French Life-expat France

I’ve gleaned a few useful facts about starting a business in France that might be useful, and more importantly could save you loads of money, so I thought I’d share them. Note I am not an expert, I’m just trying to point out some potential pitfalls and things to be aware of. You need to see a professional accountant rather than rely on anything below - every one will have different circumstances and the rules about French businesses change quite often!!

In France there is a type of enterprise called a ‘micro-enterprise’. Broadly for a service type business you can earn about 27,000 euros a year, get an exemption from preparing ‘proper’ accounts, and deuct about 50% of your income as assumed costs before your tax is calculated. For businesses that involve gites, or buying and selling products, you can earn 76,000 euros and deduct about 70% as assumed costs.

Because of this generous treatment of gites, most of the comments below probably don’t apply if you only plan to operate gites, where a micro-enterprise is often still the best solution. I say ‘probably’ because there are separate implications to do with your need to be a paid-up member of the French health system, which may be easier to achieve with & ‘real, registered business’ than a ‘non-commercial micro-business’.

An accountant won’t usually be necessary for a small business of this type in France, although you do still need to keep records of your income and expenses.

So you would think that the most natural way to start a business therefore is to create a mico-enterprise, because of the simple paperwork, and then convert to a different type of company when and if your business starts booming.

Before you follow this route for starting a business in France there are a couple of things you should be aware of:

- For reasons that are a little complicated to explain, social contributions levels (the main expense for a French business) tend to work out higher for a’micro business’ than for a ‘non-micro’ business.

- tax exemptions are available for certain newly created businesses in France if you fall within a development zone. These exemptions can be very generous eg total exemption from tax for five years and further tax reductions for the following years. Note that these tax exemptions are for new businesses - and if you create a micro-business, then later convert to a different form of business (for example because your revenues exceed 27,000 euros) you are not creating a new business, and will not receive these tax exemptions.

- development zones are carefully defined, as are qualifying activities. We live in a development zone, but a town 15 kilometres away from us does not. So if you are planning to start a successful business in France you might prefer to check your region before you even buy a property in France, the difference in tax paid over ten years could pay for the house…

Accountants are not cheap, and you are probably reluctant to pay out much money for a business that might well never earn very much. This is the wrong decision, if your business might just do well. My advice is - see one as soon as possible, and definitely before you discuss anything with the local Chamber of Commerce!