Embarking on the entrepreneurial journey in France is exciting. Still, it also comes with its set of administrative duties, including managing URSSAF social declarations and understanding business taxes. This blog has been written to steer you through these intricate details, ensuring you're well-prepared to manage your venture's finances and legal obligations.
Firstly, we'll talk you through the social security system related to your auto-entrepreneur status and explain in detail what you're being charged, where it goes and what it includes. Next, we discuss the differences between your annual tax return and your URSSAF declaration (no, these aren't the same thing), including explaining the differences between Contribution Fonciere des Entreprises (CFE) and URSSAF. Finally, we'll round off this guide with a bunch of handy top tips that we've learnt from years in the industry related to URSSAF and social charges that we know will help you, too.
The Nitty Gritty of URSSAF and Social Charges
“What do I need to know about social charges as an auto-entrepreneur?”
Let's start by explaining exactly what social charges are. Social declarations/charges are a portion of your turnover that auto-entrepreneurs pay to the French government body, URSSAF.
These contributions fund your health coverage, retirement, professional training, and various other social benefits. Depending on your type of business, such as artisan or commercial, you'll be levied a fixed percentage. This system ensures the seamless operation of France's extensive social security infrastructure.
Don't worry, it's not just you as an auto-entrepreneur who has to pay these charges. Paying social charges is mandatory for all workers in France – like income tax payments. However, the main difference is that as an employee, the charges are automatically deducted from your wages instead of having to manage these payments yourself as an auto-entrepreneur.
“When do I have to pay my social contributions?”
As an auto-entrepreneur, you can make your declarations either monthly or quarterly, based on your preference at the time of business registration. Here's the difference between the two:
Quarterly Declarations: Declarations are typically due at the beginning of April, July, October, and January. Specific deadlines for the 2023/2024 period will be updated on the URSSAF portal.
Monthly Declarations: After the initial 90 days of your activity, monthly declarations can be made.
“How do I declare?”
All declarations can be made through your URSSAF account. We've included a short step-by-step breakdown below:
Setting up your URSSAF account:
1. Go to www.autoentrepreneur.urssaf.fr.
2. Click on "Mon Compte" and enter your SIRET and social security numbers.
3. Follow the prompts, and soon, you'll get an email with login details.
Making the declaration:
4. Once logged in, on your dashboard, select “Mon échéance en cours”. If you're told you're “hors période déclarative”, wait for the declaration window. This typically starts at the beginning of April, July, October, and January for those declaring quarterly.
5. Input your revenue depending on your business type.
6. After entering details, the platform calculates the charges you owe. An additional 0.10% for 'formation professionnelle' might appear.
7. Either make the payment immediately after declaring or later via the “Mon échéance en cours” section.
8. Pay in full or in instalments. You can pay by ‘mandat’, which is a direct debit that is taken around 48H after the deadline for the declaration. This assumes that you've set up the mandate correctly and agreed to pay that particular sum for the declaration. Please note that whilst it’s possible to do a bank transfer, URSSAF favours the mandate.
9. Once done, a receipt is available for download.
10. A green tick on the “échéance en cours” tab confirms your successful declaration and payment.
For more information on this, check out our detailed guide to declaring earnings and paying social charges on URSSAF, here.
The Difference - Annual Tax Return vs. Social Charges?
It's crucial to note that your social declarations DO NOT replace your annual tax return.
If you opted for the "versement libératoire" system when setting up your auto-entrepreneur business, your income tax will be paid at the same time as social security contributions. Even if you choose this option, you must also make an annual tax declaration.
“But - how is income tax calculated for auto-entrepreneurs?”
Taxable income is calculated as a percentage of sales. This is known as the standard deduction. This percentage varies according to the type of activity. It is said to be a flat rate because it doesn't consider actual expenses incurred during your activity. For reference, social contributions for auto-entrepreneurs generally sit between 20% - 23% of remuneration. Try this simulator tool to explore your charges based on your activity, or check out this detailed activity guide on the URSSAF website.
“I've heard the term CFE, but I'm not sure what it is.”
