• France edition
 
JobTalk France
The pitfalls of France's auto-entrepreneur status
France's auto-entrepreneur scheme is an easy way to get started, but it has its downsides.

The pitfalls of France's auto-entrepreneur status

Published: 16 May 2013 08:00 GMT+02:00
Updated: 16 May 2013 08:00 GMT+02:00

For many self-employed or even unemployed foreign nationals in France, the “auto-entrepreneur” system is the perfect way to make a living or at least test your hand at running your own business.

There’s minimal red tape (once you have set yourself up), no need to pay taxes or charges up front and many employers will welcome you with open arms as they avoid having to pay the steep charges that come with having a contract.

Since 2009, around one million people are believed to have signed up to the status that was originally designed by former president Nicolas Sarkozy, to help those who wanted to work more and earn a second income.

But there are drawbacks and with the government promising to tighten the rules, expats need to consider whether it’s the right path for them to go down.

Should you really have a contract?

Although some employers, especially English teaching academies will push you to be an auto-entrepreneur, you should be wary, lawyer Jean Taquet tells The Local.

“The government knows a lot of language schools employ teachers on an auto-entrepreneur basis when really they should be putting them on their payroll. These teachers can suddenly get caught in the crossfire when authorities decide to audit a school,” Taquet says.

“The government is using auto-entrepreneurs (AEs) as bait to go after the companies,” he adds.

Andy Denison, who runs an advice website for Anglophones on all things administrative adds: “We have known of a couple of companies who were only employing AEs when really they should have had salaried people on their books and these businesses have been caught out.”

Only one client?

Under the rules of being an auto-entrepreneur you should have more than one client paying you for your services, because if you don’t then really you should be on a contract and the auditors will be looking out for this.

“If you are constantly working for someone or especially if you sign some kind of exclusivity agreement with them, then that will be an issue with authorities,” Denison warns.

When the work dries up so does the money?

Obviously, by paying a reduced rate of social charges you are not covered for some social benefits, one of those being unemployment benefits. So when the work dries up, you cannot fall back on the state to help you out.

Costs not taken into account

One of the advantages of the AE system is that it helps people test the market and try their hand at setting up a business without too much risk. But that does not mean it provides ideal foundations from which to launch a company.

“You need to consider whether you are going to be paying out a lot of costs when you start out because as an auto-entrepreneur you have to pay charges on whatever incomings you have,” Denison warns. “It does not take profits into account. So if you have a lot of costs and are losing money you will still have to pay social charges.”

“The first thing I tell people is to look at costs and try to lay out a business plan about what they want to do. If it looks like they won’t have that many costs for the first year then the AE scheme could be good for them,” says Denison.

Beware, time limits are coming

Ever since the socialist government came to power last May there has been lots of talk about tightening the rules around the auto-entrepreneur system, because it gives those using it as their main source of income an unfair advantage over tradespeople.

The government says it will introduce a time limit for how long someone can spend as an auto-entrepreneur. There has been talk of a five-year maximum as well as a three-year maximum but anyone going onto the scheme should be aware that it probably won’t last forever.

“If you start out as an AE and get your feet wet, you will realize pretty quickly whether or not your business will be viable. If it is, then you should you change your status to move onto a different scheme,” Taquet says.

Make sure you invoice correctly

Obviously being self-employed means you will have to invoice all the clients you work for and keep a track of payments. It might sound simple enough but issues can arise as one auto-entrepreneur named Bill tells The Local.

“Setting myself up as an auto-entrepreneur in France was surprisingly easy. I went online, signed up and received the proper documentation in less than a couple of weeks,” Bill says.

“Learning how to bill properly however was another matter. One agency hadn't paid me in a couple of months, and when I emailed to see what the matter was, they told me that I hadn't put a declaration regarding VAT payments and that I needed to redo my invoices.

“Apparently, no one was going to bother telling me this. So that's something to remember - you need to be precise in your billing or an accounts department may reject your invoice out of hand and neglect to inform of this.”

Don't earn too much

Earning too much does not sound like a pitfall, but breaking the strict annual revenue limits set for auto-entrepreneurs (€32,600 for trades and services, €81,500 for sales of goods) could see you wrap yourself up in knots in the very red tape you thought you were avoiding.

Allow auto-entrepreneur Bill to explain: "I once received €6,000 from an advertising gig and declared it in my first trimester. Well, they took this amount and multiplied it by 12 and several months later I received notice from URSAFF that I had to pay some exorbitant tax bill on my projected €72,000 annual income.

"I told them that the €6,000 was a one-off gig, but they told me 'rules are rules' and that I should have declared the 6,000 over several months, if it was only one-off.

"After a lot of arguing, a few insults, several apologies and many lost days waiting in waiting room at different offices across Paris, I was finally able to get out of paying tax on the fortune I would not be making and, alas, haven't made since.

Andy Denison runs the website www.monamiandy.com which specialises in administrative support for Anglophones living in France.

Lawyer Jean Taquet describes himself as a 'cultural bridge'. You can contact him at www.jeantaquet.com or find out more about his Living in France guide by clicking here.

