Auto-entrepreneur changes mulled

Small business regimes face shake-up

Report suggests merging the benefits of both simplified business regime and micro-entreprise

MAJOR changes in the auto-entrepreneur and micro-entreprise business regimes are being suggested by the MP who is investigating ways to simplify the rules on small businesses.

Although his report is in its very early stages, Laurent Grandguillaume is said by Les Echos to be looking at merging the tax and social charges sides of the two set-ups and redefining them as an entreprise individuelle. He does not want to lose the good points of the auto-entrepreneur system in favour of bureaucracy-heavy micro-entreprise regime.

Mr Grandguillaume was asked to examine the two regimes after an outcry against Trades Minister Sylvia Pinel’s plans to radically reduce the benefits of the auto-entrepreneur system: which has been credited by the OECD as giving France “the most spectacular increase in new businesses”.

Artisans had been calling for the auto-entrepreneur regime to be dropped in the building industry as tradesmen were being undercut by those on the simpler regime, who did not face the extra charges.

At the moment micro-entrepreneurs work with a simplified form set-up, outside VAT, up to a certain turnover (€81,500 or €35,600, depending on the type of business) – however, they pay social charges even if they have no turnover. Auto-entrepreneurs pay neither VAT, nor social charges without income.

Mr Grandguillaume says it is “logical” that no one should pay if they are not earning – but he has admitted that such a change would have an effect on social security funding that he has not calculated.

On the tax side, he wants to look at ways to separate profits and wages as, at present, travailleurs indépendants pay income tax on all their profits, even if they are reinvesting part of it in the business and not taking it as pay. He suggests that this reinvestment could be taxed at a lower level.

He has now submitted the early form of his report to the government to examine its financial implications – against a background of a fall in the number of businesses created; and especially auto-entreprises.

Latest figures from statistical agency Insee show a 0.7% drop in the numbers of businesses created in October compared to September. However, the number of auto-entreprise businesses created has fallen 11.5%.

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