… continuing the story.
Whatever the amount of money you make (and the way you earn it), you have to declare all your incomes . . . the best option ended up creating an independent activity as a micro-entrepreneur.
You might have heard that taxes are high in France and rightly so: France is the top-taxed country in the European Union
1. Apparently, this is not due to income and wealth tax, but the result of high social contributions. This can be a source of anger for some; still, France is the country in the developed world that spends the most on social spending relative to the size of its economy
1.
The tax-to-GDP ratio of France, calculated on the sum of taxes and net social contributions, was 48.4 percent in 2018.Ben McPartland
In France, there is a clear distinction between income taxes and social contributions. As alluded in the previous post, given my virtual lack of revenue I ended up paying 0 euro for the former. As for the latter, I should have paid 22.7 % of my income (as a micro-entrepreneur), but benefited from an exemption scheme, and contributed to only 5.5 % (see Social security contributions). After paying the aforementioned contributions (as well as an additional 0.1 % vocational training contribution), I thought I was in good standing with the French tax system… Oh naïve!
Business property tax
This tax – Cotisation foncière des Entreprises (CFE) in French – is due in each municipality where the company has premises and land. It is calculated on the rental value of real estate that the company used for its professional activity, but also to the physical characteristics and the use of the premises2. Needless to say, the rate will vary from one municipality to another; still, there is a minimum amount (applicable in case of activity at home). In fact, if the rental value is very too low, you have to pay according to this scale (the actual amount being set by the municipality):
| Income | Minimum CFE |
|---|---|
| Up to 10,000 € | 223 – 531 € |
| 10,001 – 32,600 € | 223 – 1,061 € |
| 23,601 – 100,000 € | 223 – 2,229 € |
| 100,001 – 250,000 € | 223 – 3,716 € |
| 250,001 – 500,000 € | 223 – 5,307 € |
| Above 500,001 € | 223 – 6,901 € |
Let me briefly remind you what my situation at the time was. Actually, I could summarize the all story in four letters: ACRE. I could indeed benefit from this early-activity exemption scheme because I was a “non-compensated jobseeker” (see Social security contributions). Add to this my only income – a one-time consulting contract with such a ridiculously miserable compensation that I didn’t have to pay any income tax – and you can have a better picture. In short, I had no other option to go back and live in my parents’ home!
Believe it or not, I still had to declare (what used to be) my bedroom as my company’s premise! A 10 m² real estate! Luckily, I didn’t have to pay the CFE the first year because newly created companies are not subject to this tax in the year of their creation. What about the second year, you may wonder?
As of January 1, 2019, companies with a turnover of no more than 5,000 euros over a 12-month period are exempt from minimum CFE.
Thank you Mr. President!
Artists’ rights
After the URSSAF in the previous post, let me introduce you to another association in charge of collecting payments: the SACEM. Founded in 1851, this French Society of Authors, Composers and Publishers of Music is collecting payment of artists’ right. A good thing indeed since the fees collected (87% of that amount, actually) are used to remunerate the creators.
In France, all places open to the public are required to pay a fee to the SACEM. In fact, everyone who plays music must contribute. So, if I would have, for instance, listened to the radio – in my company’s office (i.e. my bedroom) – and a client (of course, there is no better place than a bedroom to welcome them) would have been present, I would have been in big trouble, except…
The law stipulates, in Articles L.122-4 to L.335-10 of the Intellectual Property Code, that the author must give his authorization and receive remuneration for the public distribution and production of his works. Broadcasting his works to the public without authorization is considered counterfeiting and can be punished by a fine of up to 300,000 euros.
… if I would have obtained an authorization to do so. Conveniently, the SACEM has created many all-inclusive packages that allow you to broadcast legally any music, regardless of the means of broadcasting (TV, radio, streaming, CD, MP3…).
Clearly, I had no intention to have any ‘client’ in my bedroom, and I do not listen to music when I work, anyway. Therefore, my declaration to the SACEM was as follow:
“No, I do not broadcast music and I have noted that I needed SACEM’s authorization for any public broadcast.”
To be continued…
1 Ben McPartland (2019) How France is the most taxed country in the EU. The Local. ^
2 For example, the tax rate will differ for the backroom of a shop, used for storing goods, and its part dedicated to welcoming customers. ^
3 In fact, many companies opt to be domiciled in Paris because the capital has very low CFE tax rates. ^