Good News for Micros

[Ron Avery]

As this news is important to those running or thinking about running a micro business in France,  I have extracted the post I made in the "confused" thread to give it more prominence, I know double posting is not the done thing, but this is important news for businesses.

The Midilibre reported ( roughly translated by me)

Currently, any person who creates a micro business must pay a fixed sum of approximately 3 000 € of social contributions in the first year and nearly 4 500 € in the second, whatever the sales turnover. The reform aims at calculating these contributions in proportion to the actual sales turnover. 

"From now on, each business will have the insurance that for each earned and declared euro, there will not be more than 14 centimes of social security contribution for the trade and not more than 24 centimes for the services".. Mr. Chirac asked the government to act without delay to help these small businesses which are created with the intention of developing . There will also now be a single tax and social charges declaration 

Microbusinesses qualifying for these measures normally have have a self-employed worker with an annual sales turnover of less than 76 300 € for the commercial sector and less than  27 300 € for the service sector.  This measure should benefit between 250 000 and 300 000 companies, These measures will appear in the Social security (PLFSS) Finance bill  under discussion with the Senate, by way of an amendment deposited yesterday by the Minister for Employment, Jean-Louis Borloo."

[Heath]

This really is a step forward. The current arrangement with the fixed cotisations is, I believe, discouraging many Brits. who want to work part time from working legally.

[Will]

Although it is welcome I don't think anybody should hold their breath. This has been discussed on some other forums, and the French sources seem to vary considerably in their interpretations of what Chirac actually said. Some think it is starting in January next, others think it is merely up for discussion. Some say it will apply only to new businesses, so existing ones will still have to carry on paying 40-50% in cotisations.

Personally, I don't see how French bureaucracy could move fast enough to get this in place in a few weeks, and it seems grossly unfair on existing businesses who pay out nearly half of their income if start-ups only have to pay 14-24%.

We shall see.

[Quillan]

At which point in the calculation do they intend to do this, before or after your 72% tax relief and personal allowances are deducted?

[The Riff-Raff Element]

As I understood:

- The 13% limitation applies only for year 1, 24% for year 2, thereafter as now;

- Rates are AFTER the 72% has been taken, as is done for the 46%-odd charges levied now.

- The new rules will apply for S/U from 2007, not to any existing businesses.

[Miki]

Do keep up you two, it is down to 68% for Cd' H and Gîtes!! Gîtes de France told its members ages ago and has been widely advertised in all the financial news for a long time.

[The Riff-Raff Element]

[quote user="Miki"]Do keep up you two, it is down to 68% for Cd' H and

Gîtes!! Gîtes de France told its members ages ago and has been widely

advertised in all the financial news for a long time.

[/quote]

[:$]

Either way, good news for starters, business as usual for established setups.

[Miki]

The 68% will mean more social tax to be paid and put more people in to the impôt bracket.

As ever, with anything coming from Chirac, I don't know what will happen with this "possible" new help for micro's.

How long is this new cotisation amount meant to last for ? Because every month that passes, more and more existing micros are going to get more and more stroppy and quite understandably. I want to read the full and exact way this will happen and I am not sure about anyone else but I can only find what is on the "surface"

[Ron Avery]

[quote user="Jon"]As I understood:

- The 13% limitation applies only for year 1, 24% for year 2, thereafter as now;
- Rates are AFTER the 72% has been taken, as is done for the 46%-odd charges levied now.
- The new rules will apply for S/U from 2007, not to any existing businesses.

[/quote]

I know my French is not that good, but that is not what was said or is written above. The different rates apply to the different sectors not years.  It was announced in Amiens and was at first thought only to apply to inner city businesses,. it was then clarified that it applied to all qualifying micro businesses, so I assume that means all those in years one and two and new start ups. What is not clear from the article is if it applies to charges paid by 3 years plus existing micros and if the combined tax and social charges declaration only applies to those affected by the new measures or all micro businesses. The measures are being added as an amendment to a bill going through the French Senate now so could become law in 2007.  A longer article on the proposals from the Figaro are posted in the "confused" thread, perhaps that is clearer.

[Claire]

We are really confused now!!

We registered our Gite as a micro business on the first of this month.  We then decided to advertise with Gites De France and proudly showed him our documents from the Chamber Of Commerce.  He just smiled and said we did not need to register the gite as a micro business. He said because  it is our home (the gite is attached to the side of our house and we live here permanently)  it is not considered to be a business and therefore does not need to be registered.  We would therefore not need to pay any charges other than tax if we earn enough.  He gave me the name of an English man who has been working within this minefield for ten years and I intend to phone him this week to get clarification. Of course if we are not paying into the system we will not be able to claim anything back i.e. pension, social security.  We already pay URSSAF as my partner took early retirement and has a pension from the UK which is taxed in the UK.

