Slow death of the Auto-Entrepreneur

A recent poll showed that 30% of young people in the UK see themselves as becoming self-employed and running their own business. This is an encouraging statistic in these troubled economic times, demonstrating a Thatcherite sense of self-determination and endeavour. “Small acorns” and all that, lots of budding Richard Bransons ready to keep the economic motor ticking over. In Germany, too, twentysomethings have plenty of opportunity to develop their talents through apprenticed positions, learning skills that will open up future jobs or allow them to set up their own small business. The “enterprise culture” is alive there also, where youth unemployment is the lowest in Europe.
 
In France, the “enterprise culture” is moribund and the recent debate over reforming the status of the Auto-Entrepreneur reveals that the government just doesn’t seem to care. The reform proposed will limit, from 2015, the turnover of service Auto-Entrepreneurs to €19,000 per year (down from the current €32,600) and €47,500 a year for commercial Auto-Entrepreneurs (presently €80,000). If an Auto-Entreprise goes over these limits for two consecutive years they will automatically be “upgraded” to a normal self-employed business structure, which will crucially mean that instead of paying social contributions at 20-25%, they will pay nearly 50%. In other words, it just won’t be a realistic proposition for most young self-employed.

In effect, the self-employed will revert to the pre-2009 situation before the invention of the Auto-Entreprise and be strangled at birth by taxes, social charges and layers of confusing bureaucracy. The present number of Auto-Entreprises is 900,000 and the majority will die, the “black economy” will burgeon once more and compared with that 30% of young people in the UK looking to start their own business, the figure for France will be more like 3%.

Reforme des Auto-Entrepreneurs

If you care about the future of the Auto-Entrepreneurs sign up to the Coordination de Défense des Auto-Entrepreneurs, an internet-based lobby group founded at the end of April to defend the AE status (see www.facebook.com/DefenseAE or www.federation-auto-entrepreneur.fr). Les poussins, as they are known, organised demonstrations in June across France and one hopes they'll have the same success as les pigeons, a small business lobby that helped overturn Hollande’s crazy notion of inflicting massive capital gains tax on the sale of a business.

As always, with the current government it is likely that there’ll be a change of direction, one minister saying one thing and another saying the opposite. There is no clarity at the top in government, just constraint and ambiguity!

Changes in tax rules concerning expatriates in France

Some of the ambiguity, however, has worked in favour of those with second homes, as President Hollande has reduced the term needed to be free of capital gains tax on a holiday home from 30 years to 20, and elsewhere it has been confirmed that social charges will not be levied on the pro- fit from UK rental property. A little bit of good news to mitigate the rest of the gloom.

Enjoy the summer and let’s see what happens at la rentrée: a considerable majority of the French feel that with all the social unrest quelque chose va péter – something is going to blow. Man the barricades!