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No CFE tax for Auto-entrepreneurs

People on the small business status – created in 2009 – are to be exonerated from paying professional tax this year

AUTO-ENTREPRENEURS have been given a reprieve from paying the business tax cotisation foncière des entreprises (CFE) for 2012.

The tax, which replaced taxe professionnelle is based on the value of your premises (in auto-entrepreneurs’ case often their home) and could be unrealistically high for many of these small businesses, their representatives say. Now more time has been given to analyse how they should be taxed.

This comes as the first auto-entrepreneurs – set up in 2009 – have been receiving their first CFE bills, payable in December. This small business status was created on January 1, 2009, meant to encourage entrepreneurship and to avoid people working “on the black”.

It was designed both for start-ups and people wanting to top up salaries, pensions, student grants etc, and is notable for simple set-up and special “pay-as-you-go” systems for social charges and (optionally) income tax, based only on actual, not estimated, turnover, with no minimums.

Newly-created businesses do not pay CFE in the calendar year they are set up and it was agreed from the start of the auto-entrepreneur status that there would be an extra two years of exoneration for people who took up the special tax option. This was later extended to other auto-entrepreneurs.

One of the bodies representing the sector, FEDAE, says the CFE tax – levied at variable rates around France – may be punitively high for some people with a part-time business activity, effectively wiping out their profit. FEDAE proposes this tax also be levied in proportion to turnover, fitting the philosophy of the status, which was launched with slogans such as “no turnover, no tax”.

However the status is controversial. Some people on traditional set-ups, especially tradesmen, say it causes unfair competition. A report on the taxation of auto-entrepreneurs is due by the end of the year and will feed into possible reforms.

Economy Minister Pierre Moscovici said: “It appears the levying of CFE on auto-entrepreneurs was not prepared or discussed by the previous government.” They may therefore for this year, contact tax offices and they will be exonerated, he said. The government will take an “informed” decision about their taxation after the report is submitted.

FEDAE president Grégoire Leclercq said if auto-entrepreneurs had to pay the ordinary CFE it would be “deeply unfair”. However they were pleased about the government’s “fair and reasonable” stance.

According to IGAS, the body preparing the report, there are more than 800,000 auto-entrepreneurs, but less than half have made any turnover. An Insee study found that out of those which do produce an income, in nine out of 10 cases it amounted to less than the minimum wage. Someone making no turnover for 24 months loses their right to the status.

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