benefits in the event of hospitalization, illness or accident (for traders and craftsmen only).

Rest allowance and flat-rate daily allowance in the event of maternity (subject to minimum income conditions)

No work accident insurance

Mandatory basic and supplementary pension

Family allowances

IV – Compare the cost of each social system

Here are some examples.

Total cost of remuneration and charges	Net remuneration for salaried officer	Net Remuneration for TNS Officer (excluding optional contributions)	Difference
20 000 €	11 423 €	14 156 €	2 733 €
30 000 €	17 135 €	21 053 €	3 918 €
50 000 €	28 559 €	34 178 €	5 619 €
100 000 €	57 514 €	69 112 €	11 598 €
200 000 €	116 080 €	145 145 €	29 065 €

Here is another example: the table below shows the amount of social contributions from an amount of net income.

Net Income	Total Costs of social security for salaried officer	Cost of social security for TNS officer
0 €	0 €	1 320 €
30 000 €	22 524 €	13 725 €
50 000 €	37 169 €	23 208 €
70 000 €	51 319 €	31 169 €
100 000 €	72 543 €	40 634 €
150 000 €	107 923 €	56 385 €

It can be seen that the cost of contributions is in all cases significantly higher for an assimilated salaried manager.

However, you should contact an English-speaking chartered accountant before making any decision to first determine the most appropriate legal structure for your project. He will then discuss with you the best social status that may be suitable for the selected legal structure.

Then, in the event that the self-employed scheme might be suitable, the chartered accountant will help you calculate the total cost of social charges (compulsory and optional) which would ensure the coverage of the risks that you want.

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Aids for the creation of establishment of businesses in France

FBA team — Wed, 04 Sep 2024 15:33:31 +0000

There is a lot of aids available for business creators: Acre, Nacre, loans, repayable advances, tax credits, etc. Here’s some information on the most common ones to understand how they work.

We can obviously determine which ones best suit your project and even help you to formulate your request.

I – A list of the main forms of creative support

Aid for business creation or takeover can take different forms:

the payment of a sum of money, repayable or not: grant, honorary loan, participatory loan, subsidized loan, repayable advance;
loan guarantee system, scholarships to support financing needs;
tax relief, in the form of a deduction, reduction or tax credit;
an exemption from social contributions;
financing training, consulting services;
accommodation for the young company at a price lower than the market price;
Etc.

II – Presentation of the main aids for setting up a business

1 – Regional aid (linked to the location of the company)

> France rural revitalization zones (ZFRR and ZFRR+)

Municipalities in metropolitan France whose population is less than 30,000 inhabitants and which are members of a public intermunicipal cooperation establishment whose population density is low are classified as ZFRR.

Municipalities classified in a ZFRR (as defined above) and members of an EPCI with its own tax system facing particular difficulties over a period of at least 10 years are classified as ZFRR+.

We will obviously be able to send you the list of municipalities classified ZFRR or ZFRR+ as soon as it becomes available (in the following months).

> Exemption from tax on profits in ZFRR and ZFRR+

To be eligible, companies must carry out an industrial, commercial, artisanal or professional activity.

To benefit from the ZFRR+ exemption measures, the company whose activity is created must belong to the category of micro, small and medium-sized enterprises.

To benefit from the exemption measures in ZFRR, the company must employ fewer than 11 employees and establish its head office in ZFRR as well as all of its activity and its operating resources.

Determination of the exemption: the exemption is total for 5 years, then partial for 3 years. For profits made during the 1st, 2nd or 3rd period of 12 months following this total exemption period, the profits are respectively taxed for 25%, 50% and 75% of their amount.

> Optional and temporary exemption from CFE in ZFRR and ZFRR+

Municipalities and EPCI with their own tax system may exempt from business property taxes (CFE), establishments (or extensions of establishments) carrying out an industrial, commercial, artisanal or non-commercial professional activity created by companies benefiting from the corporation tax exemption in the ZFRR and ZFRR+ zones.

The CFE exemption is subject to a decision by the municipalities or their EPCI, taken before October 1^st to be applicable the following year.

> Other areas eligible for an exemption

A large number of the aids presented below will gradually disappear to be replaced by the ZFRR and ZFRR+ regime.

> Regional aid zones (ZAFR)

New companies subject to a real tax regime and established until December 31^st 2027 in the ZAFR benefit, under conditions, from an exemption from income tax (IR or IS) for 24 months, then from a decreasing reduction for the following 3 periods of 12 months (75%, 50%, 25%). Companies exempt from income tax may, upon deliberation of local authorities, be exempt from CFE and property tax on built properties (TFPB), for the 2 to 5 years following that of their creation.

To benefit from aid the company must be truly new, thus, when the company is incorporated as a company, the share capital must not be held, directly or indirectly, for more than 50% by other companies.

> Urban free zones (ZFU)

Companies established in these zones until December 31^st 2024 can benefit from a tax exemption (IR or IS). The system consists of a total exemption of profits from activities established in the ZFU for 5 years, followed by a period of decreasing exemption.

These exemptions are reserved for small companies employing 49 employees at most, which achieve a turnover or have a balance sheet total of less than €10 million, and whose capital or voting rights are not held directly or indirectly for 25 % or more by companies whose workforce exceeds 250 employees and whose annual turnover excluding tax exceeds €50 million or whose annual balance sheet total exceeds €43 million.

> Urban basin to be revitalized (BUD)

A profit relief regime is open to companies created until December 31^st 2026 in a BUD. Exemptions from local taxes (property tax and CFE) are also provided.

Companies eligible to benefit from this system must meet the following conditions:

have their head office and all their activities located in the BUD;
not be created as part of a takeover, transfer, concentration, restructuring or extension of pre-existing activities;
be SME within the meaning of Community law: a turnover of less than €50 million (or a balance sheet total of less than €43 million), and an employee workforce of less than 250;
not be more than 50% owned directly or indirectly by other companies;
have at least half of the company’s employees on permanent contracts (or on fixed-term contracts of at least 1 year) residing in the BUD.

> Priority development zone (ZDP)

A profit relief regime is open to companies created until December 31^st 2026. Eligible companies benefit from a total exemption from income tax (IR or IS) on the profits made during their first 24 months of activity, then a decreasing exemption for the following 3 years. Certain companies may benefit from a temporary exemption from CFE.

Companies whatever their form can benefit from this aid, provided that they have a turnover of less than €50 million (or a balance sheet total of less than €43 million) and that their employee workforce does not exceed 250.

> Employment areas to be revitalized (BER)

Two regions are affected by this system: Champagne-Ardenne (Meuse Valley employment zone) and Midi-Pyrénées (Lavelanet employment zone).

The creation of activities carried out before December 31^st 2024 in the BER benefit from an exemption from income tax (IS or IR) and TFPB. These companies can benefit from an exemption from CFE until June 30^th 2024.

It seems that all forms of companies (commercial, artisanal, industrial or non-commercial) are eligible to benefit from these exemptions.

> Revitalization zones (ZoRCoMiR and ZRCV), ZAIPME and QPV

These are exemption schemes for local taxes in investment aid zones for SME(ZAIPME), rural business revitalization zones (ZoRCoMiR), revitalization zones in center-city (ZRCV) and certain city districts (QPV).

Concerning ZAIPME, companies are eligible whatever their form, but they must however have a turnover of less than €50 million (or a balance sheet total of less than €43 million) and have an employee workforce of no more than 250.

Concerning other areas, contact us to find out if you are eligible for aid.

Note: The measures specific to each zone regime are often complex, do not hesitate to inform us about your situation and your project if you wish to know the precise rules.

2 – Support for innovation

> Research tax credit (CIR)

This tax credit concerns industrial, commercial, artisanal and agricultural companies, whatever their legal form and their size, taxed according to their actual profit (as well as certain companies exempt from tax – see above) carrying out research expenses.

> Expenditures concerned

Expenditures qualifying for the CIR are those relating to fundamental and applied research operations, including the carrying out of design operations, prototypes or pilot installations.

The expenses must be linked to operations located in a state of the European Economic Area which has concluded an administrative assistance agreement with France with a view to fight tax fraud or evasion.

> Expenditures qualified for the tax credit

The CIR concerns depreciation allocations for fixed assets allocated directly to research, personnel expenses (researchers and research technicians). These expenses include salaries and mandatory social charges.

> CIR amount

The tax credit is deducted from the income tax or corporate tax owed by the company for the year during which the research expenses were incurred. Its amount is determined per calendar year regardless of the closing date of the financial year. Its amount is equal to:

30% of the amount of research expenditure less than or equal to 100 million euros;
5% of expenditure above 100 million euros;
20% in the frame of an innovation tax credit.

