In the event you freelance or work as an impartial contractor, uncover how a lot tax you’ll must pay with our professional information to taxes for freelancers and self-employed employees in France.
One of many key parts of operating your individual enterprise in France is knowing how the tax system applies to you and getting your head across the allowances you may declare. French taxes could be difficult, with self-employed employees ready to decide on between tax regimes. This information affords recommendation on the next matters:
The self-employed tax system in France
In line with Eurostat, round 15% of French employees are self-employed, from freelancers and sole merchants to folks operating partnerships and restricted corporations.
Freelance employees in France usually must pay tax on their earnings and make social safety contributions. There’s a vary of buildings obtainable to self-employed employees and enterprise homeowners in France. The kind of enterprise you use will dictate the taxes you’ll must pay in your revenue.
Self-employed revenue tax in France
Tax for self-employed sole merchants and freelancers in France
In the event you arrange as a sole dealer (enterprise individuelle or EI) in France, you and your online business can be thought of one entity for tax functions. This implies you’ll pay tax underneath the overall revenue tax system (Impôts sur le Revenu), on the similar charges as salaried employees. The French revenue tax bands for 2022 are as follows:
|French revenue tax bands||French tax fee|
|As much as €10,225||0%|
|€160,367 and above||45%|
Self-employed employees can select between paying tax underneath the usual system or the micro-enterprise regime (régime micro-entrepris). Below the usual system, you’ll declare your earnings minus any allowable deductions and pay tax on that quantity.
Below the micro-enterprise regime, you’ll as a substitute declare your turnover minus a selected tax credit score to find out your taxable base. Which regime works higher for you’ll rely in your revenue and the kind of firm you run.
Micro-enterprise tax regime
The eligibility guidelines and tax credit for the micro-enterprise regime differ relying on the character of your organization.
Some sorts of self-employed employees aren’t eligible for the regime, together with these in regulated liberal professions akin to docs and legal professionals, so it’s best to search recommendation from the tax workplace earlier than continuing.
- Industrial (micro-BIC): If your online business is classed as industrial gross sales, your turnover have to be lower than €172,600 to qualify for the tax regime. A credit score of 71% is accessible, which means your taxable base can be 29% of your total turnover.
- Commerce/service-based (micro-BIC): The utmost turnover allowed is €72,500. The fee allowance is 50%, so your taxable base can be 50%.
- Skilled (micro-BNC): For skilled/liberal actions (akin to accountants), your tax credit score is 34%, so that you’ll pay tax on 66% of your revenue.
For instance, let’s say you’re operating a industrial enterprise underneath the micro-enterprise regime. In the event you make €50,000 in a yr, you’ll be capable of offset the allowance of 71% in opposition to this. You’ll then pay revenue tax on the remaining 29% of your complete income (€14,499).
Some micro-entrepreneurs may must pay enterprise property tax (CFE) on their turnover. Yow will discover out extra within the French authorities’s information.
Tax for partnerships in France
If your organization is registered as a SARL (a restricted firm in joint possession), you could be taxed underneath the private revenue tax system (as above) for the primary 5 years. In the event you don’t qualify for this standing, you’ll must as a substitute pay company tax in your earnings.
Tax on restricted corporations in France
The kind of tax you’ll must pay when operating a restricted firm relies on how the corporate is about up. Usually, restricted corporations are chargeable for French company tax, except you might have EIRL (Entrepreneur of Particular person Restricted Legal responsibility) standing, by which case you might be able to pay revenue tax by means of your individual tax return.
Registering for freelance tax in France
You’ll first must register your self-employed actions with the Centre de Formalités des Entreprises (CFE). The CFE has completely different departments relying on the kind of enterprise (e.g., industrial companies, liberal companies).
When you’ve accomplished this course of, you may register as self-employed on-line and full the micro-enterprise registration should you want to observe that tax regime. In the event you determine to modify tax regimes at a later date, you’ll must state this when submitting your tax return the previous yr.
Self-employed and freelance tax deductions and credit in France
In the event you register for tax underneath the micro-enterprise regime, you can’t declare any deductions in opposition to your tax invoice, as you already profit from the credit above.
