Taxes for freelancers and self-employed workers in France

One of the key elements of running your own business in France is understanding how the tax system applies to you and getting your head around the allowances you can claim. French taxes can be complicated, with self-employed workers able to choose between tax regimes. Read on to explore the following topics:

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The self-employed tax system in France

According to EU data, around 11% of French workers are self-employed, from freelancers and sole traders to people running partnerships and limited companies.

Freelance workers in France typically have to pay tax on their earnings and make social security contributions. There is a range of structures available to self-employed workers and business owners in France. The type of business you operate will dictate the taxes you’ll need to pay on your income.

Self-employed income tax in France

Tax for self-employed sole traders and freelancers in France

If you set up as a sole trader (enterprise individuelle or EI) in France, you and your business will be considered one entity for tax purposes. This means you’ll pay tax under the general income tax system (Impôts sur le Revenu), at the same rates as salaried workers. The French income tax bands for 2022 and 2023 are as follows:

Income tax rates for 2022

Income tax rates for 2023

Self-employed workers can choose between paying tax under the standard system or the micro-enterprise regime (régime micro-entreprise). Under the standard system, you’ll declare your profits minus any allowable deductions and pay tax on that amount.

Under the micro-enterprise regime, you’ll instead declare your turnover minus a specific tax credit to determine your taxable base. Which regime works better for you will depend on your income and the type of company you run.

Micro-enterprise tax regime

The eligibility rules and tax credits for the micro-enterprise regime vary depending on the nature of your company.

Some types of self-employed workers aren’t eligible for the regime, including those in regulated liberal professions such as doctors and lawyers, so you should seek advice from the tax office before proceeding.

• Commercial (micro-BIC): If your business is classed as commercial sales, your turnover must be less than €188,700 to qualify for the tax regime. A credit of 71% is available, meaning your taxable base will be 29% of your overall turnover.
• Trade/service-based (micro-BIC): The maximum turnover allowed is €91,900. The cost allowance is 50%, so your taxable base will be 50%.
• Professional (micro-BNC): For professional/liberal activities (such as accountants), the maximum turnover allowed is €91,900. Your tax credit is 34%, so you’ll pay tax on 66% of your income.

For example, let’s say you’re running a commercial business under the micro-enterprise regime. If you make €50,000 in a year, you’ll be able to offset the allowance of 71% against this. You’ll then pay income tax on the remaining 29% of your total revenue (€14,499).

Some micro-entrepreneurs may also need to pay business property tax (CFE) on their turnover. You can find out more in the French government’s guide.

Tax for partnerships in France

If your company is registered as a SARL (a limited company in joint ownership), you can be taxed under the personal income tax system (as above) for the first five years. If you don’t qualify for this status, you’ll need to instead pay corporate tax on your profits.

Tax on limited companies in France

The type of tax you’ll need to pay when running a limited company depends on how the company is set up. Generally, limited companies are liable for French corporate tax, unless you have EIRL (Entrepreneur of Individual Limited Liability) status, in which case you may be able to pay income tax through your own tax return.

Registering for freelance tax in France

You’ll first need to register your self-employed activities with the Centre de Formalités des Entreprises (CFE). The CFE has different departments depending on the type of business (e.g., commercial businesses, liberal businesses).

Once you’ve completed this process, you can register as self-employed online and complete the micro-enterprise registration if you wish to follow that tax regime. If you decide to switch tax regimes at a later date, you’ll need to state this when filing your tax return the preceding year.

Self-employed and freelance tax deductions and credits in France

If you register for tax under the micro-enterprise regime, you cannot claim any deductions against your tax bill, as you already benefit from the credits above.

If you register under the standard regime, there is a range of expenses you can deduct from your profits to work out your taxable income. These include overheads such as the cost of office space and equipment required to operate your company.

Most reasonable business outgoings are possible. The French tax agency sets the following rules on deductions:

• Deductions must be incurred in the direct interest of your company’s operation and relate to normal business management.
• Deductions must be recognized as an expense during the correct financial year and invoices must be provided as supporting evidence.
• Outgoings for working from home can be deducted as long as they are fairly distributed (e.g., how much you deduct from the cost of your electricity bill must be in line with how much of your time at home is spent working).

Corporate tax in France

Corporate tax rates in France have been falling in recent years. In 2021, most companies paid a standard rate of 26.5%, while companies with profits of more than €500,000 paid a higher rate of 27.5%.

From 2022, however, all companies have paid a flat rate of 25% regardless of the size of the profits. Some smaller companies that make less than €38,120 can pay a reduced rate of 15%.

Companies may be able to offset some tax credits against their profits. These can include credits for investment in research and development, new business credits that provide relief as a company is growing, and CICE credits, which can lower the cost of hiring employees abroad.

How to file freelance tax in France

If you are operating as an individual, you’ll only need to make one online tax declaration for your tax liability and social security contributions. In 2023, the deadlines are 22 May for postal returns, or somewhere between 25 May and 8 June for online returns (the specific deadline varies depending on which département you reside in France).

Self-employed workers will either need to fill out form 2031 or 2035 (if using the standard tax regime) or form 2042C (if using the micro-enterprise regime).

If your company is liable for corporate tax, you’ll need to file an online tax return within three months of the end of your company’s tax year, or by 30 April the following year. Payments are quarterly in most cases. New companies or those who paid less than €3,000 the previous year can qualify for annual payments.

VAT in France for self-employed people

VAT in France is called Taxe sur la valeur ajoutée, or TVA. TVA is payable on the sale of certain goods and services. TVA is chargeable at a rate of 20%, though reduced rates of 10%, 5.5%, and 2.1% are available for some products.

Smaller businesses in France don’t need to sign up for TVA. The threshold to register and pay the tax is €34,600 for service-based companies and €86,900 for commercial businesses.

Social security for self-employed workers in France

Self-employed workers in France must make social security contributions on a monthly or quarterly basis. How much you’ll need to pay will vary depending on the structure of your company.

If you choose standard accounting as a sole trader, your contributions will be calculated based on your final income tax calculation. Once a year, you’ll need to log on to the French government’s website and submit an online return titled Déclaration sociale des indépendants (DSI). Most social security contributions are tax-deductible.

Workers with micro-enterprise status pay social security contributions at rates ranging from 6% to 22% depending on the nature of the business. 50% relief is available in the first year to some businesses. The rules can be complex, so it is recommended that you take professional advice on how they apply to your company.

Tax fines if you freelance in France

If you fail to file your income tax return on time, you’ll face a penalty of up to 10% of the tax due. Penalties apply from 45 days of the collection date.

If you submit your corporate tax return late, you’ll be charged interest at 0.4% per month plus a penalty of at least 10% of the tax due. For late payments, the penalty starts at 5% of the tax due. Much larger fines of up to 80% can be imposed if you’re found to have committed tax fraud.

Associations for entrepreneurs in France

There are a number of associations for entrepreneurs in France, which can be a great way of gaining help and advice on setting up and running your own business. These include the following organizations:

• Citizen Entrepreneurs: association promoting entrepreneurship in France
• Fondation Chanel and Femmes Entrepreneurs: groups for female entrepreneurs in France

How to find an accountant or financial adviser in France

If you’re not sure how the tax rules apply to you, it’s worth getting professional advice from an expert. Companies such as French Tax Online offer specialized services for newcomers to the country.

There are lots of English-speaking advisers dotted around France. As a starting point, check out our directory of French accountants and tax experts.

Useful resources

• Service-Public – the French civil service website
• French Ministry of Economy and Finance
• French online tax return