Ben McPartland (ben.mcpartland@thelocal.com)

Don't miss...X
Left Right

Your comments about this article

Today's headlines
Julie Gayet wins privacy suit against Closer
Actress Julie Gayet, who had an affair with Hollande, won her privacy suit against Closer magazine on Tuesday. Photo: AFP

Julie Gayet wins privacy suit against Closer

A French court has fined two tabloid magazine executives and a photographer over a photo of Julie Gayet, who became the subject of media hounding after her affair when President François Hollande was revealed in January. READ  

Woman killed by TGV train as she chases dog
A French woman was killed by a train as she chased her dog. Photo: TGV.

Woman killed by TGV train as she chases dog

A woman was struck and killed by a high-speed TGV train in France this week when she ran out onto the tracks to try to catch her escaped dog. It's the latest in a series of tragic accidents that have seen people killed by the trains. READ  

Valls vs Blair
Is Manuel Valls really a French Tony Blair?
Spot the difference. Or maybe there isn't any between Manuel Valls and Tony Blair? Photo: AFP

Is Manuel Valls really a French Tony Blair?

Is the French Prime Minister Manuel Valls really a Gallic Tony Blair? With the help of a political expert we taker a closer look to see if the oft-made comparison is fair or false. READ  

Trierweiler's new book 'won't spare' Hollande
Valerie Trierweiler has a potentially brutal book coming out on her time with President François Hollande. Photo: AFP

Trierweiler's new book 'won't spare' Hollande

A potentially explosive new memoir is due out this week from Valerie Trierwieler, France's ex-"first lady" who was dumped by the president for his mistress. The book apparently does little "spare" François Hollande. READ  

France vows to get tough on job seekers
France orders crackdown on job seekers after it emerged tens of thousands of positions have been left unfilled. Photo:AFP

France vows to get tough on job seekers

The French labour minister has ordered a crackdown to root out those abusing unemployment benefits, after it emerged that hundreds of thousands of available jobs remain unfilled in France. READ  

Sarkozy's big return: Carla Bruni 'says non!'
Carla Bruni-Sarkozy does not want her husband to return to politics, according to reports. Photo: AFP

Sarkozy's big return: Carla Bruni 'says non!'

Former French president Nicolas Sarkozy faces a few obstacles before he can fulfill his dream of becoming head of state once again - not least his numerous legal tangles. But it appears the biggest hurdle of all could be his wife Carla Bruni-Sarkozy. READ  

Votes for expats: Plan to end UK's 15-year rule
Brits may soon get the right vote in the UK for the rest of their lives. Photo: Hagwall/Flickr

Votes for expats: Plan to end UK's 15-year rule

The Conservative party in the UK has made a bid to woo expat voters by pledging to end the controversial “15-year rule” that prevents millions of Brits abroad from being able to vote. READ  

Most French admit they 'don't know about wine'
Most French people know nothing about wine, a new survey has revealed. Photo: Philippe Huguen/AFP

Most French admit they 'don't know about wine'

It may be the country’s most famous product but more than two thirds of French people admit they know nothing about wine, according to a new poll. READ  

France bans Muslim worker from nuclear sites
Tricastin nuclear plant in France, one of the many sites a Muslim engineer has been barred from over his jihadist links. Photo: Shutterstock

France bans Muslim worker from nuclear sites

A Muslim engineer has been barred from entering France's nuclear sites due to his links with jihadist networks, after a court upheld the ban this week. His lawyer claims the man is a victim of Islamophobia. READ  

Top Gear to launch new French version of show
Hit British car series 'Top Gear' is coming to France. Photo: Ana Poenariu/AFP

Top Gear to launch new French version of show

France is going to get its own version of legendary British auto series Top Gear with the show set to hit the TV screens by next year. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Gallery
Ten dos and don'ts for keeping your French in-laws happy
National
Unemployment: How does France compare to Europe?
International
Are all the talented professionals really leaving France?
National
La France profonde: Is it a rural idyll or a backwater hell?
Travel
Check out the four new attractions coming to Paris this autumn
Gallery
The French words you can't translate literally
National
Ten things you need to know about France's economics whizzkid
International
VIDEO: Watch the top five street scams to avoid in Paris
Politics
Take a look at the bulging to-do list that awaits France's new government
Politics
Six questions for France after Hollande ousts rebels
International
Choosing schools in France: Do you go international or French?
Gallery
From kissing to bad-mouthing: Ten ways expats in France drive you mad
Culture
Ten things you need to know about the Liberation of Paris:
Travel
Watch this impressive time lapse video and you'll want to move to Paris
National
Veiled Muslim woman on a French beach prompts politician's angry rant
Travel
Forget Paris and Provence where are the least touristy areas of France?
Gallery
IN PICTURES: The battle to liberate Paris from the Nazis
National
What France means to you in just one tweet
National
15 French 'false friends' you need to watch out for
International
12 reasons to invest in Paris and seven not to
National
French hamlet 'Death to Jews' mulls name change
National
French tourist caught in Pompeii brothel romp
International
'Forget the Anglo-media's image of France, the reality is much different'
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se