Auto-entrepreneurs should be more aware of the risks they face and their responsibilities with issues like insurance, the government announced last week. What do readers think?
I WAS put onto an ANPE "course" on how to set up to be an auto-entrepreneur - it is a con. It was put into place to make Sarko look good. The amount of people carrying out illegal "metier" services who have no idea that it is not allowed, is frightening. They're French and still don't understand the rules. Trying to start an enterprise, whether as a SARL or auto-entrepreneur here is a joke. I ran three businesses in the UK and would not dream of trying here.
Mary Elizabeth Paddock NEUILLY-SUR-EURE
IF YOU are working in any form in the building trade (where a lot of auto entrepreneurs have set up) you are legally obliged to be insured for the relevant work you are carrying out. We are seeing,in the Haute Savoi area, a lot of unqualified and uninsured builders who are touting themselves as "registered" because the are in fact registered with the chambre de metier as an auto entrpreneur. This is fraud on various fronts as it is misleading potential clients that they are employing professionals. It is defrauding the taxman, as a lot of their earnings are not declared, and it is unfair competition to those of us who are insured, are obliged to have accountants, pay RSI contributions and consequently have higher operating costs to run our business and set our charges accordingly. I have spoken to my chambre de metier in Annecy and my regional building union CAPEB74 about this and it seems there is a huge loop hole in the system which could be easily rectified during the registration process.
Tony Burn Electrician Haut-Savoi
I READ the article about auto-entreprenuers with interest. I have been registerd under this scheme since June 2010 and elected to pay my tax direct every three months. Despite this, I have not yet received any communication to allow me to do this, despite making telephone calls to find out why not. It's not that I am particularly eager to pay tax but I do like things to be straight. I was assured that I would receive some communication in December 2010 but here we are in February and I have received nothing so far. Whilst I can see that some unscrupulous people might see this system as a good way to get free social security etc (not that I have even had the benefit of this thus far - I am still my paying a contribution for my state health cover). I am also concerned that some genuine people, like myself, might find themselves unable to make their declarations through no fault of their own and thereby be threatened with the risk of being closed down. Julie Austin
IS THERE a body that represents auto-entrepreneurs? I'd certainly join if there is. Seems ridiculous that the government went to the trouble of creating the scheme to simplify everyone's lives, and are now apparently undermining it. I cannot see why auto-entrepreneurs should be any more dishonest than any other type of businessperson. However, that belief is all too apparent whenever I walk into the RSI office at Gueret and there are posters everywhere about the evils of underdeclaring. So much for trust and support from the people who are meant to be there to help us.
Stephanie Dagg
I wanted to write this letter to warn others of a problem I have just encountered. I have lived in the Dordogne for three years and decided to have a house built as an investment to then sell on and make a profit, since our savings have not been performing too well in the bank. I had all the plans drawn up by a qualified architect, who then put me in touch with some builders to do the work. I believe I did my homework and checked out the builders on the INFOGREFFE website www.infogreffe.fr All the builders were registered here in France. The builders told me they were insured. Everything looked in place and fine.
I received a ‘devis’ all looked official which I duly signed. The ‘devis’ covered the labour only, as the builder told me it was cheaper if I bought the materials. I was also told that if I pay him some cash that this was ok too, and given the amount and he was offering me a discount, I didn’t think twice. The work was carried out to good standard, and I was happy with my new house. I put it on the market and within five weeks it was sold, which was amazing in the current climate.
That’s when my problems started….. At the notaires I was asked for a copy of the assurance decennale. I thought this wouldn’t be a problem and rang the builders, only to be told that their insurance had lapsed and they were not insured. The notaire told me I should have got a copy before work started. In the absence of this, I was forced to take out a VERY expensive insurance policy to cover the missing insurance.
Further, I was told that I needed a fiscal agent to calculate my capital gains tax and had to provide two years income tax returns and all the invoices for the build. To my horror, all the invoices I had were not acceptable ! Any products I bought personally were non deductible, and the builders invoices were ‘not appropriate’ largely down to the fact that they were not TVA invoices, and because the builder was an ‘auto-entrepeneur’ he wasn’t deemed to be an 'professional artisan'. Therefore I had very little to use to claim against to reduce my capital gains liability. This has been an expensive lesson for me, and I hold myself responsible for not knowing more about having building work done in France before I started the project.
To help others I have written this and included some keypoints my notaire gave me so that others don’t fall into the same trap. Key points I have learnt from this process that apply to anyone who is building new or renovating in France:
If you sell a property within five years of any major renovation work, or new build and it is not your principal residence, then you may be subject to capital gains tax.
Checking to see if your builder is registered is not enough. You need a copy of their assurance decennaledocument before you sign anything, verify how they are registered and if their invoices would be accepted to be deductible against any capital gain; your notaire can help you with this – but as an indicator if they are not TVA registered then you must investigate.
If you are asked to buy your own materials then it is unlikely you have employed the right sort of builder. Even if the property is your main residence, you have to prove you have paid income tax for a minimum of two years at that address.
Don’t pay cash. I know it’s tempting, but cash is untraceable and tends to suit the builder not you. You will end up paying later if you are not careful. The responsibility for paying the tax and having the proper insurance in place is with you the owner and not the builder.
In my case the work was acceptable, and I was happy – it was only when the builder left that I found that I would have saved a lot of money by going to a proper builder and not using a so called ‘autoentrepeneur’ and certainly not paying cash and not buying the materials myself – so watch out if you are asked to buy materials or pay cash – think twice.
