Many English speakers living in France have registered as self-employed micro-entrepreneurs. Running a small business always has its challenges, but 2020 was an exceptionally difficult year. In this comprehensive article we cover the support measures in place and other information to highlight changes for the coming year.
Business turnover thresholds (plafonds de chiffre d’affaires)
The turnover thresholds for micro-entrepreneurs increased in 2020. They are generally reviewed every three years, so they will remain the same in 2021.
However, be aware that the figures announced at the end of 2019 had seen a slight change following the publication of the official decree.
Here are the official figures to remember for 2020 and 2021
| Activity Type | Turnover Threshold | VAT Exemption Threshold |
|---|---|---|
| - Purchase / resale of goods - Sale of food to be consumed on site - Accommodation services (furnished renting not included) | € 176,200 | € 85,800 |
| - Commercial or artisan services and - Liberal activities - Renting of furnished accommodation | € 72,500 | € 34,400 |
Social charges (cotisations sociales) remain the same in 2020 and 2021
- 12.8% of turnover for the purchase / resale of goods, sale of foodstuffs for consumption on site and accommodation services (BIC)
- 22% of turnover for artisanal and commercial services (BIC / BNC) as well as for liberal activities
To these social contributions, you must add:
- the contribution to professional training,
- the tax for consular chamber costs (both very small %),
- possibly the rate of income tax discharge/levy (versement libératoire) if you have chosen this option.
These rates do not apply if you are on ACRE (Aide à la Création et à la Reprise d’Entreprise – new and acquired business help). This allows you to benefit, under certain conditions, from reduced rates of social charges during your first year of activity. We will soon be publishing an article specifically on this.
Since 2020, these declarations MUST now be made online on the website https://autoentrepreneur.urssaf.fr . Three months after you create your ME, you will still receive the paper declaration forms, however these should not be sent back by post except in specific situations.
Income Tax and versement libératoire
The Income Tax Reference amount (Revenue fiscal de référence) to be able to benefit from the monthly income tax payment scheme (versement libératoire) for micro-entrepreneurs changed in 2020.
To qualify for this option, you must ensure that your reference tax income for 2018 (N-2) does not exceed € 27,519 per share of the family quota so:
- €27,519 for a single person (1 share)
- €55,038 for a couple without children (2 parts)
- €68,798 for a couple with a child (2.5 parts)
etc.
A reminder that since January 1, 2019, all micro-entrepreneurs who have not opted for the versement libératoire (see above) payment scheme are therefore attached to the traditional tax system of deduction at source.
The tax administration does not have a benchmark tax amount for new business creators to be able to calculate the amount of payments to deduct, however. You therefore have several possible choices:
- wait until September of the following year (i.e. September 2021 if you created your business in 2020) and pay the tax due for the year of creation before December 31 of the following year,
- start paying down payments as soon as the business is created by using the tax administration simulator on the impots.gouv.fr website to find out the amount of these down payments (https://www.impots.gouv.fr/portail/calcul-du-prelevement-la-source)
- or opt for the versement libératoire payment scheme (we do not recommend this until you have been earning steadily for a couple of years).
Ask an accountant to help you figure out which option is best for you.
Covid-19: support measures in 2021
The solidarity fund extended into 2021
As a reminder, the solidarity fund is an exceptional aid established during the first French lockdown. Its objective is to compensate for the loss of income of companies affected by the health crisis. The eligibility conditions for this aid have evolved several times since its creation to best adapt to the economic situation.
The solidarity fund will continue in 2021, however, the list of its beneficiaries is now restricted to the sectors most heavily impacted by the Covid-19 pandemic.
If you would like help finding out if you are eligible and/or applying for the solidarity fund – please get in touch with Dennelle or Harriet at Renestance.
Exemption from social contributions will be maintained into 2021
At the end of 2020, the third corrective finance law offered an exemption from social contributions for professionals in the sectors most affected by the health crisis. This reduced the base rate for the calculation of social contributions so as to lower the overall amount businesses had to pay.
A new decree set out in December 2020 provides for the maintenance of this system into the first months of 2021.
If your activity falls within the S1 or S1 bis sectors (companies in the tourism, events, culture, sports, and related sectors)
Between January and December 2021, you can deduct from your turnover declarations the amount of turnover received in September, October and November 2020, if you meet one of the following conditions:
- You were affected by a ban on public reception in October and November 2020 OR
- your micro-entreprise suffered a loss of turnover of more than 50% in October and November 2020.
If your activity falls under another sector
If you were prohibited from welcoming the public in November and / or December 2020, you will be able to deduct the amount of turnover made in October and / or November from your declarations made between January and December 2021.
Important information
By deducting part of your turnover, you automatically contribute less to social security! This deduction will indeed have an impact on the calculation of your rights for health and retirement insurance. Think carefully before choosing this option.
Note also that the turnover deducted from URSSAF will still have to be declared for taxes as part of your annual income tax return. We therefore recommend that you keep a record of these deductions in your turnover ledger.
Brexit: a change in your trade relations with the United Kingdom
As of January 1, 2021, the UK exits the common market, and intra-community trade rules no longer apply between the EU and the UK.
If you are used to selling goods or services to customers located in the UK, you will therefore have to prepare yourself for some new regulations, including the introduction of customs duties and the reinstatement of certain formalities. Don’t panic, we are preparing an article to help you in this transition! To ensure you receive this update subscribe to our newsletter at the very bottom of this page!
