How to Set up as an Independent Contractor in France
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Working as an independent contractor is the most commonly used setup when working remotely. However, there are required steps to ensure you are working with the right permits and operate compliantly. If your goal is to establish yourself as an independent contractor in France, you'll find all the necessary information here.
Bear in mind that this article is not legal advice. Information in this article was collected from various resources and French government websites.
What kind of company do you want to create?
To work as an independent contractor, you need to register your own company.
You may choose between "société pluripersonnelle" (SA, SAS, SARK, SNC, etc.) and "société unipersonnelle" (SASU, EURL, "auto-entrepreneur"). If your turnover exceeds €170,000 for sales of goods or €70,000 for sales of services, you can only create "société pluripersonnelle" or an EI (independent company).
If you want a "société unipersonnelle", you may choose between EURL (the partner isn't eligible for employment benefits but has fewer accounting requirements), SASU (the partner is considered as an employee) and "auto-entrepreneur".
How to become an “auto-entrepreneur” in France?
Obtaining an auto-entrepreneur status in France is fairly easy and takes just a few steps.
- First, you must complete an online form on autoentrepreneur.urssaf.fr. The only document you need for this step is a scan of your ID. Once you receive the declaration, it will be examined by the CFE (“Centre de formalités des entreprises”) according to the nature of your activity.
- You have the option to create an EIRL, which allows you to separate your business and personal assets.
- As soon as the CFE has agreed to grant you the auto-entrepreneur status, about ten days after making a request, you will be given an identification number (SIRET) and a code to qualify your activity (APE). The SIRET number will allow you to issue invoices and receive money.
- Don’t forget to open a designated bank account to separate your professional funds from your personal ones.
Why should you become an auto-entrepreneur in France?
Administrative tasks are reduced for auto-entrepreneurs compared to other independent contractor legal statuses. They don’t need to register as traders and the process of incorporation is streamlined.
Auto-entrepreneurs have fewer accounting requirements, a simplified taxation scheme, and they don’t have to pay taxes if their revenue does not exceed €170,000 for sales of goods or €70,000 for sales of services.
Independent contractors operate independently, without the work being controlled by their employers. They have a flexible schedule and they also have the possibility to choose where they work from.
What conditions do you have to meet to be an auto-entrepreneur?
In France, auto-entrepreneur is the most common legal status for independent contractors since its introduction in 2008. The main difference between independent contractors and employees is that they work without any subordination link. This status forbids you to work in a company, ensuring you are fully independent. To remain an auto-entrepreneur, your yearly turnover must stay below €170,000 for sales of goods or €70,000 for sales of services (net of tax).
What risks should you consider as a client who wants to work with an auto-entrepreneur?
Although there are many benefits of hiring an auto-entrepreneur, there are a few things you need to keep in mind:
Legal risks (tax evasion, misclassification)
First, companies face the risk of being charged with tax evasion when they transfer money abroad to pay their contractors.
Secondly, companies need to take extra care around the misclassification of contracts. If a court finds a link of subordination between a company and an independent contractor, they may suspect disguised employment and fine the company. Additionally, the company may be forced to hire independent contractors in question as full-time employees.
Nevertheless, these risks can be mitigated by having a contract that takes into consideration the labor laws of both countries involved. Deel contracts are reviewed by local experts who make sure involved parties meet all the requirements to reduce the risks of misclassification.
Downsides of being an auto-entrepreneur: health and welfare coverage
Auto-entrepreneurs aren’t allowed to hire employees. Furthermore, they must change their status if their revenue exceeds the legal thresholds (€170,000 for sales of goods or €70,000 for sales of services).
Independent contractors aren’t eligible for employment benefits. They are required to pay their own pension and health insurance. On top of that, they are not eligible for paid vacation. However, independent contractors can receive a bonus, as long as their contract has a clause that indicates that.