Taxes / cotisations sociales in France Thread poster: Mark Harris
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Mark Harris
France
Local time: 13:40
French to English
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Hey everyone,
I moved to France recently from the UK and I'm having a bit of a headache working out all the tax stuff, I was hoping someone who's already gone through it all my be able to offer some assistance. I've declared myself as micro-entrepreneur and I'm in the process of getting it all sorted, along with social security stuff, but I'm totally lost by all the confusing information I've seen online regarding taxes and/or cotisations sociales. I've read that self-employed peopl... See more Hey everyone,
I moved to France recently from the UK and I'm having a bit of a headache working out all the tax stuff, I was hoping someone who's already gone through it all my be able to offer some assistance. I've declared myself as micro-entrepreneur and I'm in the process of getting it all sorted, along with social security stuff, but I'm totally lost by all the confusing information I've seen online regarding taxes and/or cotisations sociales. I've read that self-employed people, such as translators, pay around 22% for cotisations sociales. This seems reasonable, but then do I have to pay income tax on top of that? I've heard some people mention an overall rate of about 50%. Surely it can't be true that I have to hand over 50% of my income?
I'd love it if someone could shed some light on this! Thanks in advance. ▲ Collapse
| | | | Jean Lachaud 
United States
Local time: 07:40
English to French
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| Sounds ballpark to me... | May 13, 2020 |
... but surely someone will prove me wrong.
| | | | Mark Harris
France
Local time: 13:40
French to English
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TOPIC STARTER | Which sounds ballpark? | May 13, 2020 |
Jean Lachaud wrote:
... but surely someone will prove me wrong.
You mean the 50% figure sounds about right to you?
| | | | Jean Lachaud
United States
Local time: 07:40
English to French
+ ...
| That's what I mean | May 13, 2020 |
Which reminds me of the difference between an optimist and a pessimist.
Mark Harris wrote:
You mean the 50% figure sounds about right to you?
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| Taxes for a micro-entrepreneur | May 13, 2020 |
Hello Mark,
I have found this article in English: https://www.federation-auto-entrepreneur.fr/the-auto-entrepreneur-business-status-in-france
However, please note there is a wealth of information in French. I see one of your source languages is French, so why not ask the question in the French forum?
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... See more Hello Mark,
I have found this article in English: https://www.federation-auto-entrepreneur.fr/the-auto-entrepreneur-business-status-in-france
However, please note there is a wealth of information in French. I see one of your source languages is French, so why not ask the question in the French forum?
---
Yes, you pay 22.2% (all in all) of your gross revenue for "cotisations sociales".
As a micro-entrepreneur, unless you choose the option "versement libératoire" (which is possible under specific revenue conditions), you are taxed based on a progressive rate of income tax.
I am oversimplifying here, but this to give you an idea:
You take your annual gross revenue and substract from it 34%. The remainder 66% will be your taxable income. Then you apply the progressive income tax scale to it, currently this one.
You pay no taxes for the first EUR 10,064 of taxable income. From 10,064 to 25,659, they are taxable at 11%, and from 25,659 to 73,369 at 30% (then 41%, and 45% for the next limits).
In short, taxes depend on your taxable income. There is no one fixed percentage (unless, you use the "versement liberatoire", which is just 2.2% percent of taxes on your gross revenue, without applying any reduction). Other parameters (like marital status, kids, income from other sources, etc.) may also play a role in the effective tax.
Plus there is the CFE tax, which is an annual tax paid by businesses to local authorities. It represents a fixed cost that can range from EUR 100 to 1,000, depending on your company's office location and specifics (I work from home and pay around EUR 120 per year).
Hope it helps,
Jean
[Edited at 2020-05-13 23:01 GMT] ▲ Collapse
| | | | | 50% not true | May 14, 2020 |
Hi
Never paid such rate, the highest tax rate for independent translators in France is 22%.
Of course, this rate is only the professional tax.
You have still to declare you income once a year based on the previous monthly income, but even if you earn a lot of cash, the income tax is never 28%.
| | | | | French income tax | May 14, 2020 |
You deduct your social contributions from your income and then pay tax on the remainder at the following rates in France
Up to €10,064: 0%
€10,064–€25,659: 11%
€25,659–€73,369: 30%
€73,369–€157,806: 41%
€157,806+: 45%
[Edited at 2020-05-14 07:09 GMT]
| | | | Mark Harris
France
Local time: 13:40
French to English
+ ...
