Why 2019 is a great time to start a business in France
PUBLISHED: 09:24 09 October 2019
Changes in taxation and the introduction of a new business aid mean it's easier than ever to start a new enterprise in France.
In addition to the changes in taxation brought in by the 2019 French Finance Law, a number of changes for businesses have also been introduced in France to encourage more people to start new enterprises. Among these is the Aide à La Création ou à la Reprise d'Enterprise: ACRE.
The ACRE consists of a partial exoneration of welfare contributions for the start of the new activity and, in the case of a micro-entrepreneur activity, it comes in the form of reduced fixed welfare contributions. Certain people may also be eligible for other forms of aid for new businesses, according to their situation. A similar system did exist prior to January 2019 called ACCRE, but it was only available under specific conditions until the change in law.
To obtain ACRE, you must be setting up a new business or taking over an existing one, either as an individual enterprise of a company, so long as you have control of that company. The business activities can be commercial, artisanal, agricultural, or liberal.
Who is eligible for ACRE?
You don't have to apply for ACRE - it will automatically be applied to all new businesses according to various conditions, particularly related to professional income. For all new businesses other than micro-entrepreneurs:
- Net professional income must not exceed €40,524 in 2019
- If net professional income is less than €30,393 in 2019, the business is automatically eligible for the ACRE (exoneration of social charges related to health, maternity, invalidity, death and family allowance benefits, as well as exoneration of the base pension contribution).
The exoneration starts at the date you register for welfare contributions and the standard period of exoneration is 12 months from this date. However, for micro-entrepreneurs, this can be extended up to three years maximum from the date of start of activity.
For net professional income between €30,393 and €40,524, the business is partly eligible for the ACRE by means of a reduced exoneration. As the calculation of welfare contributions can vary according to the type of activity and tax regime related to the business, it is impossible to give specific examples, but URSSAF would calculate the relevant allowances for each case.
You cannot take advantage of the new ACRE aid for start-ups if you have previously taken advantage of the old system (ACCRE) less than three years from starting the new business, or if you are starting or taking over an identical activity to the one that has been de-registered within a full tax year after the year in which the de-registration took place.
ACRE and the micro-entrepreneur
The advantages given by the ACRE aid to new start-ups are different for micro-entrepreneurs as the welfare contributions for micro-entrepreneurs are set at a fixed rate of turnover, according to type of activity/income.
Therefore, the ACRE for micro-entrepreneurs is simply a reduced fixed rate of welfare contributions over a period of three years, as long as the micro-entrepreneur does not exceed the micro turnover thresholds (of €70,000 for services and €170,000 for sales).
URSSAF will send out a confirmation letter relating to ACRE within four to seix weeks of business registration.
When does the aid no longer apply?
It is important to note that, as soon as you exceed the various thresholds within which the ACRE aid is applied, you will lose the benefit of this exoneration back-dated ot the first day of the month or quarter following the date you exceeded the threshold.
There are other aids available (NACRE, ARCE, ARE, ASS) depending on the individual situation of the new business, and generally applying to those who are in a situation of low or no income for various reasons. Speak to your local unemployment office about these for more information.
Debbie Bradbury works for SAREG, an English-speaking French accountants.