> Tax credit for collaborative research (CRC)

The CRC concerns, as above, industrial, commercial, artisanal and agricultural companies, whatever their legal form and size, taxed according to their actual profit (as well as certain companies exempt from tax – see above) and incurring expenses of research.

> Expenditures concerned

These are expenses invoiced by approved public or private research and knowledge dissemination organizations as part of a research collaboration contract concluded between January 1^st 2022 and December 31^st 2025.

> Amount of tax credit

It is equal to 40% of the expenses invoiced to companies by research organizations for carrying out the research operations provided for in the contract. Within the limit of €6 million in expenses per year.

The tax credit rate will be increased to 50% for SME within the meaning of European law, namely:

less than 250 employees;
turnover less than €50 million or total balance sheet less than €43 million.

> Innovation tax credit (CII)

This is a support system for innovative companies which complements the research tax credit. Its objective is to support SMEs which incur specific expenses to innovate.

It concerns small and medium-sized industrial, commercial, artisanal and agricultural enterprises corresponding to the definition of SME made by the European Community which incur expenses for the design of prototypes or pilot installations of new products.

The amount of the innovation tax credit is equal to 20% of the expenses (referred to above) incurred by the company, themselves capped at €400,000.

> Young innovative company (JEI)

This status allows SME which incur research and development (R&D) expenses representing at least 15% of their costs to benefit from a certain number of tax and social security exemptions.

> Companies concerned

They must meet the following conditions:

have less than 8 years of existence at the time of the request;
be truly new, that is to say not having been created as part of a concentration, a restructuring, an extension of a pre-existing activity or a takeover;
employ less than 250 people, have a turnover of less than 50 million euros and have a balance sheet total of less than 43 million euros at the time of the request;
their capital must be held for at least 50% by natural persons, one or more other JEI or associations or foundations recognized as being of public utility of a scientific nature, research and educational establishments, etc.;
carry out R&D expenses representing at least 15% of expenses.

There is also a category of JEI, young growth companies (JEC). The criteria are the same as those of JEI but they must meet additional conditions to qualify them as companies with high growth potential (the conditions will be provided to you upon your request).

In return for these additional conditions, the required threshold for R&D expenses is lowered to between 5 and 15% of expenses.

> Research expenditures retained

Here are the main ones:

depreciation allocations for fixed assets created or acquired allocated directly to research operations;
personnel expenses (researchers and research technicians);
other operating expenses retained for their actual amount;
expenses for operations of the same nature entrusted to public research organizations, approved scientific cooperation foundations, approved associations, etc.;
the costs of taking out and maintaining patents and plant variety certificates;
standardization expenses relating to the company’s products, retained for their actual amount.

> Tax and social exemptions

Corporate tax: JEI (or JEC) can benefit from exemptions granted to new companies established in certain regional planning zones or to companies carrying out or creating an activity in an urban free zone (see above).
Territorial economic contribution (CET) and property tax: They can be exempted for 7 years upon deliberation of the local authorities.
Please note: tax aid granted to companies placed under the JEI regime cannot exceed the “de minimis” aid ceiling set by the European Commission.
Employer social contributions: For 8 years maximum, the exemption covers part of the remuneration paid to researchers, technicians, research and development project managers, lawyers responsible for industrial protection and staff responsible for pre-competitive tests.
It is also open to corporate officers covered by the general social security system and participating in the R&D project as their main activity.
The exemption from employer contributions only concerns health insurance, maternity, disability, death, old age and family allowances.

> Young University Company” (JEU)

This scheme concerns companies created by students from higher education. Creators benefit from social and tax advantages similar to those of the Young Innovative Company (JEI).

In addition, the company must be managed or directly owned for at least 10% of its capital by one or more students, or persons who have held a master’s or doctorate for less than 5 years, or persons assigned for teaching or research activities. Its main activity must also be the promotion of research work in which the managers or partners have participated. On the other hand, the rate of 15% of research expenses in relation to charges is not required.

JEU benefit from exemptions similar to those enjoyed by JEI and, in addition, a temporary exemption from tax on profits for 2 years (100% in the first year and 50% in the second year).

3 – Other assistance for business establishment

> Income tax reduction for subscription to the capital of unlisted companies

This system allows taxpayers who subscribe to the capital of SME to benefit from a reduction in their income tax equal to 18% of the sums invested each year within the limit of a ceiling, either when it is established or when ‘a capital increase.

This tax advantage concerns individuals domiciled for tax purposes in France. They must undertake to keep the securities received in exchange for the subscription for at least 5 years.

> Conditions to be fulfilled by the company

There are many conditions, we indicate the main ones below, you can ask us for them all:

be an unlisted company on a French or foreign market;
be subject to income tax under common law conditions;
carry out a commercial, industrial, artisanal, liberal, agricultural activity, or a solidarity enterprise of social utility, with the exception of certain activities;
on the date of the taxpayer’s initial investment, the company is still not carrying out any activity on a market (or carrying out its activity on any market for less than 7 years after its first sale, or carrying out its activity whatever it is for less than 10 years after its recording);
have its registered office in a Member State of the European Union or in another State party to the agreement on the European Economic Area;
employ at least 2 employees on the closing date of the financial year following subscription (1 employee in the case of a craft business);
fulfill the criteria of an SME in the Community sense.

> Conditions that the subscription must meet

Be carried out in cash either when the company is formed or during a capital increase;
confer only the rights attached to the status of shareholder or associate and not offer other advantages;
not provide any capital guarantee agreement to its partners or shareholders;
not be made after a reimbursement of contributions in favor of the subscriber made in the previous 12 months by the company.

> Amount of income tax reduction

It amounts to 18% of the amount of payments with an annual ceiling for payments:

€50,000 (single person);
€100,000 (couples under joint taxation).

However, there is a special income tax reduction for contributions made to a JEI: it is equal to 30% of the amount of payments made into a JEI and JEC (or 50% of the amount of payments made into a JEIR).

In addition, the annual ceiling for payments (only in a JEI or JEC) are higher:

€75,000 (single person);
€150,000 (couples subject to joint taxation).

> Hiring aids

Companies recruiting staff can, under certain conditions, benefit from temporary cost reduction measures, some of which are listed below:

Free employment (QPV): Concerns companies hiring a job seeker or a person under a professional security contract or a young person followed by a local mission not registered as a job seeker, residing in a QPV on a permanent contract or in Fixed-term contract of at least 6 months;
Apprenticeship contract: A company which hires a person under an apprenticeship contract benefits from aid amounting to €6,000 (only the first year of the contract);
Professionalization contract: It takes the form of a permanent contract or a fixed-term contract (CDD) with a professionalization action period of between 6 and 12 months minimum. The aid consists of various financial aids as well as a reduction in social security contributions;
Various aids for hiring disabled people;
Hire up to the 49th employee in rural revitalization zones (ZRR): The aid consists of a total exemption from contributions for remuneration less than or equal to 1.5 SMIC, or decreasing between 1.5 SMIC and 2.4 SMIC;
Aid for hiring in ZRDs or in employment areas to be revitalized (BER): It consists of exemptions from employer social charges;
Hiring aid in the overseas departments, Saint-Martin, Saint-Barthélemy and Saint-Pierre-et-Miquelon: The aid consists of an exemption from employer social charges.

> Financial aids

There are venture capital funds which mainly intervene in the creation of an innovative, high-growth company or as part of the development of an existing company. Their objective is to acquire a stake in the company (unlisted) and give impetus to its growth through a significant contribution of equity which will allow them to raise additional funds. The main ones are Bpifrance or the region when it has created investment funds in partnership with private and institutional financiers.

There is also a private fund, France Invest, which brings together all the private equity structures established in France.

It is also possible to obtain a loan from solidarity financiers such as:

“La Nef”: a cooperative solidarity finance company, which mainly finances activities with an ecological, social and cultural dimension;
“Autonomie et solidarité”: that finances businesses in Hauts de France. Its action is to fight against unemployment and exclusion by promoting a return to employment, but also to help business creation, development and takeover projects;
“Initiatives pour une économie solidaire (IéS)”: Its aim is to create employment, by financing the creation or development of businesses in the Midi-Pyrénées region;
“Crédit coopératif”: Cooperative bank whose objective is to promote an economy with strong social and environmental added value.

There are still other specific aids which have not been mentioned here and all the conditions of the ones presented here are quite complex, do not hesitate to contact us and detail your project so that we can find out more on the subject.

