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Discussion Starter · #1 ·
Hi,

Can someone please shed some light on this for me.. I'm so confused!

After 5yrs in France as a freelancer, under the (pointless) regime of MicroEnterprise, I'm starting to question what the best route for my income tax is...

As I understand, we pay cotisations sociales (46% of income?) and then whatever tax on top of that..
Is that correct??

General rule of thumb for freelancers, I'm told, is if you earn under 100,000€/year, there's no point starting a societé/EURL etc..

Most of my colleagues in the same industry as me are in umbrella companies (portage salarial) which I'm seriously considering.. (At least until I earn over 100,000€/yr)

Thoughts??
 

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Presumably you earn too much for the auto entrepreneur regime? Not that it would necessarily work out any cheaper.

Really you need to see an accountant - under most business regimes you are in any case obliged to use an accountant. There's no one size fits all best regime, it depends not only on your business model (income/expenditure, premises etc) but also on your personal circumstances, what other household income you might have, etc.

Portage salariale will work out a little more expensive, as you pay slightly higher deductions are also paying a commission to the company, but it does give you entitlement to better benefits such as holiday pay and chomage.

(Why do you say Micro is 'pointless' ? What's the point of any regime, apart from to take your money off you ? :rolleyes:
 

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Discussion Starter · #3 · (Edited)
Presumably you earn too much for the auto entrepreneur regime? Not that it would necessarily work out any cheaper. Really you need to see an accountant - under most business regimes you are in any case obliged to use an accountant. There's no one size fits all best regime, it depends not only on your business model (income/expenditure, premises etc) but also on your personal circumstances, what other household income you might have, etc. Portage salariale will work out a little more expensive, as you pay slightly higher deductions are also paying a commission to the company, but it does give you entitlement to better benefits such as holiday pay and chomage. (Why do you say Micro is 'pointless' ? What's the point of any regime, apart from to take your money off you ? :rolleyes:
Great response, thanks Eurotrash!! I should explain myself a little better..(excuse the essay!) Firstly, excuse my ignorance.. I'm a creative (no excuse!) Most French paperwork gets thrown into the too hard basket.. I'm a freelance makeup artist. 5 years ago I hired an accountant to set up my auto entrepreneur status. He failed (they didn't accept the application) and in the mean time I was set up as a micro entrepreneur. I earned very little money the first few years (5-15k) then last year I earnt just a little under the plafond (32k?) I received a letter in July warning me that my quarterly cotisations were being recalculated based on last years revenue. This meant two payments of 6,400€ before December, to my horror. Of course, if id done my research I would have first tried to sign up to AE much earlier (perhaps with a new, & slightly more capable accountant) And secondly, realise that last years earnings would accrue a higher cotisation.. And have saved up for it!! Anyway, in my panic, I've been desperately been trying to work out my best solution. I've mostly taken care of the cotisations due, but I don't want to have the same thing happen next year. I'm considering either a regime BNC, or Portage Salarial with the company L2D, in a regime intermittent (general, no spectacle) They charge 5.5% of the years earnings. Works out roughly to be 50% of income in pocket end of year. Of course with intermittent status I have access to payouts the months I don't work (August for example) and a generally more systematic/consistent income. It seems quite attractive (on paper) but I'm still not 100% convinced, the middle man idea freaks me out...
Expenses is one thing I'm concerned about, they tell me that they automatically calculate it to be roughly 38€/day of work..but do i get that all back at the end of the year? (Ie: deducted from my tax?) Otherwise I can opt for Frais reel and use my real expenses, if that works out to be more than 38€/day of work.. That's when I start thinking that it's maybe just easier to be in a BNC regime... I just don't know!! My monthly expenses are roughly 600-1000€ I earn currently roughly 3200€/month (average over the year.. It's never the same every month of course, being freelance!) Any advice would be greatly appreciated... Thanks everyone!! :)
 

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AFAIK you can't deduct expenses against tax if you go with a portage salariale because in effect you're an employee, rather than being self employed or running a business, and AFAIK there is no mechanism for employees to claim expenses against their salary (apart from certain things like travel to work). I imagine the trick is to try and avoid paying cotisations on the part of your income that goes straight out again in overheads, which I presume the portage salariale company will know all about.

Another thing that occurs to me is that if your overheads are higher than average, auto entrepreneur would have been a terrible regime for you in any case, so perhaps no bad thing that you didn't go that route.

Gut feeling suggests that portage salariale would be less stressful, especially since you obviously don't enjoy the business side of things a lot. I presume you have a few regular clients rather than loads of occasional clients which would make it a bit of a nightmare setting up all the accounts? Either that or a GOOD accountant. But this is all outside my sphere of experience so have no solid advice to offer.

Good luck with it all.
 

