Auto-entrepreneur pro rata turnover business issue in year one

By Valérie Aston on 5 April 2017 · Viewed 4897 times · Questions

The auto-entrepreneur, also called micro-entreprise, is a great legal structure for your first business in France. This pay-as-you-go system gives you time to understand how the French administration works, sets your healthcare into place, while enabling you to test your market. As and when the business grows, you may then move to a different legal structure in France.

There is however a strict rule called prorata temporis that you should be paying attention to. This is very important as ignoring the rule may push you out of the auto-entrepreneur business as soon as your business starts it's second year.

Prorata temporis rule for auto-entrepreneurs

The prorata temporis rule means that your auto-entrepreneur turnover is going to be assessed on a pro rata basis for your first calendar year in business. In 2017 all auto-entrepreneurs have a yearly turnover limit of 33,200 euros for profession liberales and artisans (i.e. manual services) and 82,800 euros for trade. But if you start your business anytime during the year, then the pro rata temporis rule is applied, meaning that you will have a smaller turnover threshold relating to your exact starting date.

Examples of the auto-entrepreneur pro rata temporis rule

  • A website designer starting an auto-entrepreneur on 4 April 2017 would have a maximum turnover of 25,014 euros, i.e. (33,200 euros / 365) times the number of days in business in 2017.
  • A gite business registered as an auto-entrepreneur on 1 June 2016, would have a maximum turnover of 48,546 euros.

How to calculate your maximum auto-entrepreneur turnover in year one

The Agence France Entrepreneur (AFE) have a useful online tool enabling you to calculate your pro rata turnover for your first year in business. Simply enter your business starting date, choose your activity type (trade, food, accommodation, manual services, profession liberale) and click calculer. Make sure you write that number down if you don’t want to have a bad surprise in 2018.

Unfortunately you cannot run the test for 2016. So if you registered your business in 2016, you would have to count the exact number of days you were in business and use the formula I mentioned above.

Know your maximum auto-entrepreneur turnover in year one

If your auto-entrepreneur business turnover is higher than the maximum pro rata number for your first year in business, you will be coming out of the auto-entrepreneur business the following calendar year. This means that régime social des indépendants (RSI) will automatically switch you from the auto-entrepreneur business to the régime réel simplifié.

You will keep your existing business and SIRET number, but you will have different accounting rules and different taxes rates. You will for instance need to be TVA registered and you will receive call for social charges appels de cotisations.

If you go over the authorised pro rata turnover in your first year in business, RSI will not allow you to stay under the auto-entrepreneur business regime. Not quite the answer you would like to hear if the auto-entrepreneur business regime fitted you perfectly.

Valerie Lemiere: Start Business in France

About the author: Valérie Aston

I've been helping people who want to start or already have a small business set up in France since 2009. After graduating from a Master of Business Administration (MBA) degree, I worked as a senior marketing consultant in the UK and France for various International companies. I worked as a conseillère en création d'entreprises (senior business advisor) for BGE here in France and run this independent business on a daily basis.