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The different categories of tourist accommodation and their regulations

FBA team — Thu, 14 Mar 2024 13:54:11 +0000

Article published on 15/12/2020 and updated on 14/03/2024

Tourism activity is highly developed in France and the number of accommodation categories provided for by law is also important so that there is a regulation adapted to all types of tourist reception.

On the other hand, this quantity of different denominations of accommodation structures creates a disturbance among the creators of companies who launch out in the tourist activity.

Also, we will give below a definition of the main categories of accommodation as well as an overview of the measures taken in terms of alleviating the security conditions with respect to very small structures.

I – Definition of accomodation categories

“Petits hotels”

This category concerns establishments that can accommodate a maximum of 100 people on all levels. Staff are not taken into account in the calculation of the workforce and the rules on security obligations are lightened. The relatively heavy safety and accessibility standards were provided for by a decree of July 24th 2006.

“Très petits hotels”

The safety regulations against the risks of fire and panic in small hotels provided for by the decree of July 24^th 2006 proved to be too heavy for very small structures. A new regulation was drafted on October 29^th 2011 with a view to offering simpler regulations to hotels accommodating less than 20 people and whose lower floor of the highest storey is located less than 8 meters from the ground. The operators of these very small hotels are not required to comply with the requirements set out in the 2006 decree. They can, for example, install simple smoke detectors.

“Chambres d’hôtes” (Gest rooms)

The rental of a guest room necessarily includes the group supply of one night (including the supply of linens) and breakfast. Reception must be provided by the lessor, who lives on the premises.

The rooms and bathrooms must be cleaned daily at no additional cost.

The capacity is limited to 5 rooms and 15 customers at the same time. If the operator rents more than 5 rooms or accommodates more than 15 customers simultaneously, this activity corresponds either to the running of a hotel or to the rental of rooms in private homes. It is then necessary to respect the regulations of establishments open to the public (ERP) and the rules of accessibility for people with disabilities.

It is possible to provide an additional service called “table d’hôtes”. The table d’hôtes is not a restaurant, it is a service that comes in addition to the accommodation, reserved only for the occupants of the guest rooms. The meal must be taken at the family table. It must consist of a single menu.

“Meublés de tourisme”

The “Meublés de tourisme” is a villa, an apartment, a “gîte” or a furnished studio, for the exclusive use of the tenant, offered for rent to a passing clientele who makes a stay characterized by a day rental, weekly or monthly, and who does not take up residence there (Tourism Code-Art D324-1). Like hotels, they are classified by the number of stars increasing according to their comfort fixed by a decree.

The “Meublé de tourisme” is seasonal, that is to say that the lessor must not rent to the same person for a period exceeding 90 days or 12 consecutive weeks.

Classified accommodation must be for the exclusive use of the tenant, without passage of the owner or other tenants, throughout the stay.

The “Meublé de tourisme classé” is defined as follow: “To obtain the classification of a furnished tourist accommodation, you must make a request to the accredited or approved assessing body of your choice (appearing on the lists on the “Atout France” website) using form No. 11819* 03”.

The assessing body visits the accommodation. In the month following this visit, he will give you a visit certificate including the inspection report as well as the proposed decision to classify the furnished accommodation for the category mentioned in the inspection report.

The classification varies from 1 to 5 stars depending on comfort elements such as the surface area of the various rooms, the general layout and the various equipment (electrical, communication, wifi, television, stereo, comfort equipment).

II – A brief overview of security and accessibility conditions

“Petits hotels”

Since 2011, small hotels must meet certain standards and are in principle, co-checked every year.

This concerns:

a) Regular maintenance and checks of installations, in particular automatic doors, electricity, heating and air conditioning, elevators, cooking appliances, extinguishers and fire safety systems, etc.
All technical installations must be checked by a competent technician every 2 years, with the exception of electrical installations and fire detection systems, which must be checked annually.

b) Safety instructions, signage and displays in each room and in the entrance hall.

c) Staff training: Staff must participate twice a year in instruction and training sessions, receive information on fire hazards. He must also receive very precise instructions in order to limit the action of the fire and ensure the evacuation of the public.

d) Surveillance: The on-call service must be provided in a room equipped with either a warning sign or an alarm report. The staff present can move away from it while remaining in the establishment, if they have an alarm transmission to an autonomous alarm receiver.

e) Safety equipment:

With the exception of the sanitary facilities, all rooms must be equipped with 1/2 hour flame arresters fitted with a door closer or E30-C;
The use of network gas or liquefied hydrocarbons is only authorized in the rooms if the distribution is collective;
Automatic fire detectors, appropriate to the risks, must be installed in areas at particular risk (boiler room, kitchen, storage, laundry, etc.);
The stairs must be protected as soon as the establishment has more than one floor on the ground floor;
Two stairs minimum are required for hotels accommodating more than 50 people and having more than one floor on the ground floor, except if the rooms are accessible by the fire brigade ladders and these floors accommodate less than 50 people;
For hotels with only one floor on the ground floor, the staircase may not be protected provided that all rooms are accessible to the fire brigade ladders.

f) Alarm system: The electrical cables used for the alarm system must be independent of other electrical conduits, be away from other electrical devices and not pass through rooms at particular risk or be protected by fire walls of degree 1 hour.

Reduction of security obligations enjoyed by “Très petits hotels”

These establishments benefit from special provisions:

They are exempt from the enclosure of the stairs;
Fire-rated door sets must be generalized;
The establishment must be equipped with a category A fire safety system. Automatic fire detection must be installed in horizontal circulation areas where they exist and in all premises, with the exception of bathrooms. However, when the director of the establishment favors the enclosure of the staircase(s) leading to the rooms, the automatic fire detection remains limited to common horizontal circulation and / or private spaces;
They are exempt from the installation of autonomous housing blocks (BAEH).

Accessibility for disabled people in hotels

All hotels are considered as establishments open to the public (ERP) and therefore subject to the regulations in force concerning accessibility.

“Chambres d’hôtes” (Guest rooms)

The standards to be observed

The regulatory minimum surface area of each room must be 9 m² (excluding toilets), with a ceiling height of at least 2.20 m;
Each room must give access (directly or indirectly) to a bathroom and a toilet and be in compliance with regulations on hygiene, safety and sanitation;
The rooms and bathrooms must be cleaned daily, at no additional cost;
The price is free but the operator is however subject to certain obligations in terms of price display.

Each accommodation, whether it is in an individual dwelling or in a collective dwelling, is equipped with at least one standardized smoke detector. Article R129-13 of the construction code specifies: “The responsibility for the installation and maintenance of the standardized smoke detector referred to in R129-12 lies with the occupant of the accommodation.” However, it lies with the owner for seasonal accommodation…

The operator must of course also take out an insurance contract covering this activity.

Safety and access for people with disabilities

No rule of access to disabled people is required as long as the accommodation capacity (limited to 5 rooms and 15 people at the same time) is not exceeded.

If this is exceeded, the operator of the guest room must comply with the regulations for hotels and establishments open to the public as well as the regulations in force on accessibility for people with disabilities.

“Meublés de tourisme”

There are no specific regulations for this type of accommodation. Housing must meet the minimum standards set by Decree No. 2002-120 of 30 January 2002 relating to the characteristics of decent housing.

As in any home, the premises must be equipped with at least one standardized smoke detector.

In addition, it is of course necessary that the home insurance covers the seasonal rental.

There is no capacity limit. However, buildings or premises used as accommodation which can accommodate more than 15 people are to be considered as establishments open to the public (ERP) and become subject to the regulations concerning accessibility and prevention of fire risks.

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Comparative table of companies’ legal structures under French law

FBA team — Mon, 15 May 2023 10:36:16 +0000

The tables hereafter shown in this document compare the main legal structures mainly used in France, available to entrepreneurs.

We have included in this table several commercial-type enterprises as well as two cases of non-commercial structures.

The cases for commercial-type companies are:

E.I. (Entreprise Individuelle) – Individual Enterprise;
E.U.R.L. (Entreprise Unipersonnelle à Responsabilité Limitée) – Enterprise with limited liability;
S.A.R.L (Société A Responsabilité Limitée) – Company with limited liability;
S.A. (Société Anonyme) – Private Company;
S.A.S. & S.A.S.U (Société par Actions Simplifiées – Société par Actions Simplifiées Unipersonnelle) – Companies with stock actions simplified;
S.N.C. (Société en Nom Collectif) – Collectif ownership company;
S.C.O.P. (Société Coopérative et Participative) – Cooperative and Participative Company.