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As you've described the situation, you'd probably do best to go the portage route. It's pretty much pointless to hire an accountant to set you up in an AE, because the whole point of the AE scheme is to eliminate the necessity of keeping formal "books" to track income and expenses. The AE scheme (which is linked to the micro-entreprise thing) is based on your paying in a flat percentage of your take (gross revenue) for cotisations and income tax. (For the income tax, they assume a set percentage of expenses - but no, you don't "get it back" in any way, shape or form.)

Any other form of business entity (other than the AE) would require you to keep proper accounting books - recording profit and loss, expenses, revenues, etc. - and submitting the annual accounts to the local Greffe de Tribunal. This is where an accountant would come in handy (though it is NOT required to engage one) and the fees paid to your accountant would actually be deductible in determining the net profit on which you are taxed, and your cotisations are determined.
Cheers,
Bev
 

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Discussion Starter · #6 ·
As you've described the situation, you'd probably do best to go the portage route. It's pretty much pointless to hire an accountant to set you up in an AE, because the whole point of the AE scheme is to eliminate the necessity of keeping formal "books" to track income and expenses. The AE scheme (which is linked to the micro-entreprise thing) is based on your paying in a flat percentage of your take (gross revenue) for cotisations and income tax. (For the income tax, they assume a set percentage of expenses - but no, you don't "get it back" in any way, shape or form.) Any other form of business entity (other than the AE) would require you to keep proper accounting books - recording profit and loss, expenses, revenues, etc. - and submitting the annual accounts to the local Greffe de Tribunal. This is where an accountant would come in handy (though it is NOT required to engage one) and the fees paid to your accountant would actually be deductible in determining the net profit on which you are taxed, and your cotisations are determined. Cheers, Bev
Great response, thanks for all your suggestions Bev!
Like I said, AE is out of the question seeing as Ill be earning too much..
I've since signed with the Portage Salarial in the meantime - I'm not locked in with them so if I find something better afterward I can leave whenever I like.
Being registered to Pole Emploi helps finance the months I don't work so much (August/October etc..) and being able to claim some expenses helps.

BUT on a more basic level, I'm so confused in general about why we pay so much out of our yearly income in France??!!
Was trying to explain it to my parents (who are in Australia) and they're making me very paranoid about it all..

I was told Cotisations are roughly 40-50% of your income (for 30,000€/year income) - then tax on top of that??!!

This is what I'm paying for last years earnings, and it seems crazy?!!

Can someone please explain where they logic in this is? Does one ever get any of this back??
Id have to earn at least 100,000€/yr to scrape by in France it seems?!
 

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As an employee, cotisations run about 25% with your employer kicking in another 40% or so. As a "self-employed" individual, cotisations run about 40% of your net income (i.e. revenue less allowable expenses). You "get that back" every time you get medical treatment and ultimately when you start drawing a pension after you retire. (And actually, the bulk of that 40% goes toward the retirement funds.)

Income tax is based on your "taxable income" which doesn't include what you've paid in cotisations. (Slight oversimplification, but it works out that way for the most part.)
Cheers,
Bev
 

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Discussion Starter · #8 ·
As an employee, cotisations run about 25% with your employer kicking in another 40% or so. As a "self-employed" individual, cotisations run about 40% of your net income (i.e. revenue less allowable expenses). You "get that back" every time you get medical treatment and ultimately when you start drawing a pension after you retire. (And actually, the bulk of that 40% goes toward the retirement funds.) Income tax is based on your "taxable income" which doesn't include what you've paid in cotisations. (Slight oversimplification, but it works out that way for the most part.) Cheers, Bev
Ok great, that's starting to make some kind of sense.
Like I said, I've already signed up to a portage salarial scheme for the time being, but I'm going to investigate better the BNC option, seeing as the accountants fees are tax deductible, and I can assuredly run up a higher expenses bill, therefore have less taxable profit/income.

Does this mean however that each year when I declared my income, I should've deducted my cotisations from the final sum??
And as a micro-enterprise, should I have deducted expenses??

Or should I try and make my status as part of the portage Salarial retroactive, so I can claim expenses for the past year at least?

I'm just trying to explore every avenue possible to make the most of my earnings from 2012, because having been a micro enterprise has robbed me dry!!!
 

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As a micro entreprise (BNC or whatever) you can't deduct the accountant's fees. That's only when you register as a regular business entreprise (EIRL, EURL or similar) and have the obligation to declare your financial results each year.

I think if you go the portage route, you are considered to be a sort of "employee" of the portage company. They withhold the cotisations (not sure if they do the employer's part or not). You normally get a general 10% deduction from your "taxable income" to cover employee expenses. If you want to take more, you have to have receipts for everything you take to back up the amount you deduct.
Cheers,
Bev
 
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