Micro-Entrepreneur Business in France

France has a system of VAT ( Taxe sur la Valeur Ajoutée -TVA ) on the supply of goods and services in much the same manner as occurs elsewhere across Europe.

The general rate of TVA for most goods and services is 20% (2016), although lower rates apply for certain goods and services, eg, a rate of 10% applies for restaurants, cafés and hotel accommodation.

The tax is, of course, paid entirely by the consumer.

As a general rule VAT is not chargeable on imports and exports intra-business within the EEA, provided the businesses are VAT registered.

Amicro-entrepreneuris exempt from TVA, and is legally obliged to make that declaration on all invoices, with the statement'TVA non applicable, art. 293 B du CGI .'

Accordingly,micro-entrepreneurscan neither charge nor reclaim VAT.

Where the turnover limit is exceeded the business is obliged to charge TVA, and change their tax status, although it does not happen automatically.

Micro-Entrepreneur Turnover Limits

In order to quality as amicro-entrepreneurthere are two basic turnover limits that apply, depending on the nature of your business, as follows:

Commercial sales and furnished accommodation - €82,800
Services and professions libérales - €33,200

These rates apply through to the end of 2017.

If your business is subject to both limits (as applies, for instance, to many builders), then the exemption limit applies for each part of the business.

There are separate rules for an agricultural business and certain other professions, not considered here.

Beyond the basic turnover limits there exists a further threshold granting continuing status as amicro-entrepreneurand exemption from VAT.

These limits are known as thefranchise en baseorseuil de tolérance.

Under these second tier limits a business that exceeds the basic turnover threshold is granted continuing exemption from VAT for two years, provided their turnover does not exceed €91,000 (sales) or €35,200 (services) during this period.

Accordingly, if you exceed the turnover limit in Year 1, you will continue to be exempt if you remain with the tolerance level

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in Year 2, but in Year 3 your exemption will cease from 1st January of that year.

During these two years you will continue to retainmicro-entrepreneurtax status, after which you will be required to use therégime réel .

If the turnover goes beyond the tolerance level you lose immediate exemption and you must include VAT on your invoices the following month. Yourmicro-entrepreneurtax status will cease at the end of the calendar year.

In addition, the turnover limits correspond to a full year, and operate pro-rata for business activity less than one year. So if you pass them in your first year, even on a pro-rata basis, you losemicro-entrepreneurstatus from the following 1st January.

VAT Registration

There is no need to separately register your business in France for TVA, for you are given a TVA number at the time you set up your business, when you receive your commercial registration number, the 'SIRET' ( Système d’Identification du Répertoire des ENtreprises ), on which your TVA number is based.

VAT Declaration

In terms of payment, in the first year payment is made in May for the previous year.

In the second and subsequent years, in July and December, you will be required to make provisional payments based on your previous declaration, although if, based on your previous declaration, the balance due is less than €1,000 none are necessary.

Credits higher than €150 are reimbursed (with delay!); in other cases they are imputed against future payments.

It is possible to go on-line using yourImpôtsbusiness account to make the declaration.

However, our strong advice would be to contact a good VAT accountant, as it is not for the faint-hearted.

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