The two non-commercial structures are:

Associations, which are useful to philanthropic entrepreneurs or commercial types, with non-competitive activities;
The S.C.I. (Société Civile Immobilière) which are useful for the organization of real estate assets.

The following criteria will be further developed:

Number of partners;
Management style;
Responsibility of partners;
Responsibility of leaders;
Capital amount and contribution release;
Contributions in kind;
Net profit taxation;
Executives’ compensation tax regime;
Social scheme for managers;
Social scheme for partners.

COMMERCIAL COMPANIES

	Individual Entrepreneur	E.U.R.L	S.A.R.L	S.A.	S.A.S and S.A.S.U	S.N.C	S.C.O.P
NUMBER OF PARTNERS	The individual entrepreneur only	One single partner (natural or legal person)	2 partners minimum 100 maximum (physical or legal persons)	-2 partners minimum in unlisted companies -7 partners minimum in listed companies -Partners may be physical or legal persons	Minimum 1 partner-No maximum (physical or legal persons)	Minimum 2 partners no maximum legal (physical or legal persons)	2 partners minimum – no maximum (Scop SAS) 2 partners minimum – maximum 100 (Scop SARL) At least 7 partners (Scop SA)
MANAGEMENT STYLE	The individual entrepreneur only	A manager (mandatory natural person) who can be either the sole shareholder or a third party.	One or more manager(s), who must be natural person(s) (either one of the partners or a third party)	Either a board of directors (3 to 18 members) who must be shareholders. The chairman is appointed by the board of directors from among its members.Or a management board and a supervisory board	A single president, natural person or legal person. The partners freely determine in the articles of association the rules of organization of the company	One or more manager(s), natural or legal person. It can be either one of the partners or a third party	A manager elected by the salaried partners for 4 years (6 years for the Scop SA)
PARTNER’S RESPONSABILITY	Liability of the individual entrepreneur limited to goods used for the professional activity, in terms of professional debts. the main residence is legally unseizable by professional creditors. Automatically benefits from the separation of personal and professional assets.	The partner’s liability is limited to the amount of their contributions, unless they have committed management errors or granted guarantees on a personal basis	The partners’ liability is limited to the amount of their contributions unless they have committed management errors or granted guarantees on a personal basis	The partners’ liability is limited to the amount of their contributions	The partners’ liability is limited to the amount of their contributions	Partners are jointly and severally liable on all of their personal properties	The partners’ liability is limited to the amount of their contributions.
LEADER’S RESPONSABILITY	Civil and criminal liability of the entrepreneur	Civil and criminal liability of the manager	Civil and criminal liability of the manager (s)	Civil and criminal liability of the manager (s)	Civil and criminal liability of the manager (s)	Civil and criminal liability of the manager (s)	Civil and criminal liability of the manager (s)
CAPITAL AMOUNT AND CONTRIBUTION RELEASE	Share capital does not exist	Amount freely fixed by the partner, according to the needs of the company Compulsory cash release of 20% upon incorporation and the balance within 5 years	Amount freely fixed by the partner, according to the needs of the company Compulsory cash release of 20% upon incorporation and the balance within 5 years.	€37.000 minimum Compulsory release of 50% of the cash contributions to the constitution and the balance within 5 years	Amount freely fixed by the partner, according to the needs of the company Compulsory release of 50% of the cash contributions to the constitution and the balance within 5 years	Amount freely fixed by the partner, according to the needs of the company Full release of contributions to the constitution is not compulsory. The balance will be paid at the request of the management	€ 18.500 for Scop SA €30 for Scop Sarl or SAS
CONTRIBUTIONS IN KIND	N/A	Possible: Must be indicated in the articles of association, appointment of an auditor in charge of the assessment but possibility of dispensing with it in certain cases	Possible: Must be indicated in the articles of association, appointment of an auditor in charge of the assessment but possibility of dispensing with it in certain cases	Possible: Must be indicated in the articles of association, appointment of an auditor in charge of the assessment	Possible: Must be indicated in the articles of association, appointment of an auditor in charge of the assessment but possibility of dispensing with it in certain cases	Possible: Must be indicated in the articles of association, appointment of an auditor in charge of the assessment is not compulsory	See SARL, SAS or SA depending on the legal form chosen
NET PROFIT TAXATION	The entrepreneur is taxed directly under income tax, either on a flat-rate basis (micro-enterprise regime) or in real terms (real tax system). The sole proprietor subject to a real tax regime may, however, opt for corporation tax.	The company is not taxed, the sole shareholder is taxed directly for income tax as in a sole proprietorship. The EURL can opt for corporate tax and thus the manager will pay tax on the income on his remuneration and the company will be taxed on the net profit to the corporation tax	The net profits are subject to corporation tax and the remuneration of managers to income tax The company may opt for income tax in the case of family SARL or, under certain conditions, for SARL less than 5 years old	The net profits are subject to corporation tax and the remuneration of managers to income tax The company may opt for income tax under certain conditions, for SA less than 5 years old	The net profits are subject to corporation tax and the remuneration of managers to income tax The company may opt for income tax under certain conditions, for SAS less than 5 years old	The company is not taxable, each partner is taxed on his share of profits for income tax (in the category of industrial and commercial profits) The company can however opt for corporate tax	Profits are subject to corporation tax Exemption from corporation tax for the fraction of profits distributed to employees in respect of the participation and for that set aside as part of the investment provision
EXECUTIVES COMPENSATION TAX REGIME	Income tax in the category corresponding to the activity of the company or, in the event of the option for corporation tax, in that of wages and salaries	Income tax in the category of industrial and commercial profits or non-commercial profits (EURL subject to income tax), or in that of wages and salaries (EURL subject to corporation tax). The single associate manager of EURL in the IR regime can choose the tax regime of the micro-enterprise	Salaries and wages tax regime, except if the company opt for income tax	Salaries and wages for the chairman of the board of directors (for conventional SA)or for the Chairman of the Management Directory Board for other companies Unless the company option for income tax	Salaries and wages tax regime for the president, except if the company opt for income tax.	Income tax in the category of industrial and commercial profits	Tax regime of salaries and wages
SOCIAL SCHEME FOR MANAGERS	Self-employed workers scheme	Self-employed workers scheme when the manager is the sole shareholder Assimilated-employee when the manager is not a partner	SARL submited to corporation tax: Minority or egalitarian manager: assimilated-employee Majority manager: self-employed Option to IR: See SNC regime	SA in classic form: The chairman is considered an employee The other members of the board of directors do not come under any social security scheme because they are not remunerated for this function	The president is assimilated-employee	Self-employed workers scheme	Managers are assimilated to employees in particular with regard to unemployment insurance
SOCIAL REGIME FOR PARTNERS	N/A	Self-employed worker scheme	The partner can be a self-employed worker if he is in the majority, or an employee if he is equal or minority.	Employees’ scheme (if they have an employment contract)	Employees’ scheme (if they have an employment contract)	Self-employed workers scheme	Employees scheme (if they have an employment contract)

NON-COMMERCIAL COMPANIES

	ASSOCIATIONS	SCI
NUMBER OF PARTNERS	2 members minimum no maximum	2 members minimum no maximum
MANAGEMENT STYLE	Freely chosen mode of management. The association is often run by a board of directors, which usually elects an office (president, treasurer and secretary)	One or more managers, partners or not, natural or legal persons
PARTNER’S RESPONSABILITY	Non-executive members are not responsible	Partners are liable on all of their personal properties
LEADER’S RESPONSABILITY	Civil and criminal liability of the manager (s). Liability reduced under certain conditions when the manager performs his duties on a voluntary basis.	Civil and criminal liability of the manager (s)
CAPITAL AMOUNT AND CONTRIBUTION RELEASE	There is no social capital Members can make contributions with the possibility of recovering them when the association is dissolved.	No minimum
CONTRIBUTIONS IN KIND	Each contribution must be recorded in the articles of association, as well as the right of recovery so that the contributor can take advantage of it	Possible: Must be indicated in the articles of association, appointment of an auditor in charge of the assessment is not compulsory
NET PROFIT TAXATION	Associations which make profits, with for-profit purposes, are subject to corporation tax at the standard rate Non-profit associations benefit from a reduced corporate tax rate on their only income from assets Non-profit associations whose revenues ancillary sales do not exceed € 60,000 per year, are tax exempt	The company is not taxable Each partner is taxed on his share of profits for income tax (in the category of property incomes) The company can however opt for corporate tax
EXECUTIVES COMPENSATION TAX REGIME	Tax regime of salaries and wages if remuneration is paid.	The manager can only be an employee if he is not a partner. In the event that the associate manager receives remuneration, this is not deductible from the profit of the SCI.
SOCIAL SCHEME FOR MANAGERS	Managers are assimilated-employees under certain conditions	Non-partner managers are assimilated-employee
SOCIAL REGIME FOR PARTNERS	No working contract possible for members	N/A

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The Individual Entrepreneur: the legal, tax and social status

FBA team — Wed, 15 Mar 2023 17:54:16 +0000

A new unique status of individual entrepreneur came into effect from May 15^th 2022 for any creation of an individual business.

