Summary of changes to the auto-entrepreneur business in 2017

By Valérie Aston on 28 November 2016 · Viewed 12680 times · Questions

The auto-entrepreneur business in France, also called micro-entrepreneur, was launched in France in 2009 for small businesses. It offers a simple legal structure for sole traders, who will be paying their social charges based on their turnover. An auto-entrepreneur business can be registered online and the social charges can also be declared online.

However over time, small changes have been added, such as the compulsory 5 day training with Chambre de Metiers for artisans (called Stage Préalabe à l'Installation SPI), the need to be listed on Chambre de Commerce's directory for trading activities or on Chambre de Metiers' directory for artisans or finally the need to have a dedicated bank account.

Increased turnover threshold for the auto-entrepreneur

The auto-entrepreneur scheme has a maximum turnover per year, which varies according to the business activity. On 1 January 2017, this turnover limit will be slighly increased with:

  • 82,800 euros maximum per year for trading, resale, gites and chambres d’hôtes. These are called activités commerciales. The former turnover was 82,200 euros.
  • 33,200 euros maximum per year for services such as consultants and manual activities. These are called professions libérales and activités artisanales (manual work). The former turnover was 32,900 euros.

Social charges rates for auto-entrepreneurs

There are no indications so far that the social charges will be increased in 2017. We will have to wait until the end of December 2016, when the new loi de financement de la sécurité sociale 2017 will be voted to find out what will happen. For now the auto-entrepreneur social charges remain at:

  • 13.4% for trading, resale, gites and chambres d’hôtes,
  • 23.1% for services activities and manual activities,
  • 22.9% for profession libérales, e.g. consulting, teaching, editing, training, programming, etc.

Income from collaborative economy such as Airbnb to become taxable

The French Government has been struggling to decide how to handle extra income made by individuals via plateforms such as AirBnb, carpooling, meal delivery or exchange of services. Indeed most people do not declare this income, leading to a lack of ressources for the Government. In 2016 a new rule was introduced to force AirBnb users to declare their earnings to the income tax. The regulation could be increased in 2017, with short-term accommodation rental owners having to pay social charges. The new rule would make the difference between a plateform aimed at sharing costs (for instance car pooling with Blablacar) and a plateform generating extra income such as AirBnb. 

Income generated from short-term accommodation (such as Airbnb) would then become liable to income tax and social security contributions from 2017. According to the Social Security Financing Bill 2017 (Article 10), short term accommodation rental would become liable to social charges, if the rent exceeded an annual income threshold of 23,000 euros. This would push many people to register as auto-entrepreneurs. The draft law stipulates that the platform on which the property is registered may, if it so wishes, carry out legal, fiscal and social formalities on behalf of the person concerned (registration, declaration of turnover, payment of social contributions and taxes). Will this mechanism ultimately be adopted? We will have to wait until the law is passed by the end of December 2016.

Miminal business social charges contributions to be introduced for the healthcare system in France

Individual "ordinary" entrepreneurs such as entreprise individuelle, i.e. excluding micro-entrepreneurs, are obliged to pay minimum social contributions, irrespective of the income they generate, which allows them to benefit from a healthcare cover, even if their business activity is very low. For now, auto-entrepreneurs are exempted from minimum social charges contributions, as the contributions they pay are strictly based on the turnover achieved (thus no contribution is due in the absence of turnover).

The Social Security Financing Act for 2016 introduced a minimum social contribution for auto-entrepreneurs, but it is purely optional. The idea of ​​this system, called surcotisation (overcontribution), is to allow auto-entrepreneurs to benefit from a better social protection, especially if their turnover is low. 

In practice, it allows auto-entrepreneurs to benefit from daily sickness allowances (indemnités journalières) and pension rights, even in the absence of turnover. The surcotisation represents 950 euros per year for artisans and commerçants (for pension, sickness indemnities and invalidity) and 448 euros per year for profession libérale (only going towards pension, no sickness indemnities). For now, there is no minimum contribution for health insurance, family allowances, CSG-CRDS and contribution to vocational training. Auto-entrepreneurs wishing to surcotiser must apply before 31 December for an application the following year to RSI for trading activities (activité commerciale) or to URSSAF for profession libérale

So the question for 2017 is, will this option become compulsory and will there be a minimum contribution in order to benefit from healthcare?

Compulsory bank account for business auto-entrepreneurs

Since 1 January 2015, auto-entrepreneurs have to open a dedicated bank account to handle their financial transactions (CSS, article L. 133-6- 8-4 new). This rule was intended as a means of fighting fraud and better controlling auto-entrepreneurs. The law does not impose the opening of a professional account (costing about 20 euros per month), and this can be limited to a personal bank account dedicated to the business (costing about 5 euros per months).

The draft bill Loi Sapin 2 (article 39) intended, in its original wording, to eliminate the obligation for auto-entrepreneurs to open a dedicated bank account, since this obligation is being considered as slowing down business creation. So this is also something which may change with the new loi de finance in December 2016.

Compulsory 5 day training for auto-entrepreneurs registering as artisans

Entrepreneurs registering with Chambre de Métiers are called artisans (craftmen, i.e. manual and labour based activities). As part of their business registration process, artisans have to take a compulsory 5 day training called Stage Préalable à l'Installation (SPI), including subjects such as legal structure, financing a business, provisional planning and regulations. There are no tests at the end of this training, but the business registration cannot be completed if the training has not be done. This training is only done in French and costs about 200 euros.

The Pinel Act of 18 June 2014 abolished the SPI training exemption for auto-entrepreneurs. There has been a flood of criticism on this SPI training. First with regard to its contents, as it is perceived as quite distant from the concerns of auto-entrepreneurs. The second criticism relates to the long waiting list and delays involved in taking this training. For now, only Chambre de Metiers is entitled to offer this training, hence entrepreneurs having to wait sometimes for several months before being able to register their business.

In order to solve these issues, the Loi Sapin 2 recommends to simplify the rules applicable for this SPI training witn two actions (Article 38 - L. 82- 1091, 23 Dec. 1982, art.2 mod.). Firslty, in the future, this compulsory training could be taken within thirty days maximum after the business registration. It will be Chambre de Metiers' responsibility to ensure that it is taken within a maximum delay of 30 days. Past that delay, the auto-entrepreneur registration could not be refused or postponed, as long as the other obligations on registration (the obligation to hold the required qualification, in particular) are fulfilled. 

Secondly, in order to take account of the growing diversity of profiles of entrepreneurs, the draft law extends the grounds for exemption from the SPI training, to entrepreneurs who will have already benefited from support for business creation by one of the networks of business advisors whose list will be fixed by decree of the minister in charge of the craft industry.

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.