Whats the difference.................

[poppet]

Hi there,

My husband has been told that due to the amount he earnt last year and predicted to earn this year, he has to change from the micro-enterprise to a VAT/TVA registered regime or earn less and stay under the allowance. He only supplies labour, there is nothing he buys and sells. What will be the difference in what we have to pay out with the new regime? Obviously he will have to add the TVA onto his invoices now and that will have to be paid out but will the tax percentage he has to pay be higher than before - other than the fact that he will be earning more? Will the percentage for the cotisations be higher - again other than the fact that he earns more? Apparently he wont be able to claim the VAT back on petrol only diesel - is this right? Has anyone else changed regime and has it worked in their favour or was it a nightmare? We would like to know what the main implications are for changing please.

[Tony F Dordogne]

I would have thought that you'd be best served in employing an accountant to help you through this change, at least for the first year. 

[poppet]

Yes we went to see one yesterday but as always theres lots of questions to ask after the event. Just wondered if anyone had any first hand experience as we are still undecided.

[mandycats]

All i can tell you is that we had a total nightmare. ACCOUNTANTS  WILL ALWAYS TELL YOU TO CHANGE BECAUSE ITS COMPULSARY TO HAVE AN ACCOUNTANT  BEWARE!!!!!! (regardless of your actual situation)

We went to the regional business advice centre - which i am told that most regions have one - where we got free and more importantly impartial advice.

It is my OPINION that asking someone for advice who has a vested interest in the outcome is not the best idea.  In the end we closed our TVA registered business and started up in micro. 

This was OUR situation and of course yours will be different but i sincerely advice caution about taking things an accountant says as gospel.  Accountants in france are not full of impartial advice regarding the advantages of changing into and out of regimes that involve them loosing out on a client! 

The above is only my opinion based on my experience and should be taken as such. However our accountant advised us to register as tva and it cost us including his fees nearly 4,000 euros in the four months we operated on this system where we could have paid only 1,400 euros (in a micro regime).  Needless to say we are micro and for now that will do nicely.   I sincerely wish you the best as making a living in france is hard enough without dilemma's like this one!

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[Will]

My experience is the opposite. Going from micro regime to regime réel, and employing an accountant, I paid lower charges, tax etc, despite having a higher income and even allowing for the accountant's fees, which were more than covered by the savings. There is no hard and fast rule, it obviously depends on what you do as well as how creative your accountant is. Also, my own experience of the regional business service was not good - although the people were charming and helpful, they initially gave completely wrong guidance, though, to their credit, they did look further into our situation and withdrew the original advice - something that does not always happen.

My advice is make sure you have a good accountant, preferably through recommendation, who understands your business and your situation. Unfortunately, as with most businesses in France, the best ones seem to be the busiest, and may not always be able to take on more clients.

There is a common view among British people with businesses in France that the micro regime is always the best, because it is simple and perceived as cheap, and accountancy fees are something to be avoided. My experience is that paying a good accountant is more of an investment than a liability. Knowing what can be offset, and how it should be done, can have a big impact on the bottom line, and the cotisations depend on that bottom line figure, so a saving there is valuable, as that's another chunk on which you are not losing 46% to URSSAF, RSI etc. Then there is the potential TVA recovery benefit on top of that. If you know a lot about finance in France, by all means do it yourself. If you don't than definitely consider using a professional.

Of course, some businesses will suit the micro regime - otherwise there would be no point in having it. But that doesn't mean it is right for all businesses, however low the turnover.