This status makes it possible to distinguish the professional assets from the personal assets with the consequence of preventing him from answering for his debts on all of his assets.

In return, the law is gradually abolishing the status of individual entrepreneur with limited liability (EIRL). Indeed, since February 15^th 2022, it is no longer possible to create an EIRL.

We will see successively:

The legal status of the individual entrepreneur;
Its tax and social systems;
The main legal operations in this type of business.

I – The legal status

1. The two heritages

This system leads to the automatic separation of professional assets and personal assets. However, the new status does not impose on entrepreneurs the formalities that weighed on EIRL, the separation of assets being by right.

Composition of professional assets

These professional assets are made up of the property, rights, obligations and sureties which he holds and which are useful for his independent professional activities which he exercises. These are the goods, rights, obligations and sureties that serve the activity of the individual entrepreneur.

The administration presents a non-exhaustive list of goods belonging to this category:

The goodwill, the artisanal fund, the agricultural fund, all the tangible or intangible assets that constitute them as well as the right of presentation of customers of a liberal professional;
Movable property such as merchandise, equipment and tools, agricultural equipment, as well as means of mobility;
Real estate used for the activity, including the part of the principal residence of the individual entrepreneur used for professional use;
Intangible assets such as data relating to customers, patents, licenses, trademarks, designs and models, and more generally intellectual property rights, the trade name and the sign;
The cash funds, the sums registered in the bank accounts dedicated to this activity.

Composition of personal assets

It is made up of elements of the assets of the individual entrepreneur not included in the professional assets. It includes assets (such as a principal residence not used for professional use) and liabilities (for example, a loan to purchase personal property).

Starting point for limitation of creditors’ pledge

The limitation of the pledge of creditors to the professional assets of the individual entrepreneur (concerning professional claims) applies to claims arising after May 14^th 2022 and from:

Registration in the register to which the entrepreneur belongs for his activity;
The earliest registration date when it belongs to several registers;
The declared date of the start of activity, if this is prior to the date of registration;
The first act he exercises as an individual entrepreneur, when he is not bound by an obligation to register.

1. Exceptions to separation of assets

The individual entrepreneur may, for certain operations, waive the protection of his personal assets.

The waiver must contain certain information. It can only intervene at the request of a professional creditor and after a period of reflection generally set at 7 clear days from the receipt of the waiver request.

The creditor’s right of pledge then covers all professional and personal assets, with the exception of property that is legally exempt or declared exempt.

Concerning the tax authorities

They may seize the main residence of an individual entrepreneur, or any other property declared unseizable, in the event that the entrepreneur has committed fraudulent maneuvers or in the event of any serious and repeated non-compliance with his tax obligations.

With regard to personal tax debts, the separation of assets is not opposable to the tax authorities in respect of tax debts owed on a personal basis, but whose base includes the results of the professional activity (tax on the income or social contributions) or is made up of property useful for the professional activity (property tax on this property).

Note: This measure is inapplicable to the collection of income tax and social security contributions when the individual entrepreneur has opted to be assimilated to an EURL or an EARL and is subject to corporation tax.

Concerning social organizations

When the individual entrepreneur has, through fraudulent maneuvers or following serious and repeated non-compliance with the requirements of social security legislation, made it impossible to collect the contributions and social security contributions due under its activity, the recovery of these sums can be made on all of its property and rights.

Concerning creditors in a personal capacity

They can exercise their general right of pledge on the professional assets within the limit of the amount of the profit made during the last closed financial year to ensure the recovery of their debt when the personal assets are insufficient.

1. Mandatory mentions

For the exercise of his professional activity, the self-employed worker must use a name incorporating his name or a name of use immediately preceded or followed by the words “individual entrepreneur” or the initials “EI”.

This mention must appear on the invoices, order notes, catalog and prices, advertising documents, correspondence and receipts as well as on the website.

II – The fiscal and social regime

The individual entrepreneur is, as before, personally subject to income tax on the profits made. These profits are determined according to the rules specific to the tax category corresponding to the nature of the activity carried out (B.I.C., B.N.C. or B.A.).

However, since the entry into force of this new status, the individual entrepreneur can opt for corporation tax.

1. Option for assimilation to an EURL or an EARL

The individual entrepreneur can opt for the assimilation of his sole proprietorship to an “Entreprise Unipersonnelle à Responsabilité Limitée” company (EURL) or to an “Entreprise Agricole à Responsabilité Limitée” (EARL). This option is irrevocable and automatically entails option for corporate tax liability.

However, a waiver of corporation tax liability is possible until the fifth financial year following that for which the option for assimilation to an EURL (or EARL) was exercised. The sole proprietorship remains assimilated to an EURL or an EARL but will be subject to the regime of partnerships.

The net result for application of corporation tax is determined as follows:

The sums that the entrepreneur allocates to himself in remuneration for his activity are tax treated as remuneration allocated to the partner of an EURL (or an EARL) subject to corporate tax. They are therefore deductible from the result and taxed on income tax like wages;
The deductions made by the entrepreneur, other than his remuneration, are assimilated to dividends and are not deductible for the determination of the result.

1. Social regime for the individual entrepreneur

He is covered by the scheme for self-employed workers (Social security for the self-employed). The individual entrepreneur does not pay himself a “salary” and does not have a payslip.

The social contributions of entrepreneurs subject to a real regime are calculated, in the general case, on the basis of the taxable profit. However, in the event of the option for IS, the social security contributions are calculated on the remuneration allocated and possibly on part of the dividends.

Contributions for micro-entrepreneurs are based on turnover.

In any case, they are not entitled to unemployment insurance for self-employment, but they have the possibility of taking out personal insurance.

III – Legal operations within the sole business

1. The constitution of the sole proprietorship

The sole proprietorship is characterized by its simplicity of constitution. The entrepreneur registers his business with the Chamber of Commerce or Industry (CCI) or the Chamber of Trades and Crafts (CMA) in his region depending on whether his activity is commercial or artisanal, or makes a declaration to Urssaf when the planned activity is liberal.

Note that since January 1st 2023, companies must carry out their formalities for creating, modifying and terminating their activity in a dematerialized way, on the one-stop shop, which replaced the old business formalities centers.

1. Transfer of assets

Transfer of personal assets to the professional assets of the individual entrepreneur (not assimilated to an EURL or an EARL)

This transfer does not constitute an assignment and does not lead to the taxation of the capital gain noted.

On the other hand, during the possible subsequent sale of the property, it will then be necessary to determine two capital gains:

A private capital gain, corresponding to the capital gain realized during the period during which the property was included in the private heritage;
And a professional capital gain, corresponding to the capital gain acquired by the property since its date of entry into the professional asset.

Transfer of the personal assets of the individual entrepreneur to the assets of the individual business assimilated to an EURL or an EARL

The transfer of property useful for the activity does not constitute a transfer for consideration and, therefore, does not give rise to the recognition of a private capital gain immediately taxable in the hands of the entrepreneur.

The transfer of other property constitutes a contribution. The capital gain resulting from this contribution is immediately taxable in the hands of the entrepreneur according to the capital gains regime for individuals and may benefit, where applicable, from the exemptions provided for by this regime.

1. Option for the assimilation of the sole proprietorship to an EURL or an EARL

When the individual entrepreneur opts for the assimilation of his sole proprietorship to an EURL or an EARL, this option carries the consequences of the creation of a separate tax entity:

A transfer of the assets registered in the heritage of the sole proprietorship to that of the company assimilated to an EURL or an EARL, which must be treated for tax purposes in the same way as the contribution of these same assets from the heritage of the company individual to that of an EURL or an EARL;
The termination of the sole proprietorship.