In France, the business property tax, known as the CFE (Contribution Foncière des Entreprises), is a mandatory local tax imposed on auto-entrepreneurs and small businesses engaging in regular self-employed activity as of 1 January of the taxable year. The CFE is a manifestation of France's emphasis on rooting businesses in their localities, ensuring they contribute to the very regions that facilitate their operations. It's a delicate balance of ensuring revenue for local bodies while not overburdening businesses, especially the smaller ones. Through its various provisions, exemptions, and scalable rates, the CFE serves as a testament to France's evolving economic landscape, fostering growth while ensuring communal responsibility. It's important to recognise here that most auto-entrepreneurs work out of their own home, and this is taken into account when filling out the CFE forms during the process of creating an impôts account. If you find yourself filling out these forms and you work from home, you’ll need to find section A2 and declare details about your property.
CFE base calculation
The tax base for CFE is primarily rooted in the rental value of properties used by the business, considering their value two years prior to the taxable year. This method ensures the tax is rooted in tangible, measurable assets. However, this doesn't mean that businesses with no rental properties or properties of negligible rental value are exempt. Instead, they're subject to a fixed minimum contribution. This minimum is on a sliding scale, corresponding to the company's turnover from two years prior, ensuring even businesses with modest operations contribute to local finances.
Exemptions and reductions
All enterprises and individuals with habitual self-employed operations in France are liable to pay CFE, including micro-enterprises. However, there are exceptions. For instance, businesses with an annual turnover or revenue below €5,000 since 2019 are exempted from the minimum contribution. The French tax code further outlines exemption conditions for businesses, including provisions for businesses in specific zones, industries, or meeting certain economic benchmarks.
CFE payments and declarations
The administrative aspect of CFE is streamlined for efficiency. Upon establishing a business, entrepreneurs are required to declare for CFE by 1 January of the succeeding year. This is a one-time declaration unless there are subsequent changes in the business operations that would affect the CFE amount. Payment structures have been designed to ease the burden on businesses. Auto-entrepreneurs can split their payments for larger contributions (exceeding €3,000 from the previous year). Various digital payment avenues, including direct debit and online transactions, ensure the process is convenient for all.
Top Tips for Auto-Entrepreneurs Declaring Social Charges and Tax
From our years in the industry, we’ve picked up some top tips that will help you navigate the intricacies of declaring and we want to share those with you today. Whether you're a seasoned entrepreneur or just getting started, staying updated on URSSAF guidelines, tax return protocols, and the CFE (Cotisation Foncière des Entreprises) is paramount. We hope that these tips will simplify the process to ensure you stay in the clear and continue thriving in the French system.
1. The importance of declarations
Always declare, no matter what. Even if you earned nothing during a certain period, it's essential to make a declaration. Entering a simple "0 €" will suffice. This ensures transparency with the regulatory authorities and demonstrates your commitment to compliance.
2. Stay ahead with the "calendrier des écheances"
Keeping up with payment deadlines is crucial. The "calendrier des écheances" is a lifeline here. It’s not just a calendar; it’s a roadmap to your financial responsibilities. By keeping an eye on it, you're proactively preparing for any upcoming declarations or payments.
3. Ward off unwanted penalties
Nobody likes unexpected fines. The best way to avoid them? Stay on top of those deadlines. And a pro tip: always set your URSSAF emails as a flagged priority. This way, they’ll stand out in your inbox, reducing the chances of you overlooking them. If, for some reason, you do miss a deadline, don't panic. Yes, you might face a penalty, but you can make amends by proceeding with a bank transfer using the specific URSSAF references. It’s a little extra legwork, but it’ll set things right.
4. Making corrections
Mistakes happen, and the URSSAF understands that. If you've accidentally entered incorrect details in your declaration, there's a window to correct it. Make sure you rectify any errors before the deadline, ensuring accuracy in your financial records. If you make a mistake and realise it after the deadline, there is an option called "oops droit à l'erreur’ on the tax returns and social security declarations where you can register the mistake to let the government know you know.
5. The rewards of diligence
Being consistent and diligent with your declarations and payments isn’t just about avoiding penalties; it’s about fostering trust. Smooth operations bolster your business's reputation and ensure you're always on the right side of the French regulatory system. Remember, a compliant business is a thriving business.
5. Use auto-translate
It can be super daunting to have a huge amount of information in French on screen - just use the automatic translate available on your Chrome browser, and despite not being perfect - it really helps.
To round up, understanding URSSAF, tax returns, and CFE isn't just a bureaucratic requirement – it's a cornerstone for a successful business in France. We trust this blog has shed light on the process. If you're keen to delve deeper, don't forget to check out our comprehensive step-by-step guide, available here.