A definitive guide
In France, being an independent contractor or self-employment has seen a steady increase. A recent study by Boston Consulting Group shows a 92% increase in the number of independent contractor's in the last 10 years.
Thanks to the pandemic, and a growing number of individuals consciously choosing a life of “freedom and fulfilment”, it’s safe to say freelancing is the new work order in France.
If you’re planning to get into freelancing, or if you are an independent contractor already, you’ll find this guide particularly helpful. We take you through:
- The basics of freelancing in France
- How to register yourself as an independent contractor in France
- The basics of invoicing clients
- How to pay taxes as an independent contractor in France
- Important resources/links to help you
Freelancing in France - the basics
- If you’re not a citizen of France and Europe, you have to get a profession libérale visa to be able to freelance in France.
- If you are a French national or a European national, you do not need to avail a visa that allows you to work in France.
- However, every individual, whether French or other, who wants to freelance in France, has to register themselves.
- You might come across a few different terms for the types of registration - auto-entrepreneur, micro-enterprise, individual company, etc. The two previous tax and social status – micro-enterprise and auto-entrepreneur – have been combined to create a new official tax and social status called micro-entrepreneur. This makes it easy for independent contractor's to register.
- Maintain a separate bank account for your professional activity as an independent contractor. Do not use your personal account to receive payment from clients.
- Maintain a receipt book (livre de recettes) to note all your payment received details.
- Declare all payments from clients in EU countries in the Déclaration européenne de services to the Customs.
- Please note that the President of France M. Emmanuel MACRON presented a plan for the independent contractor's in September 2021 which includes simplification measures.
Registration for independent contractor's in France
You can register your work activity in three ways:
- Visit the relevant Centre de Formalités des Entreprises (CFE). There are different CFE -- choose the one suitable to your business activity from this list.
Chambre de Commerce et d’Industrie (CCI) - for shops, commercial company, etc.
Chambre de Métiers et de I’Artisanat (CMA) - for manual and crafts professionals.
URSSAF - for professional and intellectual services.
- Fill this form and send it to the relevant CFE.
- Register online.
- You will need to register with URSSAF, Chambre de Métiers or Chambre de Commerce and get your official business number called SIRET before you can start freelancing.
- To register, you have two options: 1) Register online from the official website - URSSAF. 2) Register in-person at the office.
- To maintain your micro-entrepreneur status, your annual earnings from freelance work should not exceed, for two consecutive years, € 176,200 for commercial and industrial activities, and € 72,600 for supply of services per year (those thresholds apply for 2020-2022.
- This is a low threshold and can help you get on your feet when you start off as an independent contractor.
- Later, once you’ve established your freelance business, you have the option to move from the micro-enterprise system to a EURL classification (sole proprietorship with limited liability).
- You could also choose to join a workers cooperative or Société Cooperative et Participative (SCOP). What’s that? It’s an alternative way for independent contractor's to conduct their business. You sign a contract with the SCOP and they do your account, payslips, chase payments, etc. For all that, you, the independent contractor, pays a fee to the SCOP.
- For registration, you will need to provide some documents such as identity, insurance, etc.
- Once your registration is done, you will be given a SIREN number (Système d'identification du répertoire des entreprises), which proves that you are a legitimate business. This number will be used by all government and official agencies.
- You will also receive the SIRET number (Système d'Identification du Répertoire des Établissements). This is the number that your clients will ask for.
How to invoice your clients
Make sure your invoice mentions these details:
- Invoice date
- Numbering of the invoice
- Date and description on service delivered
- The amount payable, advance received it any
- Your name and client’s name
- Your address and client’s address
- Your SIRET/SIREN number
- Your bank account or payment details
- The price excluding VAT
- The mention of VAT exemption if you benefit from the Franchise de TVA (you have to write “TVA non applicable - article 293 B du CGI” on the invoice) or your VAT number if you opt for the payment of VAT. You can benefit from the Franchise de TVA (no invoicing of Tax on goods and services (VAT) / Taxe sur la valeur ajoutée (TVA)) if your earnings from freelance work do not exceed € 94,300 for commercial and industrial activities and € 36,500 for supply of services per year (those thresholds apply for 2020-2022). It’s possible to renounce to the Franchise de TVA exemption by opting for the payment of VAT.
- VAT Rate and the amount of VAT, if applicable
It is best to check with each client if they prefer a specific format for invoicing. This will ensure that you do not miss out any details in the invoice.
One of the most important details in your invoice is the SIRET number.
As an independent contractor, it’s important to keep a track of all your paperwork and always stay well organized. Keep all your invoices organized in one place. It will come handy when you’re working on your taxes.
Make sure you organize your receipts, expense records, monthly or quarterly declarations, bank account statements, etc.
Paying taxes in France as an independent contractor- an overview
- Every independent contractor in France is responsible for reporting their income to the government and paying tax on it.
- It’s important to note that the tax structures for French nationals and expats may differ. If you’re not a French national, it might help to go through this list of countries that have tax treaties with France.