Incidentally the Chamber Of Commerce told us that many people who think a gite may be a good source of income decide against it as soon as they find out how much the first and second year charges will be.

We know of one situation where the business owners  regularlry write to the agencies concerned explaining that they have not earned enough to cover the charges and the charges have either been adjusted or dropped entirely.

[The Riff-Raff Element]

[quote user="Ron Avery"]

[quote user="Jon"]As I understood:

- The 13% limitation applies only for year 1, 24% for year 2, thereafter as now;

- Rates are AFTER the 72% has been taken, as is done for the 46%-odd charges levied now.

- The new rules will apply for S/U from 2007, not to any existing businesses.

[/quote]

I know my French is not that good, but that

is not what was said or is written above. The different

rates apply to the different sectors not years.  It was announced

in Amiens and was at first thought only to apply to inner city

businesses,. it was then clarified that it applied to

all qualifying micro businesses, so I assume that means all those

in years one and two and new start ups. What is not clear

from the article is if it applies to charges paid by 3 years plus

existing micros and if the combined tax and social charges

declaration only applies to those affected by the new measures or all

micro businesses. The measures are being added as an

amendment to a bill going through the French Senate now so could

become law in 2007.  A longer article on the proposals from

the Figaro are posted in the "confused" thread, perhaps that is

clearer.

[/quote]

Errmmm...clearer? The article I read (which I am now trying to find)

gave the figures above for year 1&2 and that year 3 on would be as

now. Both it and "Figaro" seem to agree that it starts from 1 Jan 07,

but other sources say that it is not yet all done and dusted and is

still only a proposal. I'll ask in our CDC when I'm passing next week

and see what level of confusion is reigning there....

[tj]

[quote user="Claire"]

We know of one situation where the business owners  regularlry write to the agencies concerned explaining that they have not earned enough to cover the charges and the charges have either been adjusted or dropped entirely.

[/quote]

Hi

You have hit on a sore point here, it is discussed greatly and their are those who beleive the charges for the early years are set in stone, and your friends are right, they are not.

Charges are ultimately based on net taxable revenue, the system assumes a base income for the initial calculations which are wholly unjustified for many people. If you have a sales business with a 72% allowance it is possible for net revenu to be much lower than the base figure they use for calculation, and also possibly for those with a small service business with the 52% allowance.

In such instances, write to them and explain your situation.

[BJSLIV]

Like so many political statements its less of a concession than it first seems.

At present , unless you kick up a fuss they automatically charge you a fixed amount for the charges in years one and two. You have a right to pay less if you can show that you will nt be earning enough to be liable to such  high fixed amount .

What is being introduced for next year, is that you will automatically pay 14% on the calculated profits for a sales business, or 24% on calculated profits for a service business. In other words if you earn the max from a micro you will be paying 3500 Euros. You will also only fill in one form for taxes and social charges.

Its a move in the right direction ,a simplification,  and a cash flow benefit but doesn't really change the level of charges a great deal.

[Quillan]

[quote user="Miki"]Do keep up you two, it is down to 68% for Cd' H and Gîtes!! Gîtes de France told its members ages ago and has been widely advertised in all the financial news for a long time.

[/quote]

Nope read my post again and again and I see no mention of Cd'H or GDF but as you point out people with Cd'H /B&B's only get 68% but the rest get 72% but I didn't want to cloud the issue as only a few here run B&B's. However that was not the question, I just wanted to ask at which point they took the proposed tax and gave the percentage purely as a reference point.

Thanks Jon for the answer.

[BJSLIV]

Cd'H /B&B's only get 68% but the rest get 72%

Bad news it was reduced to 68% allowance for everybody from 2006 onwards.

[Miki]

[quote user="Quillan"]

[quote user="Miki"]Do keep up you two, it is down to 68% for Cd' H and Gîtes!! Gîtes de France told its members ages ago and has been widely advertised in all the financial news for a long time.

[/quote]

Nope read my post again and again and I see no mention of Cd'H or GDF but as you point out people with Cd'H /B&B's only get 68% but the rest get 72% but I didn't want to cloud the issue as only a few here run B&B's. However that was not the question, I just wanted to ask at which point they took the proposed tax and gave the percentage purely as a reference point.

Thanks Jon for the answer.

[/quote]

Quillan,

Who are the rest, who will still be getting the abattement of 72% please ?

[Quillan]

Miki - See the post before yours. Up to 2006 the rest got 72% it would seem. The question is more to do with the calculation being done before or after tax relief or have I said that wrong as well. Anyway the question has been answered or is this something else you want to go about [:D] .