1. Liquidation of sole proprietorship

The liquidation of the sole proprietorship of an individual entrepreneur who has not opted for assimilation to an EURL or an EARL entails the immediate taxation not only of the operating profits made since the end of the last taxable year, but also capital gains on assets resulting from the disposal or termination and any tax-deferred profits, provisions or capital gains whose taxation has been previously deferred.
The liquidation of a sole proprietorship assimilated to a EURL or an EARL entails the same tax consequences as the termination of the business and the cancellation of the shares of an EURL or an EARL:

- * Taxation of results not yet taxed on the date of this termination, including any unrealized capital gains, to corporation tax or income tax;
- * And, when the company is subject to corporate tax, the taxation in the hands of the individual entrepreneur of the “liquidation bonus” in the category of income from movable capital.

All the team of French Business Advice is at your disposal to help you, so do not hesitate to contact us!

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Bank accounts in French companies

FBA team — Sat, 15 Jan 2022 08:00:00 +0000

A large number of business leaders wonder if it is compulsory in France to open a bank account dedicated exclusively to the business and if this account must necessarily be a professional type account.

In addition, some companies want to do banking transactions in currencies other than the euro but fear they will run into a legal problem.

We will try, through this article, to answer these questions.

I – Professional bank accounts

1. The obligation (or not) to open an account dedicated to professional activity

Individual entrepreneurs are exempt from the obligation to open a current account dedicated to their professional activity.

However, self-employed workers are required to create an account dedicated to the activity of their company if their turnover has exceeded for two consecutive calendar years an amount of € 10,000.

This measure resulting from a law of 2019 also applies to micro-entrepreneurs.

On the other hand, all capital companies (EURL, SA, SAS, SARL…) must open a bank account dedicated to their professional activity at the time of their creation in order to deposit their share capital. Without opening such an account, separate from the current account, it is impossible to obtain registration. However, while it is mandatory to open such an account in order to create a company, it is not mandatory to keep it.

However, you are strongly advised not to close the account dedicated to professional activity once the company is registered. Indeed, in the event of management of a company without an account dedicated to professional activity, professional deposits in the personal bank account will be mixed with other cash receipts and, thus, these professional deposits risk being requalified by the tax administration like wages.

1. The steps to open an account dedicated to the company

Choosing a professional bank is an important act because the objective for it is to support the company at the different stages of its development.

The first step is to clearly identify your needs at the beginning of the relationship but also in the foreseeable future. The choice of the bank will have to take these needs into account.

It is possible to distinguish two types of needs among the questions to be asked:

Needs related to the activity of the company:
- services related to means of payment: electronic money, international transfers, cash collection, online payment systems, check cashing, but also business cards, payment limits, etc;
- geographic coverage of services;
- short-term financing and liquidity facility;
- development investment financing;
- other specific needs.
Needs related to the expected relationship mode with the bank:
- availability of a regular advisor, need for proximity … and / or possible digitalization of all or part of the exchanges;
- investment advice, management advice, etc.

Important note: A company that cannot find a bank willing to open an account for it has an “account right”. Any bank refusing to open an account must provide the company with a certificate. This can turn to the “Banque de France”, which designates a banking institution with the obligation to open a professional bank account at short notice.

The steps to be taken by a company being created to open an account are as follows:

When setting up a company, partners who contribute money must deposit the funds with a specialized establishment.

In practice, the partners start by writing a draft statute. Once the capital has been defined and the contributions determined, they must deposit the contributions in cash (in full or at least the legal minimum provided for by the articles of association) into a blocked account.

The articles of association must mention the deposit of the share capital and specify the name of the establishment where it is deposited. Then, it is only when the company is registered with the registry of the commercial court that it is possible to release the capital of the company and to pay it into a final bank account.

1. The differences between professional bank account and personal account

Whatever the type of bank account, it will be possible to obtain a RIB, to have a bank card and a checkbook, to receive and issue transfers, to cash checks and cash, to set up payment by direct debit.

However, several services are only reserved for companies with a professional bank account. Here are some examples:

payment terminals by bank card;
online management services as invoicing, accounting etc;
the possibility of making a capital deposit and obtaining a certificate;
the establishment of a bank overdraft suitable for professionals.

In return, the professional bank account has a higher operating cost than a personal bank account. There are also online business accounts for the self-employed. This sometimes allows savings on bank charges.

The choice between the two types of accounts depends on the legal form of the company. Companies must open a professional bank account upon creation. On the other hand, individual entrepreneurs have the choice between using a personal account or a professional bank account.

II – Opening a bank account in foreign currency

Some companies need to record accounting transactions in foreign currencies, here is what the administration specifies on this subject:

“A company established in France can issue an invoice in a currency other than the euro (in dollars or pounds sterling for example). The foreign currency must be internationally recognized and be mutable: subject to change, convertible. The exchange rate in euros applicable must be mentioned on the invoice.

However, the invoice integrated into the company’s accounts must be in euros. It must have a conversion rate which may be different from the exchange rate used for the payment.

The conversion rate depends either on the due date of the VAT, or on the date of the customs conversion rate (which by convention is fixed on the penultimate Wednesday of the month). “

Thus, the company may be required to open an account denominated in a foreign currency by opening a foreign bank account or by opening a multi-currency account.

1. Opening a foreign account

The law provides for an obligation to report foreign accounts but commercial companies (SA, SAS, SARL, …) are not affected by this obligation to report to the tax authorities.

On the other hand, sole proprietorships and EIRLs have the obligation to declare their accounts abroad, including accounts closed the previous year and accounts on which people have a power of attorney.

The declaration must be sent to the tax authorities each year using the Cerfa 3916 form.

Procedure for opening an account abroad within the EU:

The documents to be provided are generally the following:

An identity card;
A Kbis extract;
The statutes of the company;
The last tax declaration (VAT or IS);
Proof of address or registered office;

In addition, you are generally asked to make a minimum deposit.

Procedure to open an account outside the EU:

Any complications related to opening a bank account abroad depend on the regulations of the country you choose. Indeed, you will also be subject to the economic laws of the host country of your new professional account.

In both cases, some banks require numerous guarantees in terms of administrative documents and in financial terms.

The advantages of a bank account abroad:

The opening of a bank account abroad can meet different needs, depending on the structure and nature of the professional activity. It will thus be able to streamline commercial relations, for customers or suppliers established abroad. It will also simplify the procedures relating to raising funds to obtain international investments.

1. Opening a multi-currency account

For some companies that have to make many transfers from one currency to another, opening such an account allows you to avoid many bank charges.

The advantages of a multi-currency account for companies that often process transactions in different currencies:

It allows to keep money in different currencies in one place with more favorable exchange rates;
It allows to make more profitable online purchases from certain international suppliers;
It allows you to send and receive money in foreign currencies with lower fees.

In conclusion, it should be noted that the operations of opening a foreign account or a multi-currency account are generally only profitable to companies which have a relatively important activity with foreign customers or suppliers. But if you have any doubt, all the team of French Business Advice is at your disposal to help you, so do not hesitate to contact us!

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Which tax regime to choose for an individual entrepreneur

FBA team — Fri, 30 Apr 2021 12:49:11 +0000

The two main tax systems applicable to an individual enterprise are:

“Micro” tax system;
Real tax system.

It is pointed out that the micro-scheme does not apply to companies, which is why our article is limited to the case of individual companies.

I – Tax regimes depending on the activity carried out

There are three categories of taxation of professional income:

Industrial and Commercial Benefits (BIC) for industrial, commercial, craft activities and furnished rental activities;
Non-Commercial Profits (BNC) for liberal activities;
Agricultural Benefits (BA) for agricultural activities.

For some service providers and some liberal professionals, it is sometimes complicated to know whether there is a BIC or a BNC when the company is set up. In case of doubt, it is important to consult an English-speaking chartered accountant because an error of assessment on the tax system would lead you to determine your tax result using an incorrect method.

Indeed, whether one depends on the “micro” tax regime, on a real regime (or on the controlled declaration regime for BNCs), the method of determining the tax result is different from one regime to the other.

The same is also true (as we will see later) for the percentage of flat rate abatement on receipts in the various micro regimes.

In addition, when an operator exercises a secondary activity (linked or not to the main activity) within the same business, it is important to determine whether this secondary activity should be taxed according to the same tax category as the main activity or whether, on the contrary, it must be the subject of an independent tax declaration.

In this case too, it is important to seek advice from a chartered accountant.

In all cases, an error of assessment on the choice of the tax system could subsequently lead the tax administration, during a tax audit, to recalculate the result according to the appropriate method and possibly to carry out adjustments accompanied by delay interests and penalties.

II – The tax systems involved

1. Non-commercial profits (BNC)

The two regimes concerned are the “Micro BNC” and the declaration controlled (real). In order to benefit from the “micro”, the turnover achieved by the professional during the previous year must not exceed € 72,600 excluding taxes.