TOPIC STARTER | Thank you for clarifying | May 14, 2020 |
Jean Dimitriadis wrote: Hello Mark, I have found this article in English: https://www.federation-auto-entrepreneur.fr/the-auto-entrepreneur-business-status-in-france However, please note there is a wealth of information in French. I see one of your source languages is French, so why not ask the question in the French forum? --- Yes, you pay 22.2% (all in all) of your gross revenue for "cotisations sociales". As a micro-entrepreneur, unless you choose the option "versement libératoire" (which is possible under specific revenue conditions), you are taxed based on a progressive rate of income tax. I am oversimplifying here, but this to give you an idea: You take your annual gross revenue and substract from it 34%. The remainder 66% will be your taxable income. Then you apply the progressive income tax scale to it, currently this one. You pay no taxes for the first EUR 10,064 of taxable income. From 10,064 to 25,659, they are taxable at 11%, and from 25,659 to 73,369 at 30% (then 41%, and 45% for the next limits). In short, taxes depend on your taxable income. There is no one fixed percentage (unless, you use the "versement liberatoire", which is just 2.2% percent of taxes on your gross revenue, without applying any reduction). Other parameters (like marital status, kids, income from other sources, etc.) may also play a role in the effective tax. Plus there is the CFE tax, which is an annual tax paid by businesses to local authorities. It represents a fixed cost that can range from EUR 100 to 1,000, depending on your company's office location and specifics (I work from home and pay around EUR 120 per year). Hope it helps, Jean [Edited at 2020-05-13 23:01 GMT]
I had actually read a bunch of information on various French websites but I just wasn't getting it, and it's obviously always easier to understand these kinds of things in my own language.
How you've explained it makes a lot more sense, thank you.
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| You have a choice | May 14, 2020 |
As a micro entrepreneur you can opt to pay 'versement liberatoire' if you wish.
https://www.impots.gouv.fr/portail/professionnel/le-versement-liberatoire
But if you've already set yourself up then you will have already made your choice for this year. If you want to change it the change won't take effect until next January.
When you ... See more As a micro entrepreneur you can opt to pay 'versement liberatoire' if you wish.
https://www.impots.gouv.fr/portail/professionnel/le-versement-liberatoire
But if you've already set yourself up then you will have already made your choice for this year. If you want to change it the change won't take effect until next January.
When you talk about cotisations on income, you need to be clear what "income" you're referring to. You are paying cotisations as a percentage of your turnover (that's the figure you declare). Other business pay cotisations calculated on their profit. 22% of turnover, equates to more than 20% of profit. (For a translator micro entrepreneur can be advantageous if you work from home and keep your overheads low).
If you're finding it confusing, it's probably because you are overthinking it. Micro entrepreneur is very simple because it is all based on flat rates. There are many good explanations online. Personally I prefer to use the government website because you can be sure it is always bang up-to-date.
https://www.service-public.fr/professionnels-entreprises/vosdroits/F23264
Bonne continuation
EDIT - sorry, I somehow didn't see Jean's very clear post which explains it very well. Mine is superfluous I guess.
[Edited at 2020-05-14 08:04 GMT] ▲ Collapse
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Jean said it all. As a "micro-entrepreneur", I pay 22% (cotisations sociales) + 2,2% (versement libératoire = impôt sur le revenu) of my gross revenue monthly, and that's it. The other 75% stay with me
[Edited at 2020-05-14 08:05 GMT]
| | | | | About the 50%: buying power vs. sales | May 14, 2020 |
Mark Harris wrote:
...I've heard some people mention an overall rate of about 50%. Surely it can't be true that I have to hand over 50% of my income?
I am not well-versed into tax and accounting, but this figure can help compare oranges with oranges. You don't hand over 50% of your sales. A good portion of it remains for you, but at a later date. You happily "put it aside" to pave a smooth way to the grave or the urn when you stop working.
50% is a conservative estimate of what is left from your overall sales as a service provider, after you have deducted business expenses, income tax and other taxes, compulsory contributions, provisions for sick leave and holiday, private healthcare insurance, private pension plans, etc.
In a nutshell, after accounting for those company benefits you take for granted when on a payroll, which you should pay yourself when you're self-employed: selling 5,000 a month means you earn a wage-equivalent of 2,500 doing the same kind of work.
This ballpark figure matches (logically) the overall "cost" of somebody employed in a company: they take home about half of what the company spends in total for them, from employer's taxes, benefits and contributions to office space, training time, business support activities, hardware and stationery.
With this 50% figure, I know roughly how much I need to sell (invoice) in order to get sustainable buying power and secure the future as strongly as if I were employed in a similar position. Granted, I don't want to have to choose between heating and my cancer treatment when I'm 80+.
If you underestimate the relation between sales and buying power, you may end up cutting corners with your health, working more hours and/or having to carry on working after retirement age because your pension is too low. It can be a valid choice, but a choice you need to make knowingly.
You can also value the fact that you don't have to think about what to wear, spend time commuting, live in a packed and stinking city, endorse the boss' views, put up with boring colleagues, have a sandwich at your desk for lunch, work at set hours or use tools and processes you find ineffective. Some of the benefits of being self-employed are indeed priceless.
Philippe
[Edited at 2020-05-14 16:12 GMT]
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