[Miki]

Quillan,

I think that any moderator should ensure that whatever they post on here, is up to date and is posted with some knowledge and authority. Every so often, I see you make blunders and that to my mind is simply not good enough. There are many people who come on here to get questions answered. If a moderator posts an answer, it is fair to assume that the person seeking an answer will overlook any other answers from us mere mortals, in favour of a Moderators answer. I would therefore please request, that you personally, do not post answers, unless you are completely au fait with the actuality !

[quote] At which point in the calculation do they intend to do this, before or

after your 72% tax relief and personal allowances are deducted? [/quote]

So you quote the wrong abattement and I put that right, for others to know the real abattement for 2006.

Then I get this reply from you, as a way of trying to wriggle out from being wrong :

[quote] Quillan : Nope read my post again and again and I see no mention of Cd'H or GDF

but as you point out people with Cd'H /B&B's only get 68% but the

rest get 72% but I didn't want to cloud the issue as only a few here

run B&B's. However that was not the question, I just wanted to ask

at which point they took the proposed tax and gave the percentage

purely as a reference point.[/quote]

And so, not only I but BJ as well, have to put you right, you say the rest, I ask what rest and your reply is another classic

[quote] Quillan- See the post before yours. Up to 2006 the rest got 72% it would

seem. The question is more to do with the calculation being done before

or after tax relief or have I said that wrong as well. Anyway the

question has been answered or is this something else you want to go

about [/quote]

You blitherer, ALL of us who were entitled, got 72% in 2005 and now, as I stated, we get an abattement of 68% for 2006. I needed to ensure that people in the same trade, knew the right amount, as it will affect their CRDS, CSG etc and put some folks either in to the Impôt bracket or increase others tax due.

You may think putting a smiley will sort it out for you but to many folks on here who run Gîtes and C d'H's, they may well have taken your words as gospel and so another Chinese whisper begins on LF.

By writing the quote below, do you not see, that by getting the abattement wrong, you get the whole equation wrong and with it, the reference point will be totally pointless, as the figures won't suit. And then you ridiculously tried to get out of it by saying that the others got 72% !!! When you were one of the others...nothing like the blind leading the blind !!

[quote] Quillan : I just wanted to ask at which point they took the

proposed tax and gave the percentage purely as a reference point.[/quote]

Come on Moderators, have a word, he will get you all a bad name [:)]

tj, you too have put the wrong figures down, can't blame you, even a Moderator has done it. Both amounts of allowances you quote, have been dropped for 2006 tax purposes.

[tj]

[quote user="Miki"]tj, you too have put the wrong figures down, can't blame you, even a Moderator has done it. Both amounts of allowances you quote, have been dropped for 2006 tax purposes.


[/quote]

Hi

Maybe since in 2006 we are paying tax for 2005 is the confusing part, if you had said the change will affect taxes paid in 2007.....

Have to say have not heard about the change, but will get the low down from l'impots tomorrow, am going to get the english versions of their tax guides.

[Miki]

[quote user="tj"]

[quote user="Miki"]tj, you too have put the wrong figures down, can't blame you, even a Moderator has done it. Both amounts of allowances you quote, have been dropped for 2006 tax purposes.

[/quote]

Hi

Maybe since in 2006 we are paying tax for 2005 is the confusing part, if you had said the change will affect taxes paid in 2007.....

Have to say have not heard about the change, but will get the low down from l'impots tomorrow, am going to get the english versions of their tax guides.

[/quote]

tj,

Yes perhaps but as we have all done our taxes for last year already (2005) and they should all be done and dusted, or should be ! I was talking about 2006 tax purposes (meaning tax on money earned in that year) , which naturally was when the new abattement came in to force and how micro bic for businesses will have a lesser abattement and OK will actually appear in tax returns in 2007 for 2006 turnover.........................

[timc17]

Well this has totally confused me (although i'm a bit of a thicky anyway). I'm having to register as a micro-bic in the new year and was pleased with the news that from 2007 things will be simplified and the deductions reduced. Now having read all the posts here i don't know what to think.

If anyone has a definitive answer could this be posted as a sticky please?

 

[BJSLIV]

Its still good news. The paperwork will be simplified, and you won't automatically have to pay a fixed amount of contributions. Other than that things are much the same as before.

[Will]

I would imagine that it will merely defer the cotisations for new businesses - we will all still have to pay the average 46% or so at the end of the day.

[timc17]

Will,

With my 'thicky' hat on why do you keep quoting  46% as the average cotisations? Does this include income tax?

 

Tim.

[Anyone for Cricket?]

Reply to Claire

We looked into the whole registration thing when we first came over and chose to go through an accountant who has successfully registered our gite business as a non-professional business in the way that the people form Gites de France have suggested to you, I believe that if you are a Chambre d'hote then you are viewed as a professional business (not sure why). 

We pay only tax on the income, which is not a great amount and no social charges, I believe this is how it should be done but some regions seem to treat things differently and have asked people to register as a business paying cotisations.  

regards