1. Industrial and commercial revenues

The two tax regimes are “Micro BIC” and real (simplified or normal). The annual turnover limit for “Micro BIC” is:

€ 176,200 for companies for the sale of goods, supplies and foodstuffs to be consumed on the spot, or the provision of accommodation (hotels, guest rooms, furnished tourist accommodation);
€ 72,600 for service providers or tenants in a furnished dwelling;
In the case of mixed activities, the total amount of income must not exceed the limit of € 176,200, and the amount of income relating to the provision of services must not exceed the limit of € 72,600.

1. Agricultural incomes

As in the case of BIC, the two tax regimes are “Micro BA” and real simplified or normal. Are affected by the “Micro BA” regime all farmers (regardless of their tax regime previously) whose average revenue for the three previous years does not exceed € 85,800 excluding tax.

1. Some precisions

It should be noted that the “Micro” system is prohibited to certain persons who are mainly:

For the “Micro BNC”:
- Public officials;
- Taxpayers who trade in securities;
- People who engage in commercial and non-commercial activity at the same time and who opt for a real regime on commercial profits;
- People who receive “BNC” from abroad.

For the “Micro BIC”:
- The equipment rental companies;
- Trading on the stock market;
- Non-profit associations;
- Real estate agents, property dealers and developers.

III – The advantages of the “Micro” tax system

The most obvious advantage of this system is its simplicity:

At the accounting level, operators must only keep a chronological log of receipts and a register of purchases only in the case of activity of sale of goods or supply of housing;
In terms of taxes, only the amount of turnover should be indicated on the income tax return. The tax administration determines the taxable income by applying a flat-rate reduction to this figure of:
- 34% for “Micro BNC”;
- 71% for “Micro BIC” in case of selling goods or providing housing;
- 50% for “Micro BIC” in case of providing services;
- 87% for “Micro BA”.

It may be noted that this system is particularly interesting if the amount of expenditure actually incurred by the business is less than the flat-rate reduction.

The self-employed whose tax reference income (RFR) of the fiscal household of the penultimate year (year N-2) does not exceed a certain threshold have the possibility of paying a lump-sum disbursement of income tax at the rate of:

1% or 1.7% for “Micro BIC” depending on whether they participate in a sales activity of products or services;
2% for the “Micro BNC”.

“Auto-entrepreneurs” may also choose to pay social contributions in proportion to the turnover.

The last two last options mentioned above are not applicable in the case of “Micro BA”.

For more precise information on this tax regime, you can consult on our website the article entitled: “The Micro company”.

IV – The advantages of the real tax system

It is obvious that the operator must opt for the real if he finds that his costs are higher than the amount of the standard deduction applied automatically in the “Micro” system. In addition, in the event of a loss, he may deduct the amount of such loss from his other incomes or incomes from subsequent years.

It should also be noted that most of the tax exemption regimes (income tax, local taxes) from which certain new businesses may benefit are only applicable in the event of an option for a real tax regime.

The majority of tax credits intended for businesses are likewise applicable only to those which are subject to a real regime.

It is important to note that the choice of a tax system is never final and that (except in exceptional cases) it is possible to change it at the beginning of the year provided that an option is formulated with the tax department of the company before the 1rst of February. Before making such a decision, the operator must speak with his accountant.

The choice of the tax regime “Micro” requires, as indicated above, the exercise of an activity in the form of a sole proprietorship which does not guarantee the patrimony of the operator in the event of bankruptcy.

To avoid this, it is possible for the creator of business to constitute an “EIRL”.

We of course offer a consulting service to make this choice with English-speaking accountants.

Are you interested in this service? If so, contact us!

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Create a business in France in 2019

FBA team — Mon, 16 Sep 2019 14:57:00 +0000

The creation of an economic activity is often a complicated operation. It must be carefully prepared because it engages the businessman for many years.

We wish to summarize below the main stages of creation by referring you to the various articles that we have already published on the subject.

During all these stages, the business creator necessarily needs a consultant who will be able to support him in the delicate moments a chartered-accountant is a professionally trained professional to bring this help.

You can contact us for any useful questions and even meet us on Thursday, October 3, 2019 at Montpellier for the conference “Invest in a real estate & Create a business in France” organized by the Franco-British Chamber of Commerce and Industry.

I – Preliminary to the creation of a business

Market study and business plan

The market study can guide and validate the legal, economic or logistical choices of the project leader, by following different steps: completion of a questionnaire, interviews with professionals in the sector, estimated projected turnover that will serve as a basis for seeking funding …

For the project leader, the choice of the location of the future company is decisive for its viability: it is important to have a clear view of potential customers.

Choice between the various investment methods

There are many opportunities to invest in a business in France, the main ones are:

Create a new business,

But there are also other possibilities that can be considered in the development of an existing business by the addition of a new activity. Under these conditions, the investment can be realized as follows:

Buying a commercial property,
Purchase of shares of companies,
Subscription to a capital increase,
Advances to a company’s current account.

These investment methods are developed in an article previously published on our site entitled: “Invest in business in France”.

Choice of the legal and fiscal status of the company

There are many possibilities that we will not discuss here in detail, they are discussed in our articles entitled: “Setting up a small business in France” and “The main legal forms that can be adopted to do a business in France”.

Finance research

Before developing a project it is very important to ensure that it can be financed both in terms of investments and the need for working capital.

It is in principle the business plan that must integrate the calculation of these needs.

Financing can be of:

Internal origin (contributions to the share capital, contributions to the current account),
External origin (loans bank aids and various subsidies).

With regard to the aids, you can consult our article on the site: “Main relief to the creation of businesses”.

Looking for a consulting partner

As we pointed out in our introduction, to give a great chance of success to your project, it is necessary to be able to be advised during all the decisions or the steps. A chartered-accountant can obviously represent this partner who will bring you this permanent assistance.

II – Business creation operations

Constitution of the company

Before starting the incorporation operations it is necessary to check whether the chosen legal form will be compatible with the activity that will be carried out.

In addition, it will be necessary to check if the activity requires a diploma or a special authorization to be exercised.

The most commonly adopted legal forms are:

Individual business,
S.N.C. Société en Nom Collectif,
S.A.R.L. Société à Responsabilité Limitée,
E.U.R .L. Entreprise Unipersonnelle à Responsabilité Limitée,
S.A.S. Société par Actions Simplifiée or S.A.S.U.,
S.A. Société Anonyme,
French Establishment of a foreign law company.

There are also specific social statuses for certain liberal activities, these are:

S.C.P. Société Civile Professionnelle,
S.C.M. Société Civile de Moyens,
S.E.L.A.R.L. Société d’Exercice Libéral à Responsabilité Limitée,
S.E.L.A.F.A. Société d’exercice Libéral à Forme Anonyme,

Etc…

There is also a form of society still poorly known, the European Company, the status of European Company exists since 2004 in France. This legal form allows the company to operate throughout the European Union.

The formalities and the estimated cost of constituting a part of them are exposed in our article “The main formalities to be completed for the installation of an enterprise in France”.

At the time of incorporation, it is essential to choose the tax system (income tax or corporation tax). Sole proprietorships and companies so-called “de personnes” such as S.N.C., S.A.R.L. “de famille”, E.U.R.L. (in some cases) and S.C.P. are most often subject to income tax. In return, companies so-called “de capitaux” such as S.A.R.L., S.A.S., S.A., S.E.L.A.R.L., S.E.L.A.F.A., are subject to corporation tax.

But it should be noted that many options for corporation tax are possible. In addition, a large number of companies subject to mandatory corporation tax may opt for income tax for the first five years of their existence.

The advice of a chartered-accountant is really essential when making all these choices.

Choice of the social status of the leader

Business leaders may be dependent on one of the following two social statuses:

Employee,
Self-employed.

In sole proprietorships, S.N.C., E.U.R.L. or S.C.P. the status of self-employed worker is, except in exceptional cases, compulsory.

In the S.A., S.A.S., S.E.L.A.F.A is in principle the salaried system that is required.

When a S.A.R.L.L. or a S.E.L.A.R.L is constituted, the managers are employees when their participation in the share capital is minority or egalitarian. Otherwise they adopt the status of self-employed worker.

To better understand the consequences of choosing one of these two statutes, we invite you to read our article: “Some information to help business leaders to choose their social status”.

Hiring employees

As soon as the activity of the company grows, hiring generally becomes essential. There are many hiring aids, the most common of which are:

C.I.C.E. which now becomes a reduction of social charges,
Assistance for the training of young people (apprenticeship contract or professionalization contract),
Help for hiring a disabled worker,
Help for hiring a job seeker,
Help with hiring in troubled areas.

