Changes that will impact your business
As for every year a few changes are being implementation on 1st January, with the new Loi de Finance 2020. Here is a summary of the key changes which may impact your French business.
French incorporation tax reduced to 28%
Since 2018 the French Government has been implementing a slow decrease of the incorporation tax paid by EURL, SARL, SAS, SASU or SA. Initially at 33% of your profit, it will now be at 28%. In 2021 it will go down to 26.5% and finally 25% in 2022. A quick reminder that your incorporation tax is only 15% up to 38,120€ of profit. More on incorporation tax called Impot sur les Sociétes (IS) from the Government’s website (in French).
Your pension & health is now managed by Sécurité Sociale
Since 1 January 2018, the social protection for entrepreneurs is no longer managed by Régime Social des Indépendants (RSI), but has been entrusted to the general system called Sécurité Sociale for health and pensions. The implementation of this new organisation has been gradual since 2018. New entrepreneurs registered from 1st January 2019 were already automatically affiliated to Sécurite Sociale (CPAM) and Caisse d’Assurance Retraite. Entrepreneurs who registered their business before 2019, will be switching to CPAM and Assurance Retraite between 20th January and 17th February. I will write more on this subject in a separate article soon.
ACRE modified for micro-entrepreneurs
The social charges exoneration ACRE automatically given to new entrepreneurs in 2019 is modified for micro-entrepreneurs. The exoneration will be restricted to specific criteria, such as people listed with the unemployment agency Pôle Emploi and receiving benefits, or without benefits but registered for at least 6 months over the last 18 months, people under 25-year-old. From 1 January 2020, micro-entrepreneurs meeting these criteria will benefit from an exemption from social security contributions, but only for the first 4 quarters of activity and the exemption will be limited to 50% of the normal social charges contributions (against 75% previously). More on this here.
Registration fees with Chambre de Metiers reduced
If you have a manual activity, you will be called an “artisan” and will be registering with Chambre de Métiers. The registration and legal fees with Chambre de Metiers are being reduced in 2020. For instance, the registration for a sole trader enterprise individuelle goes from 130€ to 90€. It’s worth checking these rates.
Changes that will impact you in 2020
Taxe d’habitation is being cancelled
The budget law for 2020 “Loi de Finances” confirms the complete abolition of the housing tax on the main residence for 80% of households from 2020. For the 20% of remaining households, the abolition of the housing tax will be effective from 2023.
Lower income tax
Your income is submitted to a taxation grid called Barème de l’Impôt sur le revenu. The tax rate for the first threshold of income tax, which includes 12 million households, will be lowered from 14% to 11% from 2020. This represents an average saving per household of 350€. The 5 million households in the next tranche will benefit from an average saving of 180€.
You can use this simulation tool to estimate the impact of this measure on your income tax in 2020. Take your estimated income (or reference income for 2018 called “revenu fiscal” on your income tax attestation, then enter the number of fiscal share “parts fiscales” for your household. An adult is one share and a child is 0.5. So a married couple with 2 children is 3 shares.