Reader question: I am an Anglo-American living in France and want to set up a consulting business. What are the VAT and tax implications? P.M.
You should probably take professional advice as to the best set-up for your plans.
However, the most common way to start a freelance consultancy would be as a micro-entrepreneur (also known as auto-entrepreneur).
Read more: A guide to micro-entrepreneurs in France
Read more: What is the difference between 'auto/micro-entrepreneur' in France?
You can create your business at autoentrepreneur.urssaf.fr. Your activity will be considered a profession libérale and you do not have to be concerned with VAT until turnover is more than €34,400.
You can stay in the micro system up to €72,600, after which you have to change to the réel accounting regime, keeping all receipts and claiming ‘real’ expenses.
Read more: Do French entrepreneurs need separate work bank accounts?
Social charges are calculated differently on the réel, which may also be opted for, regardless of income level, if you believe you would have a lot of expenses to offset.
Social charges under the micro would be 22% and would be levied on turnover, monthly or three-monthly.
Tax would be optionally at a set 2.2%, also levied regularly on turnover (this option is available within certain income ceilings) or under the standard income tax bands after an allowance of 34%.
If you wish to operate in regulated fields, such as real estate or financial advice, you should have a suitable diploma of a type recognised by France.
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