Moving to a new country to set up and run a small business is a popular dream, and one that becomes a reality for many of the hundreds of British expatriates leaving the UK every year, with France being a popular location to choose.
In France, residents are liable to pay tax. We explore general taxes in more detail in our French taxation guide. However, for those moving to France to start a new business and work on a self-employed basis, taxes can be a little more complex and it’s important to get things right from the very start when setting up a company, to ensure that taxes are calculated correctly.

Freelancers and sole traders

In recent years, it has become easier to set up as a freelance expat worker in France. Two previous tax status – micro-enterprise and auto-entrepreneur – have been combined to create a new official tax status called micro-entrepreneur. This is a specific tax status designed for those who are self-employed or running a business as a sole trader, and not through a limited company. It is fairly straightforward to register as a micro-entrepreneur, and it is popular because it offers a simple accounting option.
However, there are limits to who can work as a micro-entrepreneur, based on annual turnover. For those whose business activity is service based or a professional activity, the maximum turnover is €33,200 for 2017. For those businesses that are sales-based (such as a café, hotel, some types of rental accommodation and similar), the turnover limit is €82,800. In the first year of business, these figures are applied on a pro-rata basis from when the business was registered. These businesses cannot charge VAT under the rules of this tax status. There are also certain types of business that are excluded from the micro-entrepreneur tax option.
Tax is paid based on a fixed percentage rate of turnover. A business that is service based is required to pay 22.7% of their turnover for social security payments, whereas a sales-based business pays 13.1%. Income tax is then applied as usual, as per our previous guide on the French taxation system, although it is possible to opt for a fixed percentage charge paid alongside social security contributions. This latter option is worth discussing with an accountant first, as no business costs can be deducted.

Larger businesses and higher turnovers

Sole traders and freelancers who have a larger turnover than the limits for the micro-entrepreneur tax option, would be taxed through the standard regime reel instead (see below). Other business setup options include EURL, for those with a limited company in sole proprietorship, or a SARL, a private limited company in joint ownership.
With an EURL, there is the choice of being taxed under the personal income tax system using the rules of regime réel or through a company-based taxation system called Impôts sur les Societiés. SARL companies almost always follow the Impôts sur les Societiés tax system.
Regime réel is a system similar to the UK taxation system, where income tax and social security payments are made based on net profits, with eligible business costs deducted. The system is aimed at those businesses who make more than the threshold for micro-entrepreneur status, are a type of business excluded from micro-entrepreneur status, who charge VAT, or that choose to use this option.
This is a very basic overview of the French tax laws for expats, and it is always worth consulting with a trained accountant to explain the system more thoroughly and help ensure that the right tax status is chosen.
If you’re moving to France, find out how our international removals team can help to arrange packing, storage and transportation on your behalf.