Name withheld on request
THE government rushed this scheme through without any real thought and said it would help 'smaller businesses'. They now have to back peddle to sort out the mess. I've heard people say that they have signed up as an auto-entrepreneur or micro, when they are clearly in a trade that involves the need for (expensive) assurance decennale. When asked how they afford such insurance when it cannot be claimed back, the usual answer is that they don't bother with it. One solution would be if the Chambre de Metiers et al, insist that anyone signing up for these types of trades must have proof of their insurances before they issue the final registration papers. It would deter many of the fraudsters and help protect the unsuspecting public. It's the thousands of TVA registered small business who really need help to survive and they will all tell you that this government hasn't helped them one iota!
Mrs Thomas
I WOULD love to find out if this system can be used for estate agents earning commission only. I have conflicting reports and have been told 'My boss pays the TVA'. I am registered as an 'agent commercial en immobilier' and thus pay my own TVA and also pay much higher cotisations than those using the AE scheme. Hilary D. Schaper
IT HAS always amazed me how hard some people will work to defraud or satisfy some physical or perceived need without regard for how distructive it may prove to themselves or society. Whether the culprit is a drug addict that works diligently and systematically robbing poor people of pension cheques to pump heroin into their veins or an otherwise innocent local resident that claims to run a business but has no intention of ever doing a lick off work. Why bother with the sham? The French government should make services available to all registered full time residents of France and simply charge the going rate directly. If someone starts a business then simple tax incentives for success, location or employing people should be available. The alternative is inviting abuse and making insurance companies undeservably wealthy. Keep it simple.
Dave Silcox Roquebrune-sur-Argens
I AM awaiting my refund from the fisc, having been wrongly charged Taxe Fonciere Entreprise while registered as an autoentrepreneur. I have last week been notified that I will be refunded the full amount that I had to pay in December 2010, even though the tax for 2010 amounted to more than my earnings for that year. I was advised by the inspector at the tax office back in December, that the only route open to me, to avoid being charged the tax again in 2011, was to de-register as autoentrepreneur before end December 2010, which I did. So now, I am going to get a refund, but have no business status. What a mess it has turned out to be. No wonder people are finding fraudulent means to cope with it all. Excluding myself, of course. I shall retire gracefully. Paul Charnley
I REGISTERED under the auto-entrepreneur scheme eight months ago and opened a top up health insurance policy to ensure I had ample health coverage in case of injury. To date I have not had my carte vitale transferred from the Cpamto to RAM via RSI. After numerous visits to all concerned last week I finally had my status accepted by RAM and an agreement that any medical bills would be reimbursed upon receipt of the feuille de soins. This situation does not help in the event I am seriously injured. Hospital bills for a broken leg or arm, or God forbid something worse, would cost more than I have in available funds. According to RSI there is a national blockage of carte vitale transfers - no reason given, and this is probably going to be the case for some months to come. So it appears I am caught in a 'Catch 22' situation - I want to work, I need to work, I want to honour my social dues, they want me to declare wages and pay those social charges but won't activate my carte vitale - so in effect, because I won't take the risk, I can't, and don't work.
Bruce Roberts
I AM registered as a micro enterprise as the MSA refused to sign up the the auto-entrepeneur scheme. My wife runs a small English language teaching scheme and is an AE so we have a foot in both camps. As far as I can see from the revised proposals in your article, I would agree with all the changes to prevent fraud, but I totally disagree with the proposal to force AEs to re-register after three years. This will have two major effects. The first would be to turn many people to working on "the black" and the second would be to force many other people out of the employment system and back on to state support at a time when French unemployment is already very high. France suffers from a lack of competitive business and the auto-entrepenur system does go some way to creating more jobs and more competition. It is right and proper to stop the system being abused but this is not the way to go.
Richard Davis
I DON'T see why being an auto-entrepreneur should make someone more inclined to act fraudulently than if they were, say, under an ‘enterprise individuelle/micro bic’ setup. In either case you are obliged to declare your own revenue. As someone who has set up a business in France in the last three to four years, I have to say that I sighed a huge sigh of relief when the opportunity to become an auto-entrepreneur arose. The main reason being simplification – you earn your revenue, you keep back a proportion of it to cover ‘contributions sociales’ and then you pay over those contributions at the end of whichever payment period you have opted for. This is a particularly good move, I feel, for small businesses in their early years, where funds are often scarce.
Before this regime came along, I was being asked to pay over large sums of money which bore no relation to my earnings and with little or no explanation as to how these sums had been calculated. The result was long hours on the phone with, or physically going to RSI/URSSAF offices, trying to establish what was going on and trying to find ways to pay what was being demanded over a more affordable timescale.
Combined with huge disorganisation within these offices as a result of merging of RSI/URSSAF activity, it just meant that I was having to invest an inordinate amount of my time in doing what really should be and thankfully now is a relatively simple process. That must also help the government to improve revenue flows for them and reduce costs with fewer queries having to be fielded by the RSI/URSSAF staff – with the added bonus that they can concentrate their time on more productive matters. People who are inclined to act fraudulently will do so whatever regime they opt for (if in indeed they declare the fact that they are in business in the first place.)
If anything, you could argue that it is less likely to encourage fraud due to its simplicity and the fact that it allows you to earn your money before having to paying a proportion of it over to the authorities. I think what is more likely to lead to fraud (in this particular case mis-declaration of revenue) is excessively high social contribution rates and the high probability that contributions will be demanded from you when you do not have the funds available to pay them.
Matthew Sleigh
