"Tax free allowance"

[Nessie]

If you start up a business in France, is the system the same as in the UK where you can earn a certain amount before paying tax?  If your partner wants to start something like a B&B and doesn't have any other source of income, either in the UK or France, how much could be earned before income tax became payable?

[EuroTrash]

Starting a business in France is nothing at all like starting a business in the UK. Business régimes in France are quite complicated. The rules depend on which régime you choose. You need to do a lot of research.

Income tax isn't the killer in France, in fact you'll probably pay less tax than in the UK. The killer is cotisations, which is the equivalent of NI contributions but much much higher. Everybody who works, either employed or self employed, has to pay cotisations and you can expect to pay around quarter of everything you earn in cotisations.

The simplest business regime is the Auto Entrepreneur regime, have a look here http://www.anglais.urssaf.fr/index.php?option=content&task=blogcategory&id=278&Itemid=5572 (cut n paste) and investigate further if you're interested (though they're likely to revamp the way it works next year).

For instance, under this regime your partner could run a B&B and pay a certain percentage of his income as cotisations which would mean the state would part fund his healthcare.

Income tax is calculated per household, not per individual as in the UK, and is not PAYE as in the UK. You declare income for your household once a year, you have a joint tax allowance that depends on how many people there are in the family, and you get an income tax bill based on that. In fact, unless you have a 'good' income, most families pay very little tax if any, and if your earnings are low you get a reduction on your taxe d'habitation.

(Just a warning - although income tax is relatively low, France probably has the highest rate of overall taxation of any EU state. If you run a business here, you need to really want to live here... it's not an easy option.)

Hope this helps.

[Chiefluvvie]

Spot on Eurotrash - in fact the editorial (by Guillaume Roquette) in Le Figaro Magazine last weekend included the statement that 'France is the most heavily taxed country in the developed world' - i.e. not just in Europe!

It's all 'Smoke and Mirrors' - the French (and some French residents for that matter) are totally brainwashed.....and the fact that successive governments have been and are, totally incapable of addressing any core 'issues' - simply compounds the issue. The current tally for new taxes introduced by Hollandes' government alone must be over 90 by now....

So the ethos is - do nothing, just introduce more taxes - simple....

Chiefluvvie :-)

[Catalpa]

As has been said, tax is not the killer in France - cotisations sociales are - and they are payable from your first euro... though I don't think even France would deduct cotisations from an income of 1 euro. [:P]

If you're researching starting a b&b - while there are b&b people on here (I'm one) - a very useful site is http://www.laymyhat.com/forum/index.php . You'll get a lot of business specific and country specific information on there.

As has been said, you have to opt for a particular tax régime to begin with but for the basic régimes like autoentrepreneur, you are assessed on turnover not profit. You cannot offset any actual expenses to deliver the "profit" figure - there's a flat rate included in the régime. This means that if you have a lot of purchasing to do - quality mattresses, seating, bedding, towels, garden furniture - you can't declare those costs or depreciate them over the next few years. I realise that sounds bonkers. Welcome to France.

You also need to look into licences - from your local Douanes usually found in your prefecture town although, for Manche and Calvados, they are at Caen. Or they were... but my info is from 6 years ago. You need a licence even if you are only serving tea and coffee with breakfast - and there have been some examples of people having to attend courses before getting the licence and these can be expensive. However, not all départements enforced this ruling (it may even have been dropped) but if your département does, that would be an extra cost to factor in.

If you are anywhere near Sourdeval, Manche, and bank with the Crédit Agricole (or would consider doing so) there's a British manager there who is au fait not only with French banking "stuff" but also the ins and outs of starting a small business. Specifically, he understands what British people expect and what the French system actually delivers!