In the event you register underneath the usual regime, there’s a vary of bills you may deduct out of your earnings to work out your taxable revenue. These embody overheads akin to the price of workplace area and gear required to function your organization.
Most affordable enterprise outgoings are potential. The French tax company units the next guidelines on deductions:
- Deductions have to be incurred within the direct curiosity of your organization’s operation and relate to regular enterprise administration.
- Deductions have to be acknowledged as an expense through the right monetary yr and invoices have to be supplied as supporting proof.
- Outgoings for working from dwelling could be deducted so long as they’re pretty distributed (e.g., how a lot you deduct from the price of your electrical energy invoice have to be according to how a lot of your time at house is spent working).
Company tax in France
Company tax charges in France have been falling in recent times. In 2021, most corporations paid an ordinary fee of 26.5%, whereas corporations with earnings of greater than €500,000 paid a better fee of 27.5%.
From 2022, nonetheless, all corporations pay a flat fee of 25% whatever the measurement of the earnings. Some smaller corporations that make lower than €38,120 will pay a lowered fee of 15%.
Corporations might be able to offset some tax credit in opposition to their earnings. These can embody credit for funding in analysis and growth, new enterprise credit that present reduction as an organization is rising, and CICE credit, which might decrease the price of hiring workers overseas.
The right way to file freelance tax in France
In case you are working as a person, you’ll solely must make one on-line tax declaration on your tax legal responsibility and social safety contributions. In 2022, the deadlines are 19 Could for postal returns, or someplace between 25 Could and seven June for on-line returns (the particular deadline varies relying on which département you reside in France).
Self-employed employees will both must fill out type 2031 or 2035 (if utilizing the usual tax regime) or type 2042C (if utilizing the micro-enterprise regime).
If your organization is chargeable for company tax, you’ll must file a web-based tax return inside three months of the tip of your organization’s tax yr, or by 30 April the next yr. Funds are quarterly usually. New corporations or those that paid lower than €3,000 the earlier yr can qualify for annual funds.
VAT in France for self-employed folks
VAT in France is known as Taxe sur la valeur ajoutée, or TVA. TVA is payable on the sale of sure items and companies. TVA is chargeable at a fee of 20%, although lowered charges of 10%, 5.5%, and a couple of.1% can be found for some merchandise.
Smaller companies in France don’t want to join TVA. The brink to register and pay the tax is €34,600 for service-based corporations and €86,900 for industrial companies.
Social safety for self-employed employees in France
Self-employed employees in France should make social safety contributions on a month-to-month or quarterly foundation. How a lot you’ll must pay will differ relying on the construction of your organization.
In the event you select customary accounting as a sole dealer, your contributions can be calculated primarily based in your closing revenue tax calculation. Annually, you’ll want to go browsing to the French authorities’s web site and submit a web-based return titled Déclaration sociale des indépendants (DSI). Most social safety contributions are tax-deductible.
Staff with micro-enterprise standing pay social safety contributions at charges starting from 6% to 22% relying on the character of the enterprise. 50% reduction is accessible within the first yr to some companies. The foundations could be advanced, so it is suggested that you just take skilled recommendation on how they apply to your organization.
Tax fines should you freelance in France
In the event you fail to file your revenue tax return on time, you’ll face a penalty of as much as 10% of the tax due. Penalties apply from 45 days of the gathering date.
In the event you submit your company tax return late, you’ll be charged curiosity at 0.4% per 30 days plus a penalty of at the very least 10% of the tax due. For late funds, the penalty begins at 5% of the tax due. A lot bigger fines of as much as 80% could be imposed should you’re discovered to have dedicated tax fraud.
Associations for entrepreneurs in France
There are a variety of associations for entrepreneurs in France, which could be a good way of gaining assist and recommendation on organising and operating your individual enterprise. These embody the next organizations:
The right way to discover an accountant or monetary adviser in France
In the event you’re undecided how the principles apply to your online business, it’s vital to take skilled recommendation from an professional reasonably than threat making errors in your tax return.
There are many English-speaking advisers dotted round France. As a place to begin, take a look at our listing of French accountants and tax specialists.