- There are three major types of personal taxes which can apply to you as a independent contractor:
- Personal income Tax (impôt sur le revenu)
- Social security contributions (charges sociales/cotisations sociales)
- Tax on goods and services (TVA or VAT)
- You will have to choose a tax system based on what is applicable to you. To understand what’s applicable to your case, it’s best to discuss it with an expert advisor or an official at the tax office.
- Tax regime:micro-entrepreneur, régime réel, régime de la déclaration contrôlée, etc.
- VAT regime: Franchise en base de TVA, régime réel simplifié, etc.
- Social regime: micro-social, etc.
If you are subject to the micro-entrepreneur regime, you have to report your earnings monthly or quarterly for the purpose of social security contributions, which are levied at a flat rate.
Income tax rates in France
- The income tax rates in France depend on a number of factors: your marital status, if you have children, the number of children, your income and if you’re self-employed.
- French tax residents have to pay taxes on worldwide income. This means, all the income you’re earning from freelancing, from property rent, bank interest, investments, etc.
- This is subject to specific provisions of applicable double tax treaties (France has entered into more than 130 tax treaties)
Here are the income tax rates:
- Up to € 10,084: 0%
- € 10,085 to € 25,710: 11%
- € 25,711 to € 73,516: 30%
- € 73,517 to € 158,122: 41%
- € 158,123 and more: 45%
- These rates apply for the year 2020. Micro-entrepreneurs benefit from an allowance automatically calculated by the French tax administration on the turnover. The amount depends on the activity : 50% for commercial and industrial supply of services, 71% for commercial and industrial purchase-sale of goods and 34% for non-commercial activities. This allowance applies to the turnover, then allows to determine the taxable profit. Such taxable profit is then subject to progressive income tax rates (brackets in the chart)
- Alternatively, under conditions, independent contractor's who are subject to micro-regime may elect for a payment in full discharge (versement forfaitaire libératoire), which consists in paying both individual income tax and social contributions at a flat rate applicable to the turnover; flat rates are ranging 13.8% to 24.2% depending on the activity
- In principle, non-resident independent contractor's have to pay tax on their France-sourced income at a minimum tax rate of 20% for income up to €25,710 and 30% for income above that.
Other taxes in France
- You may be subject to business property tax (Contribution Foncière des Entreprises) based on the rental value of the premises used. Many exemptions exist depending on the activity carried out and for how long you carry out such activity.
- Additionally, you may also have to pay occupier’s tax (taxe d’habitation, or French property tax (taxe foncière). This tax is destined to disappear during FY 2022 and FY 2023.
- If you own real estate assets of more than €1.3 million net value, you may have to pay real estate wealth tax(depending on the nature and on your tax residence).
- If your annual turnover is above €152,000, you will have to submit a value-added declaration (however, you would pay the related business value added tax (Cotisation sur la valeur ajoutée des entreprises) only if you have a turnover of more than €500,000).
Income tax dates in France
- The French financial year follows the calendar year: 1st January to 31st December.
- The tax returns deadlines may vary each year and are announced every year in Spring. For example, the deadline for 2021 was in June.
- Each type of income must be declared in the appropriate category. For example, commercial income have to be declared in the BIC category (Bénéfices industriels et commerciaux), non-commercial activities income (e.g., nurses) have to be declared in the BNC category (Bénéfices non commerciaux), etc.
The different types of tax forms in France that you might need to know:
- 2042: the main tax return.
- 2042C-PRO: you have to report your independent contractor income in the appropriate category (Micro-entrepreneur regime, BIC, BNC…)
- 2042C: complementary income and tax credits return; it is also where you can offset tax paid elsewhere.
- 2042-IFI: if your are subject to the real estate wealth tax.
- Rental income is either declared in Form 2042 C-PRO (furnished properties) or Form 2044 (unfurnished properties).
- 2047: for declaring any income earned from abroad, which also must be stated on Form 2042 (for French tax resident)
- 2074: capital gains (profit) from the sale of any assets or investments.
- 2035: BNC business earnings (régime réel).
- 2031: BIC business earnings (régime réel).
- 3916: for any bank accounts held abroad by French tax residents (and also cryptocurrency accounts held abroad).
Tax deductions and allowances
You can claim many credits - allowances and deductions. Here are some:
- Childcare for children under six years: 50% of the cost, limited to € 2,300 per child. Max credit of € 1,150 per child.
- School-age dependents € 61 per child for college, € 153 for high school € 183 for university.
- Installation of energy-saving technologies.
- Domestic worker employment.
Resources to find answers to your freelance related queries
Service Public website - an institutional website that offers information on administrative procedures.
URSSAF website - for auto-entrepreneur registration.
Ministère de l'économie website - for taxation related information.
Impôts website - for taxation related information.
French Tax Return Online - to file tax returns online.
French tax lawyer – for additional questions.
Registration - check. Invoicing - check. Taxes - check. By now, you’re ready to start your freelance career in France. If you were already freelancing in France, we’re sure you have some doubts cleared. Freelancing in France, afterall, isn’t that difficult. Is it?