As a freelancer in France, dealing with administrative and tax obligations can sometimes seem like a complex task. Are you a freelancer or starting out on an entrepreneurial project? Find out in this article about all the taxes and contributions you could be eligible for.
Taxes for freelancers in France
VAT (Value Added Tax): If your sales exceed a certain threshold, you may be required to collect and remit VAT on your services or sales of goods to the tax authorities.
Declaring your VAT is done directly online, which implies that you have first created a business account on the tax authorities’ website.
Next, you need to obtain an individual VAT identification number from the SIE. As a VAT-registered auto-entrepreneur, you can choose between the simplified tax system and the standard tax system**.
Income tax (IR): If you are self-employed and run your business as a sole proprietorship, you are generally subject to income tax rather than corporation tax. Your taxable profit is incorporated directly into your personal tax return (this profit constitutes your net income before income tax).
Corporation tax (IS): If you have opted to set up a company (SARL, SAS, etc.), the company will generally be subject to corporation tax. The company’s profits are taxed at the corporate income tax rate before being distributed to shareholders, who are then taxed on the dividends at the income tax level. (Note that depending on the company’s structure and capital, these dividends may or may not be subject to social security contributions as remuneration, or to flat-rate deductions). These profits correspond to sales minus expenses (including salaries and social security contributions). Overall, in a company of this kind, your income as a manager will comprise: your net salaries and your dividends.
N.B.: exclusive remuneration in the form of dividends should be avoided, as this would not entitle you to any social rights (provident scheme, pension, etc.).
What’s more, if you work for a company that owns a passenger vehicle, you may be liable to pay the tax on passenger vehicles. The amount depends on the vehicle’s CO2 emissions.
Contributions applicable to freelance status
URSSAF (Union de recouvrement des cotisations de Sécurité Sociale et d’Allocations Familiales) in France is an organization responsible for collecting social security contributions. For the self-employed, URSSAF plays an essential role in collecting compulsory social security contributions.
Social security contributions: As a freelancer, you are subject to the Social Security Scheme for the Self-Employed (Régime Social des Indépendants – RSI) or the Social Security Scheme for the Self-Employed (Sécurité Sociale des Indépendants – SSI), which covers contributions for health insurance, basic retirement, disability and death, and sometimes contributions to professional training.
Contributions may cover all or part of the remuneration. It should be borne in mind that this generally represents between 40 and 45% of net income for a manager (SARL-EURL) and around 80% for a chairman (SAS-SASU).
Cotisation foncière des entreprises (CFE): The CFE is a local tax payable by freelancers and businesses. The amount depends on the rental value of the real estate used for your business and the commune in which you are based.
Vocational training contributions: As a self-employed worker, you are required to contribute to continuing vocational training. The contribution rate is fixed at €116 in 2024. It is set as a percentage of professional income. Vocational training contributions are collected by social security bodies (such as URSSAF).
Supplementary pension and provident insurance: You can choose to take out supplementary pension and provident insurance. These contributions are optional, but may be recommended to ensure optimum social protection.
*VAT may be payable even by an auto-entrepreneur (the threshold for VAT is €39,100), whereas the threshold for the auto-entrepreneur scheme is €77,700.
** For the simplified tax regime, VAT is paid half-yearly. The entrepreneur must pay 55% of the VAT due in July and 40% of the VAT due in December. In addition, an annual adjustment declaration is required, generating either a balance to be paid or a refund of overpayments made on account. This system ends and switches to the normal system if the total annual amount exceeds €13,000. Under the standard tax system, the entrepreneur must file, transmit and pay the VAT return on a monthly basis.
