The auto-entrepreneur, now officially called micro-entrepreneur, is a sole trader or one-person business, registered under the entrepreneur’s name. As such, there is no distinction between the owner and the business, meaning the entrepreneur is liable for the debts generated by the business.
Until 2017, auto-entrepreneurs had a maximum yearly turnover they could not exceed of 32,900 euros per year for services and 82,800 euros per year for trade. Auto-entrepreneur could not be TVA registered and therefore could not charge or reclaim TVA.
Turnover thresholds for micro entrepreneurs increased in 2018, with a maximum turnover of 70,000 euros for services and 170,000 euros for trade. Be careful however as TVA will have to be applied above the old turnover threshold, i.e. 32,900 euros for services and 82,800 for trade. This will mean at this stage requesting a TVA number from Impots, so it is best to plan this move.
Social charges are based on a fixed percentage of the auto-entrepreneur’s turnover. 22% for services (consultants, programming, teaching, bed and breakfast) and 12.8% for trade (gites, ecommerce, shops) . Expenses cannot be claimed for, but have to be recorded. Income taxes can be paid up-front, by paying an extra fixed percentage of their turnover. This option is called impôt libératoire (2.2% for profession liberale and 1% for trade).
Social charges exoneration - changes in 2020
NEW in 2020 - ACRE was reviewed and was limited to people registered with the unemployment agency Pole Emploi, benefiting from the minimum revenu of reinsertion RSA or being under 30 years old. ACRE is not automatic and has to be requested on registering your business. The exoneration is also reduced to 50% of the normal rate and be limited to a year: 11% for profession liberale and 6.4% for trade.
In 2019, all new micro entrepreneurs were automatcially entitled to some social charges exoneration called ACRE for their 1st year in business. ACRE stands for Aides aux Créateurs et Repreneurs d'Entreprises. For your 1st three trimesters in business, you were paying 5.5% for services and 3.2% for trade (gites, shops, ecommerce). Find out more about how ACRE works here.
Auto-entrepreneurs / micro entrepreneurs are liable to other taxes, including Contribution Foncière des Entreprises (CFE) and Contribution à la Formation Professionnelle (CFP 0.2% for profession liberale and 0.1% % for trade). Auto-entrepreneurs are currently exempt of CFE, but talks are currently under way and it may end up being charged as an extra set percentage turnover.
As an auto-entrepreneur / micro-entrepreneur you can not claim any expenses the business incurs, as explained in this video.