Two Micro Businesses in the same family?

[Goodlife]

We are considering setting up a business in France, however the Taxes seem very high unless you are a micro business.  Does anyone know the authorities view if we were to setup two micro businesses, one in my name and one in my wifes name?  Both businesses would offer the same products and services, however as long as they are operated separately, would this be a problem?  We would probably look to operate one company while the other is dormant, then switch over to the second company as turnover in the first company neared the €27k threshold.  Total turnover is unlikely to be above €50k so we don't believe either company would exceed the threshold independently.

[Will]

Taxes are not particularly high in France, despite what some say, so I don't see how you would gain much advantage from your proposal. Under most circumstances you have to be taxed as a married couple rather than individuals anyway.

I think that paying two lots of cotisations (social charges) would far more than cancel out any perceived saving in tax. I would imagine, as both business will trade similarly, you would be far better off setting up a single business, with one partner as 'collaborateur conjoint', thus saving on an unnecessary duplication of health charges, retirement charges, professional fees and other insurances etc. But you would need to confirm this - as well as the viability, legality or otherwise of your proposal - with a qualified accountant. You would then not be governed by any turnover threshold, except that if you come under the relevant turnover you can always elect to be taxed under the micro-bic or micro-bnc regime, whichever applies to your business.

[Nick Trollope]

If you have 2 seperate businesses (or 2 joint businesses of different types) then you must be registered twice, although I guess that this is not what the OP is trying to do. Other than that, Bill is right, you may as well be a "proper" business - it will cost you less in the end.

[The Riff-Raff Element]

...and the trick about the micro regimes (and this is really quite

clever, so there must be some people emerging from the French education

system with some imagination intact) is that although it appears that

they offer generous relief from tax & charges with the presumption

of only 28% "taxable" income from turnover, in fact the goverment take

is (on average) practically the same as it would be for more

conventional regimes. This is because:

- social charges are made as though one is both employer and employed

and by the third year top out at around 70% of "taxable" income;

- There is no TVA registration...which means that altough TVA is paid on any business expenses it cannot be reclaimed.

The big advantage for both the authorities and the business is the

simplicity of the accounting in that there really isn't a great deal to

do.

[PossumGirl]

[quote user="jond"]...and the trick about the micro regimes (and this is really quite

clever, so there must be some people emerging from the French education

system with some imagination intact) is that although it appears that

they offer generous relief from tax & charges with the presumption

of only 28% "taxable" income from turnover, in fact the goverment take

is (on average) practically the same as it would be for more

conventional regimes. This is because:

[/quote]

When we recently set up our business at the chamber of commerce, it was

clear that if you don't mind a bit of accounting, for many people, a

regular business is more interesting than a micro, precisely because of

the micro's inability to deduct expenses.  Although, I suppose if

you don't make a lot of money and really hate keeping books, it might

make sense for some.

PG

[AnnH]

Having read on or two of these threads I think Will is missing the point that most people thinking of moving to France consider Taxes to included income tax & cotistations - I know he is right that there is a difference but in the main most people want to know the overall cost of running a business and it is just more confusing to start talking about the 2 as separate issues.

 

Having been here for a year and used this forum before and after the move I think you just need to keep it short and simple, especially on this issue.

[Will]

Sorry AnnH, I disagree. Particularly when starting a business, people must remember that cotisations are payable on a monthly or three-monthly basis, according to your estimated turnover, so usually start to become due even before you have received money. Tax, on the other hand, is paid in the year following the trading year to which the tax relates. Some think that it's similar to Britain, where you pay tax and national insurance, to the Revenue and Customs, based on profit after you have received the money. In France the NI equivalent, which is by far the greater amount, is virtually paid in advance. It is usually payable to several different caisses. In the case of a micro business, the simplified regime only affects the income tax and TVA - cotisations are considered on a separate basis. So I think it is essential to consider taxes and cotisations separately.

Moreover, there are several 'tax advisers' who advise people on minimising French tax, but many of them take no account of social charges - in fact a couple I've had dealings with claim to have no knowledge about cotisations.

The point about TVA is very valid - that's yet another tax to consider, besides income tax and cotisations. This is why taking advice from a properly qualified professional is essential, don't rely solely on what is said on web sites like this.

I'm all for keeping things short and simple, but the French system doesn't really allow simplicity.

[Owens88]

I'll add a reinforcement to the last two posts (which seemed to be agreeing on the substance !).

There are more than one 'tax stream'. They are not as transparent as in the UK.   The practitioners do not necesserauily consider them in a 'holistic' sense.

Ask an expert and MAKE B** SURE that you put in writing that you are asking for a complete recommendation taking into account: x, y and z.

AND when you have found such an adviser, who has reasonable English and uses e-mail, please do e-mail me.

Good Luck

John