Taxation for freelancers and self-employed in France

France offers a structured but sometimes complex tax system for freelancers and self-employed individuals. Understanding the types of taxes, social security contributions, and filing processes is essential to managing your business successfully while staying compliant. This guide covers everything you need to know, from tax structures to social charges and filing requirements.

Taxation for Freelancers and Self-Employed in France

Self-employed taxes in France

Freelancers and self-employed workers in France are required to pay three primary types of taxes:

  1. Income tax: Paid under the general income tax system.
  2. Social security contributions: Covering healthcare, parental leave, retirement, and other benefits.
  3. VAT charges: Applicable based on turnover thresholds.

Income tax for freelancers

If you operate as a sole trader (entreprise individuelle or EI), you and your business are treated as one entity for tax purposes. This means you’ll pay income tax at the same rates as salaried workers, based on your total earnings.

Self-employed workers benefit from tax deductions based on their activity:

  • 34% deduction for private services
  • 50% for commercial and trading services
  • 71% for sales and related activities

After applying these deductions, the remaining taxable income is subject to the standard French income tax rates, which depend on your marital status, number of dependents, and total income.

Business property tax (CFE)

Freelancers are also liable for Business Property Tax (CFE) if their net income exceeds 5,000 €. The rates vary by municipality and income bracket:

  • 243 € to 579 €: Revenue up to 10,000 €
  • 243 € to 1,158 €: Revenue from 10,001 € to 32,600 €
  • 243 € to 2,433 €: Revenue from 32,601 € to 100,000 €

New businesses are exempt from CFE in their first year and only pay 50% in the second year by submitting the CFE declaration form.

Social security charges for freelancers

As a freelancer in France, you are responsible for your own social security contributions. These payments cover essential benefits such as healthcare, retirement, and family allowances. Unlike salaried workers, freelancers only pay social contributions if they earn income.

Contribution rates

Social security rates for freelancers vary based on the type of activity:

  • 12.8%: Sales and related activities
  • 22%: Trade, commercial, and professional services
  • 22.2%: Regulated private-practice professions

Reduced rates for new freelancers

Freelancers under 25 or registered job seekers may qualify for reduced rates for up to three years:

  • 75% reduction in the first year
  • 50% reduction in the second year
  • 25% reduction in the third year

It’s important to note that social contributions for freelancers do not cover workplace accidents or occupational illnesses. If your work involves physical risks, such as construction, consider obtaining voluntary insurance.

VAT charges for freelancers in France

Under the standard tax regime, businesses are required to charge VAT on goods and services. However, self-employed businesses with lower turnovers are exempt:

  • Under 34,400 € for service-based activities
  • Under 85,800 € for commercial activities

If your turnover exceeds these thresholds, you must charge VAT at a rate of 20%, though reduced rates of 10%, 5.5%, and 2.1% may apply to specific products and services.

Tax regimes for self-employed workers

Before completing your tax declaration as a self-employed individual in France, it's essential to understand the tax regime that applies to your business. There are three primary tax regimes. 

Micro-enterprise regime

The micro-enterprise regime is the default tax system for micro-entrepreneurs. To qualify, your business must stay within specific turnover limits:

  • Commercial (micro-BIC): Turnover limit of 188,700 € with a 71% tax credit.
  • Trade/service-based (micro-BIC): Turnover limit of 77,700 € with a 50% tax credit.
  • Professional (micro-BNC): Turnover limit of 77,000 € with a 34% tax credit.

Example: If you run a commercial business under the micro-enterprise regime and earn 50,000 € annually, you can offset 71% as a tax credit. You’ll then pay income tax on the remaining 29% (14,499 €).

If eligible, you can opt for the prélèvement libératoire (tax prepayment option). This option allows you to combine income tax and mandatory social contributions into a single payment, calculated at an effective rate.

Régime réel (real regime)

The régime réel applies to businesses that exceed the micro-enterprise turnover thresholds. This regime has two variations depending on your company's revenue:

  • Régime Réel Simplifié (Simplified Real Regime): For businesses with turnover between 77,700 € and 840,000 € for service activities and between 188,700 € and 876,000 € for commerce and accommodation.
  • Régime Réel Normal (Normal Real Regime): For businesses with turnover above 254,000 € for service activities and 840,000 € for commerce and accommodation.

This regime allows for more detailed accounting and permits deductions for business expenses, which can be beneficial for companies with significant operational costs.

Régime de la déclaration contrôlée (Controlled declaration regime)

The régime de la déclaration contrôlée is mandatory for non-commercial profits (BNC) exceeding 77,700 € (excluding VAT). Unlike the other regimes, this system calculates taxes based on your net profits rather than turnover.

Registering for freelance tax in France

To operate as a freelancer in France, you must register your business activities with the Centre de Formalités des Entreprises (CFE). The CFE has various departments depending on the type of business (e.g., commercial or liberal professions).

Once registered, you can:

  • Declare your business as a micro-enterprise (if eligible).
  • Register for VAT if required.

If you choose to change tax regimes later, you must indicate this on your tax return for the preceding year.

Filing freelance tax in France

Declaring your income as a self-employed individual in France involves completing the 2042-C-Pro form. The process has been streamlined through the online tax declaration system at impots.gouv.fr, where specific questions guide you to the correct sections. Here's a step-by-step guide to filing your freelance tax return:

Initial steps

  1. Access Your Account: Log in to your personal account on impots.gouv.fr.
  2. Begin the Declaration: Click on Accéder à la déclaration en ligne, then select Commencer.
  3. Update Personal Information: Review and update any changes to your family status and personal information during the preliminary steps.

Declaring your income and charges

Once you've completed the preliminary steps, you will reach Step 3: Revenus et charges, where you need to declare your income for the previous year. The fields you complete depend on your tax status:

  • Micro-entrepreneurs with tax prepayment (prélèvement libératoire): Check the box labeled Micro-entrepreneur (auto-entrepreneur) ayant opté pour le versement libératoire de l’impôt sur le revenu.
  • BNC (Non-commercial professional income): Select Revenus non commerciaux professionnels.
  • BIC (Commercial and industrial professional income): Select Revenus industriels et commerciaux professionnels.

Reporting for micro-entrepreneurs (Micro-fiscal regime)

If you are a micro-entrepreneur under the micro-fiscal regime, you must declare your annual gross turnover in the 2042-C-Pro form. Ensure that you accurately report this figure to determine your taxable base and comply with tax obligations.

To wrap it all up

Navigating the French tax system as a freelancer may seem daunting, but understanding the different tax regimes, social security contributions, and filing requirements can make it manageable. Whether you choose the standard system or the micro-enterprise regime, staying informed and compliant will help you thrive in France’s dynamic business environment. Don't forget to book your consultation call with us if you are confused about what visa you should apply for or register to one of our upcoming webinars