Every year the French Government’s budget called “ Loi de Finance” brings a series of changes that may impact freelancers. In this article, I’m covering the key changes that may impact you or your business, as an expatriate in France.
1 - Minimum wage increased in 2024 - SMIC
The minimum wage in France, called SMIC, is increasing to roughly 1,400€ net per month. This is a key number to remember as an expatriate with a business visa or carte to de sejour, as this is the minimum income required to issue or renew a business visa.
Minimum Wage in France in 2024 - SMIC:
- 1 398,69€ net per month (after social charges) - Roughly 1,400€.
- 1 766,92€ gross per month for employees.
- 16,784€ net per year - Roughly 16,800€.
- 21,203€ gross per year for employees.
- For employees, SMIC is based on a 35 hours/week contract.
What does this mean for you as a freelancer? This is a very good question, as many get confused between “revenu", meaning take-home income in French and turnover (also called revenue in English but referring to sales). SMIC refers to the take-home income, or the equivalent of a salary.
This means that if you have a business, this is the net income that you will take out of your business. This means your take-home income AFTER you pay your business social charges.
A - How does the tax office assess your business income
Let me explain this further for someone freelancing as a Micro Entrepreneur. Although you don’t see it, the tax office applies a standard rebate on your turnover to assess your business income. For instance, a profession liberale, i.e. intellectual-based services, gets a rebate of 34% on their sales, in order to assess their business income (i.e. money taken home after you have paid your social charges and running expenses). This means that your business income represents 66% of your sales.
Your turnover objective to reach, to get or renew a business visa or carte de sejour entrepreneur, is (16,784.28 x 1.34) = 22,491€. I would go slightly above that just in case the exchange rate changes and to show that you still have a margin for manoeuvre.
B - Micro Entrepreneur sales objectives for a business visa
If I summarise the tax office calculations, your sales objectives are the following, based on your activity type:
- Profession libérale: intellectual & services based activities, such as consultants, independent teachers, coach, fitness instructors = 22,491€
- Manual or commercial services: artisans such as builders, kitchen fitters, hairdressers, and nail extensions = 25,176€ (rebate of 5O% turnover).
- Buy to resell, ecommerce, gites = 28,700€ (rebate of 71% on turnover).
If you have another business type, such as SARL/EURL or SAS/SASU, add your social charges and fixed business expenses to the net SMIC, to get your sales objectives.
2 - Gites and holiday rental income
This one is a major cockup from the French Parliament. The initial intent of the Government was to increase taxation on gites and holiday rentals. For now, we have a distinction between what we call professional and non-professional income. Non-professionals called LMNP (Loueur Meublé Non Professionnel) make less than 23,000€ per year and declare directly into their French income tax form. While professionals make more than 23,000€ per year register a business and pay social charges.
Many people going professional choose the Micro Entrepreneur setup and strangely enough, for now, gites or AirBnB were classified under the buy-to-resell category “vente de marchandises”. Hence having a significantly higher turnover potential of 168,000€, while they provided a service. They also benefit from an important tax rebate to assess their business income (-71% instead of -50% if gite classified with Atout France).
The Government realised that it was missing an opportunity for taxes and aimed to change this category from marchandises to services coommercial. Hence the yearly turnover going down from 168,000€ to 77,700€ per year for gites.
The major mistake happened when the term used in the text of law that was voted referred to “micro foncier”, which has a maximum turnover of 15,000€! This is normally used for non-furnished rentals and land rental for farmers.
The Government realised the mistake the day after the law was passed and confirmed that a new law would be passed to fix this. So, don’t worry about the 15,000€ focus on the 77,7000€ that will happen soon.
What is the impact for gite & holiday rental owners
I’m waiting for the final text of law to be passed before writing a specific article. I would say that this doesn’t impact you too much if you are starting an activity from scratch or if your yearly turnover is below 77,000€. However, if you have a large property and have been in business for several years, you may have to reconsider which business type and tax regime suits your best. And it may be time to change to something else this year, for instance change from and Micro Entrepreneurs to a SARL or SAS.
3 - New Income Taxe Thresholds in 2024
This change refers to personal taxes and not business taxes, but it's good to know about it. The tax on your income earned in 2023, which you will declare in May 2024, is calculated based on income brackets. This income can be a salary, pension, business or rental income.
The income brackets have been revalued by 4.8% on 1st January 2024, to reflect inflation. The new tax bands are the following:
- Up to 11,294€ : 0%
- 11,295€ to 28,797€ taxed at 11%
- 28,797€ to 82,341€ taxed at 30%
- 82,342€ to 177,106€ taxed at 41%
- > 177,106€ taxed at 45%
I won’t explain how the French income tax works in this article, but you can find out more from the tax office website
4 - Recycling organic waste for professionals
France has been steadily implementing policies to reduce the amount of organic waste. Individuals have been equipped with paper recycling bins, as well as composting bins. Local councils have providing paper and plastic recycling bins to professionals too. From 1st January ALL professionals also have to handle organic waste. Specific bins called "composteur" might be provided by their local councils. They may have to look at private service providers if they have to deal with large quantities of organic waste. This applies to any professional, but is a cause for more headaches in the food sector.
5 - Summer Olympic Games 2024 in Paris
Okay, this one isn’t so much a change, but rather a warning or reminder from me. The summer Olympic & Paralympic games will take place in Paris from the end of July to early September 2024.
Finding a flat to rent anywhere near Paris around these months (and slightly before), will be a nightmare. Prices are already going up and many people are keeping the bookings open for late rental at higher prices…
If you plan is to move to Paris in 2024, you might have to look further away. Make sure you update your business plan accordingly if you do.
6 - Pole Emploi becomes France Travail
If you are listed with the unemployment agency, are currently employed in France and plan to negotiate the end of your contract (rupture conventionnelle), just know that Pole Emploi will change its name to France Travail this year.
Voilà, c'est tout pour l'instant! I will keep you posted on these changes, especially for the gite and AirBnB. Make sure you subscribe to my newsletter to keep up-to-date. It's published twice a month, short and sweet - Subscribe to my newsletter.