Minding Your Own Business
Small business: lexicon of who does what, when, why, and where it all breaks down
The baffling world of French acronyms in the small business world needs some explaining. It's simpler than it was, but woe betide anyone who strays from the straight and narrow.
So, you've decided to register as a small business, either as an Auto-Entreprise (AE) or as an Entreprise Individuelle (EI) - self-employed sole trader status for both. Under the AE you will pay social charges and income tax (optional) on a "pay as you earn" basis, while the EI pays a "forfaitaire" - a fixed amount - with annual reconciliations.
Both the AE and EI will pay social charges to RSI or URSSAF, with possible pension contributions to CIPAV or CNAVPL depending on the activity in question. RSI is traditionally the body that administers social matters for the independent or self-employed sector ("Regime Sociale Independents"). URSSAF collected the money and have always been seen as the "bad guys" in the old-fashioned days of "catch up" social contribution reconciliations. Now RSI and URSSAF have combined forces (no doubt as a measure to waste civil servants) and the ensuing association is chaotic. RSI are still unable to accurately tell you how much you owe in social charges, because URSSAF still keeps control of the actual figures.
The RSI/URSSAF contributions pay for health cover, family allowances, national debt repayment, and national pensions for certain activities other than CIPAV-related ones (such as journalists, osteopaths, consultants, teachers). The rate of contribution is 21.3% for RSI /URSSAF contributions, 18.3% for RSI/URSSAF for CIPAV-related activities, with CIPAV collecting the difference for the State pension.
Health cover is subcontracted out from RSI to independent agencies such as RAM, or Mutuelles du Soleil. These latter bodies are referred to as "organismes conventionnés" (OCs).
The tax regimes applicable to the AE and EI have their own terminology again: the AE is a separate regime started in 2009, but is essentially a variation of the micro-BIC or micro-BNC regimes that have always applied to EIs. A micro-BIC, in order to qualify as such, has an upper turnover figure of €80,300 per annum if commercial or holiday lettings, and a micro-BNC has a ceiling of €32,100 of white-collar "profession liberale" or artisanal.
As such these micro regimes are exempt from VAT and turnover is declared on the personal income tax return, rather than a specific business tax return. For a small business that exceeds these micro limits we enter the realm of the "réel simplifiée", a reporting regime to which VAT is appropriate and which requires a proper business tax return, with net business profits then being carried across to the personal tax return of the individual.
Breaking news: the favourable tax treatment of home help and "aide à domicile" is not changing - you can still deduct up to 50% of the amount paid against your tax bill, up to a ceiling of €15,000, but the abatement of 15% on the social charges paid by the employer for the employee is being removed, effectively making the whole employment situation some 12% more expensive for the employer. The employer could argue that he/she will pay 12% less in pay to compensate, but any modification to the employment contract has to be in agreement with the employee. That's just not going to happen (what might happen however is a return to simply paying people cash, so that's a clever move by someone in Bercy).