New Company Type in France - Auto Entrepreneur

From the 1st of January 2009 it is easier, cheaper and quicker to establish a small business in France than it was in 2008.

The French government decided to simplify the auto entrepreneur system by lowering the social charges, the minimum capital, simplifying the administrative conditions of creation. It is really easier and cheaper to start up a small business in France, even for the foreigners who settle in France.

With this new law, a small business can be set up on Internet. The registration in the "Registre du Commerce et des Sociétés (RCS)" or in the "Registre des Métiers (RM)" is no longer compulsory. Moreover, the individual entrepreneur can with a statement made by a public notary, avoid the possibility for the debt collectors to seize his properties but only if they are not used for a professional purpose. The necessity to have an administrative permit to use the ground floor of the main house as an office or as commercial premises will be no longer compulsory.

This new auto entrepreneur system applies only for 2 types:

- For a business which has a turnover below EUR80,000/year (tax not included) with an activity of selling goods, objects, furniture, catering or an activity of providing accommodation.

- For a service industry which have a turnover below 32000EUR/year and which come under the category of industrials and commercial benefits or of non-commercial benefits.

Furthermore, the auto entrepreneur has now the choice between paying his social charges monthly or quarterly and they are calculated thanks to a percentage on the amount of turnover. This percentage is 12% for a commercial activity and 21.3% for an activity in the service sector.

The main advantage is that if an auto entrepreneur does not have a turnover, he won't have to pay social charges. The taxation system of the new auto entrepreneur system is also favorable. Indeed, if the maximum level of income is reached, the monthly or quarterly tax is based on a percentage of the turnover:

- 1% for a business selling goods, objects, furniture, take away or provides accommodation.

- 1.7% for a business which the activity is to provide services which are not in the 80 000EUR threshold.

This option is only available for auto entrepreneur who have chosen the "micro-social" system (i.e., the system in which the auto entrepreneur can chose between monthly or quarterly income tax payments). If the minimum level of income is not reached, the taxation system will be the "micro-enterprise" system (one man industry).

Another benefit is that the auto entrepreneur does not have to pay the "VAT" on their business activity.

In conclusion, this new system is really helpful for the foreigners who wish to set up a small business in France (i.e., writers, accommodation, translating, teachers...).