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 - 1st year in business
Since 1st January 2019, all micro entrepreneurs are 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 will be paying 5.5% for services and 3.2% for trade (gites, shops, ecommerce). If you chose this option, your social charges will therefore be lower up to 30KE of income. 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.