top cx logo
cx logo
Explorearrow down
search icon
arrow down

Why am I taxed on materials?

There is a catch with the auto-entrepreneur system and here it is

I AM an artisan and an autoentrepreneur. I bill my customers for labour and materials. I pay cotisations of 21.3 per cent and income tax via the libératoire payment method at 1.7 per cent each trimestre. Do I have to declare the amount that I paid for the materials? I will be paying cotisations on money that I do not actually get, as well as indicating that I am actually earning more than I actually bank. I have tried contacting the RSI, but have received very different garbled replies. Could you put me straight? R.C.

Yes, indeed there is a catch with the auto-entrepreneur system and here it is.

The answer to your question is that you declare the income, that is the amount invoiced. This, therefore, includes the amount that you are charging your clients for the materials that you have bought, meaning in a way that you are paying income tax and social charges not only on your income, but also on what you charge to cover your material costs.

As a very rough guide, depending on the nature of the activity and the group you fall into for social charges, it is usually the case that, if your expenses amount to more than a quarter of your income, then the auto-entrepreneur is in fact more costly than having a business via France’s traditional business regimes.

You, in fact, earn less than what you bank, since you bank your customer’s money to cover the cost of the materials, as well as that for your time, however you only earn money for the time. Welcome to the drawback of the scheme.

Not wishing to slate it in any way (it is fine for those with few expenses), the instant that expenses, mainly in the sense of materials, are having to be invoiced, then it loses its advantages from a tax aspect.

Resident or second-home owner in France?
Benefit from our daily digest of headlines and how-to's to help you make the most of life in France
By joining the newsletter, you agree to our Terms & Conditions and Privacy Policy
See more popular articles
The Connexion Help Guides
featured helpguide
Healthcare in France*
Featured Help Guide
- Understand the French healthcare system, how you access it and how you are reimbursed - Useful if you are new to the French healthcare system or want a more in-depth understanding - Reader question and answer section Aimed at non-French nationals living here, the guide gives an overview of what you are (and are not) covered for. There is also information for second-home owners and regular visitors.
Get news, views and information from France
You have 2 free subscriber articles left
Subscribe now to read unlimited articles and exclusive content
Already a subscriber? Log in now