Until then you can consult the government’s customs guide to preparing for Brexit – https://www.douane.gouv.fr/sites/default/files/2020-12/14/guide-douanier-de-preparation-au-brexit.pdf.
CFE: reduction and possible exemption over 3 years
The CFE (Cotisation Foncière des Entreprises) should decrease for some of you in 2021, since the calculation for property taxes is set to evolve. The details of this move have not yet been set out, so we will be keeping a close eye on this and bringing you more info as soon as we know more. Note that this reduction will not apply to everyone.
In other good news: the 2021 Finance Bill will allow some municipalities to extend the CFE exemption by 3 years. Please note, this measure will only affect newly created companies and will be subject to deliberation. Each local authority is in fact free to apply this measure or not.
Rural revitalization zones maintained until 2022
A rural revitalization zone (Zones de Revitalisation Rurale – ZRR) is a term set out in 1995 to define municipalities recognized as economically fragile, which could benefit from support and development.
As such, companies located in ZRR may benefit from tax exemptions, if they meet certain conditions, linked in particular to the nature of their activity.
If you are a self-employed person and your activity is domiciled in ZRR, you may have thus been able to benefit from a total exemption from your CFE for 5 years.
Deemed to be complex and not adapted to the reality of the territories, the ZRR system was called to disappear on December 31, 2020. But a government amendment was tabled calling for consultation and substantive reflection in order to redefine the priority geography of the country, resulting in the ZRR system being extended until 2022. Ask your local mairie or have a look online to see if you are in a ZRR and if you qualify for this exemption.
HEALTHCARE in 2020 and 2021
A change of administrator for social security initiated in 2019 and finalized in 2020 means all micro-entrepreneurs are now attached to the general social security regime, the CPAM (Caisse Primaire D’Assurance Maladie).
If you were ME before 2019, no need to panic as this changeover from the SSI to the CPAM should be done automatically. You will simply need to update your Carte Vitale by going to a pharmacy, for example.
This change will not have any impact on the amount you pay in contributions or on your rights and entitlements. The aim is quite simply to improve the management of your social protection.
Maternity and Paternity Leave
In January 2019 self-employed women were given the right to benefit from a minimum of 8 weeks paid maternity leave (€54/day for those earning over €3000 a year) up to a maximum of 16 weeks (the same as a salaried employee).
In 2021, the amount of paternity leave will also be extended for micro-entrepreneurs (yay for gender equality!). As of July 1st 2021, this will be increased from 11 days to 25 days and to 31 days (1 extra week) for multiple births. This extension also applies to the adoption of a child.
To benefit from daily paternity allowances, you must meet the same conditions as for maternity leave. Meaning you will have to interrupt your activity for the duration of your leave and justify 10 previous months of affiliation to the CPAM on the presumed due date. The amount of this compensation may vary depending on turnover over the past 3 years.
In 2021, don’t forget to defer your training rights!
If you were a salaried employee in France before December 31, 2014, you may still have individual training rights (Droits Individuel à la formation – DIF).
You have until June 30, 2021 (and not December 31, 2020 as initially announced) to transfer these rights to your Personal Training Account (Compte Personnel de Formation – CPF).
Without action on your part, these rights will be permanently lost.
DIF and CPF, these acronyms mean nothing to you? Don’t worry, many self-employed people are still unaware that they also have rights to finance their training.
The CPF (previously DIF) is a virtual kitty in which you accumulate rights each year, as soon as you declare a turnover greater than 0 and you pay the contribution to training (a small percentage you might have noticed on your cotisations). These credits are there to help you finance all or part of a training course. Note that as a micro-entrepreneur you must have been in business for at least a year before you can access your CPF.
Boost for digitization in 2021
Lockdowns have forced many professionals to reinvent the way they sell their products. Online orders, take-out and Click & Collect have seen strong growth in recent weeks.
To support small businesses in their digital transition, the government has therefore announced a plan to support e-commerce, particularly in favour of traders and artisans.
The objective is to digitize points of sale as much as possible so as not to be limited to face-to-face sales and to remain open even in the event of a lockdown.
This program created the ‘Clique Mon Commerce’ platform to help professionals determine the solution best-suited to their needs, depending on the nature of their activity and their geographical location. Thanks to this database, you have access to a list of operators recommended by the government.
Secondly, a digital check of €500 can be granted for companies wishing to equip themselves with distance selling solutions (e-commerce) and develop their online activity. This aid is only open to traders who have undergone an administrative closure and to professionals in the hotel and catering industry. This check should help them to cover, for example, the cost of creating a website or joining an online platform.
This help is available from January 2021 on presentation of your invoice to the service and payment agency. The grant will be paid directly to your account and cannot exceed € 500.
Note also that some municipalities have taken advantage of the financial support of the government to set up e-commerce platforms in favor of local artisans and traders. Your community may have already joined this program! Do not hesitate to inquire at your town hall or your intermunicipal authority. Your CCI or CMA can also offer some advice.
If you would like more information, or need assistance with setting up a business in France, please contact us – we are here to help you make your #Frenchdreamlife a success!
Harriet is a British born, French raised, European who loves resolving problems and knowing when she's helped out. Her energy and positivity are a great fit with the rest of the Renestance Team and a treat for customers!
All articles by: Harriet Amazon-Brown