An accountant will obviously be able to provide you with the advice and assistance necessary to choose and obtain these aids.

We have written two articles about hiring employees that you can refer to:

“Hiring of employees in France”
“The steps of hiring an employee in France”

If, on reading this text, you need clarification on the subject, contact us directly!

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Main relief to the creation of Businesses

FBA team — Mon, 01 Jul 2019 15:27:00 +0000

There are a very large number of helpers for entrepreneurs. We cannot quote them in their entirety, but the list of the main help below can be useful if you aim to start a business in France.

I – Social aids

A.C.R.E

Since the beginning of the year this help can be requested by all business creator, it consists of:

An exemption from social contributions for the benefit of the creator during the first year of activity (except C.S.G., C.R.D.S. and supplementary pension).
Exemption is total on income up to € 29 800, it is degressive beyond this amount.

A degressive exemption for three years reserved for “auto-entrepreneurs” and “micro-entrepreneurs” provided their income is less than € 40 600 approximately.

Young innovative companies (J.E.I.)

When a company meets the conditions to obtain the status of “J.E.I.”, it can obtain an exemption from employer social contributions for 8 years on salaries paid to researchers and technicians related to research.

This measure is also accompanied by an exemption from corporation tax and Territorial Economic Contribution (C.E.T).

“Pôle-Emploi”

When an unemployed person is a business creator, it is possible to maintain the payment of unemployment benefits in one of two ways:

Maintenance of unemployment rights (A.R.E.): In this situation, the creator remains on the jobseeker lists and reports monthly his activity income.
He will receive his jobseeker’s allowances to which 70% of the income from the company’s activity will be deducted.

Payment of capital (A.R.C.E.): If the creator opts for this aid, he will receive 45% of the amount of benefits remaining to be received. This sum will be paid half at the beginning of the activity of the company and the other half six months later.

Exemption from employers’ charges on wages in certain areas

Please, refer to Chapter II paragraph 4.

II – Tax aids

Income tax reduction for subscription to the capital of a small or medium-sized company

The tax code provides for a tax reduction of 18% of the amount invested in the capital of a small or medium European company created for less than 5 years.

The subscriber must undertake to keep his shares for a minimum period of 5 years. The law has provided a lot of conditions for obtaining this tax reduction, you can contact us to know the details.

Tax Deduction of Loan Interests for Investment in a Business

The managers or employees of certain companies may deduct interest from loans borrowed to subscribe for the capital of their company.

The company must meet several conditions provided for by law, we keep them at your disposal on your request.

Exemptions from taxes on profits

In this context, there are also a large number of exemptions granted to creators during the first years of life of the new business. We list below the most common ones.

Exemption in rural revitalization zone (Z.R.R.): This device is intended for business set up in a municipality whose list is fixed by the government.
The exemption is granted for a period of 8 years including 5 years on the entire profit and 3 years on a degressive part.

Exemption in certain urban areas (Q.P.V.): The activities that are created in these areas also benefit from a tax exemption on profits for 8 years at 100% during the first 5 years and then 60% in the sixth year, 40% the seventh and 20% the eighth.

Exemption from C.F.E. and property taxes

Companies that establish themselves in Z.R.R. or in Q.P.V. are exempt from “Contribution Foncière des Entreprises (C.F.E.)” and Value-Added Contribution in full for 5 years then declining for 3 years.

Upon deliberation by local authorities, they may be exempted from property tax on buildings for professional use located in the area they own.

In addition, companies located in Z.R.R. are exempt for 12 months from employers’ social security contributions on any new hiring on permanent contracts or fixed-term contracts of at least 12 months. The exemption is limited to a maximum base of 2.4 times the SMIC.

Regarding the jobs in Q.P.V., companies can get a bonus under certain conditions that we can tell you on your request.

III – Miscellaneous aids

Here is a list of some help you can get when starting a business. We can of course give you the conditions of obtaining.

Zero rate loans

They come in addition to bank loans and facilitate the obtaining of other financing.

NACRE zero rate loan: It is granted by the region for an amount of € 8,000 to 10,000 over a maximum period of 5 years.
Loans of the ” Initiative France” network: They amount to € 3,000 to 6,000 per job created. Their duration is from 3 to 5 years.

Guarantee funds

They come in guarantee of the loan contracted with a banking organization at the time of the creation of the company. They provide valuable help in financing the business.

Micro credit for business creation

These are loans for the benefit of people excluded from the banking system. They are suitable for small, low-risk projects.

The accompaniments to the creation of businesses

Accompaniment of “POLE-EMPLOI Parcours ACTIV’CREA”: The purpose of this measure is to help the jobseeker become a business creator.
Enterprise Project Support Agreement (CA.P.E.): This contract consists of assistance provided by a company or an association to a person to prepare his creation project.
Chambers of Commerce and Industry: They also develop various assistive devices for creation.

The subsidies

The main ones are:

Grant “Cap’ Jeunes” for creators under 26,
Subsidy “FISAC” for renovation of local shops,
Grant “AGEFIPH” for disabled workers,
Grant “F.D.I.” paid by the county councils,
Award “French Tech” for young innovative companies (J.E.I.).

There are still many sources of aid or funding such as crowdfuding, “Pépinières d’entreprises”, some “EXCEL” tools, etc.

The chartered-accountant is also an excellent partner in the creation of your business. So, whatever your project, contact us to explain your objectives and we will help you during all stages of the creation.

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Archives des Set up a business in France - FBA - French Business Advice

Tax and social aspects of the Micro Enterprise

I-CONDITIONS OF ACCESS TO THE MICRO-COMPANIES REGIME:

1-Registration with an administration:

2-The legal structure:

3-Excluded activities:

4-Turnover limits:

5-Transition from a MICRO scheme to a real scheme:

II-FUNCTIONING OF THE TAX SYSTEM OF THE MICRO-ENTERPRISE:

1-Simplified formalities:

2-Determination of taxable profit:

3-VAT franchise (VAT exemption):

4-Contribution on value added (C.V.A.E.):

III-FUNCTIONING OF THE “MICRO SOCIAL” REGIME:

CONCLUSION:

Some information to help business leaders to choose their social status

I – What will be your mandatory social system depending on the legal structure or your shareholding in the company?

II – The main characteristics of the salaried status

1 – The advantages of this status

2 – The disadvantages

III – The main characteristics of the self-employed (TNS) status

SALARIED STATUS

TNS STATUS

IV – Compare the cost of each social system

Total cost of remuneration and charges

Net remuneration for salaried officer

Net Remuneration for TNS Officer (excluding optional contributions)

Difference

Net Income

Total Costs of social security for salaried officer

Cost of social security for TNS officer

Aids for the creation of establishment of businesses in France

I – A list of the main forms of creative support

II – Presentation of the main aids for setting up a business

1 – Regional aid (linked to the location of the company)

> France rural revitalization zones (ZFRR and ZFRR+)

> Exemption from tax on profits in ZFRR and ZFRR+

> Optional and temporary exemption from CFE in ZFRR and ZFRR+

> Other areas eligible for an exemption

> Regional aid zones (ZAFR)

> Urban free zones (ZFU)

> Urban basin to be revitalized (BUD)

> Priority development zone (ZDP)

> Employment areas to be revitalized (BER)

> Revitalization zones (ZoRCoMiR and ZRCV), ZAIPME and QPV

2 – Support for innovation

> Research tax credit (CIR)

> Expenditures concerned

> Expenditures qualified for the tax credit

> CIR amount

> Tax credit for collaborative research (CRC)

> Expenditures concerned

> Amount of tax credit

> Innovation tax credit (CII)

> Young innovative company (JEI)

> Companies concerned

> Research expenditures retained

> Tax and social exemptions

> Young University Company” (JEU)

3 – Other assistance for business establishment

> Income tax reduction for subscription to the capital of unlisted companies

> Conditions to be fulfilled by the company

> Conditions that the subscription must meet

> Amount of income tax reduction

> Hiring aids

> Financial aids

The different categories of tourist accommodation and their regulations

I – Definition of accomodation categories

“Petits hotels”

“Très petits hotels”

“Chambres d’hôtes” (Gest rooms)

“Meublés de tourisme”

II – A brief overview of security and accessibility conditions

“Petits hotels”

Reduction of security obligations enjoyed by “Très petits hotels”

Accessibility for disabled people in hotels

“Chambres d’hôtes” (Guest rooms)

“Meublés de tourisme”

Comparative table of companies’ legal structures under French law

COMMERCIAL COMPANIES