Auto-entrepreneur ceilings slashed

A NEW draft law will force auto-entrepreneurs to leave the popular simplified business regime if they earn more than the minimum wage two years running.

Business Minister Sylvia Pinel aims to please the artisan lobby with her proposals, which are expected to drop the upper limit for the regime from €32,600 for services to €19,000 and from €81,500 to €47,500 for sales businesses. Bodies representing artisans, especially in the building trades, have long claimed that auto-entrepreneurs cause “unfair competition”.

While these precise figures – mentioned by the minister in June – have been left out of the draft law, which has now been officially presented to the cabinet, Ms Pinel said the levels will correspond to the “Smic” minimum wage (on which the above figures were based).
The final figures will be fixed later by decree after a parliamentary working group, headed by Socialist Laurent Grandguillaume, holds further discussions on the regime, starting this month.

The aim of the changes is to refocus the auto-entrepreneur on what were its original priorities – a simple way to set up for a complementary, part-time activity; or as a simple way to get a potential full-time business off the ground.

However now, as soon as a business becomes viable for earning a full-time living over two successive years, people would be obliged to switch to one of the classic regimes.

Along with simplified set-up procedures, a key characteristic of the auto-entrepreneur is simplified social charges, levied at a proportion of turnover; whereas the standard regimes involve estimated charges in early years, and then fixed minimums. Depending on the business, the auto-entrepreneur can also be generally lighter in social charges and tax (though businesses with a lot of deducible expenses may be better off under a classic regime).

If the auto-entrepreneur is obliged to change regimes the draft law proposes to ease the transition: in the first year after changing the person would pay the same social charges as in the preceding year.

Auto-entrepreneurs not exceeding the thresholds would stay on the regime indefinitely.

The law also addresses a loophole related to training. Auto-entrepreneurs are entitled to free training, due to paying a regular professional training fee – which is proportional to turnover. They may therefore receive training having had no turnover or payments at all. The law says auto-entrepreneurs will gain 12 months’ right to training, only after declaring an actual turnover.

It also extends the obligation of auto-entrepreneurs in artisanal trades to register on the répertoire des métiers at the chambre de métiers. At present this is only required for people whose main income is from an auto-entrepreneur job, but not where it is a complementary activity.

The president of the Fédération des Auto-entrepreneurs, Grégoire Leclercq, attacked the lowering of the turnover ceilings, saying people going over them are now likely to do part of their work “on the black”.

Building trades body Capeb, said the measures go in the right direction – for example formal registration of artisans will make sure they have required qualifications and insurance - however it said they did not go far enough.

The plans are part of a wider draft law on small business and will be subject to debate in parliament.

Photo: Ygor75/Wikimedia Commons