The New Autoentrepreneur Scheme
Until very recently, the second biggest reason expats gave for wanting to return back to the UK, after missing their friends and family, was the cost of setting up and running their own business.
For many Brits that cross the Channel ready to start their new life in France, they think that life will be the same but better, with croissants instead of toast and sunshine instead of drizzle, but all the benefits of living in the UK. Although there are loads of benefits to living in France, the ease of running your own business is certainly not one of them. The costs are very often impossibly expensive (it sounds ludicrous, but taxes are charged on what you might earn in your best year, in advance, making it all too common for people to owe more in tax than they’ve actually earned) with the headache of bureaucratic paperwork – all in French!
So it’s no wonder that the British expat community has embraced the new Auto-entrepreneur scheme wholeheartedly. Whilst it is nowhere near as easy and flexible as being self-employed in the UK, it is certainly a whole lot simpler to be self-employed in France now that it ever was before.
What is the Auto-Entrepreneur Scheme?Introduced in January 2009, the Auto-entrepreneur scheme is a flagship policy for President Nicholas Sarkozy and his desire to get France to be seen as more flexible and entrepreneurial. It is very easy to sign up for the scheme and, in great contrast to the reams of paperwork, official meetings and strict categorisation of starting a business before, you only need to complete one simple form, either online or at your local Chamber of Commerce.
In order to sign up to the auto-entrepreneur scheme, you do need to match certain criteria. There are three main categories, which relate to the ‘primary activity’ of your business and have a direct impact on the rate of tax you will pay, so it is very important to be accurate. These categories are ‘service’, professional’ and ‘commercial’, paying 23%, 21% and 13% social charges accordingly, ostensibly devised to relate to the expected levels of expenses for each area. There are also some additional charges that include business tax, with many regions or departments freezing this charge for the first three years. The one main limit is that for those in the service and professional categories, you cannot earn more than €32,000 per year without moving up to another business category (which has more of the traditional paperwork issues) and no more than €80,000 for service-based businesses.
These taxes include your social charges, or coitisations, which gives you entry in to the French social system for healthcare, pension etc, so it really is invaluable for expats wanting to be fully integrated into the system. Please note that it is still advised that you get a mutuelle to top up your state provision for healthcare.
No Expenses!You will note from the levels of social charges/taxes that there are no allowances. This is where the French system is highlighted as being more expensive that the UK self-employed situation because you are unable to claim any expenses for your business. None at all! You ‘pay as you earn’ from your very first euro, so if your business requires considerable expenses you may find that you are better off in another scheme, such as the BIC Micro-Enterprise, although it is recommended that you gain professional advice.
As a general rule, the auto-entrepreneur scheme is great for expats that work from home and generate few expenses, such as marketing consultants, PR consultants and web designers. There have been unsubstantiated rumours that the easy sign-up process is set to be tightened in 2010, with stricter rules on proving qualifications in particular, but this is yet to be proved correct.