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Becoming a freelancer in France
Thread poster: Barbara Cashin

Barbara Cashin
Local time: 03:38
Member
German to English
Jan 30, 2003

Hello Everyone,



I am an Irish translator working from German to English. I plan to go and live in France at the end of this year. However, I been reading that becoming a freelancer in France can be very difficult. Is there anyone out there with recent experience of this - particularly non-French nationals. Is the \"entreprise individuelle\" the best solution for freelancers?



Taking a round figure of € 20,000, what tax and social security would be payable? I have also heard that foreigners wishing to start a business in France must attend classes on running a business - book-keeping. Is this true?



I look forward to contributions.



Kind Regards



Barbara Cashin



bcashin@indigo.ie



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xxxWayne Sutton
Local time: 04:38
French to English
Portage Salarial Jan 31, 2003

The best way to start off is to use a system known as \"portage salarial\". It takes all the hassles out of the administrative side and means you only pay social security etc on what you earn. There is a good site if you want all the info www.guideduportage.com



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Kaori Myatt  Identity Verified
France
Local time: 04:38
Member (2004)
English to Japanese
+ ...
I am curious too. Feb 3, 2003

Have you seen the URL below??

They were talking about tax in France, how high it is...

I am curently living in Japan. Tax is about 17% here. I am planning to move to France in a year or so...with all my family!

In France, tax is much higher but I think social benefit is better though.

I don\'t know if the class for running bussiness is necessary or not but many people have their base office resistered in Britain because of high tax in France. I am thinking about having resistered in Britain too.



Good luck for your moving.



http://www.proz.com/?sp=bb/viewtopic&topic_id=7139&forum_id=18



Kaori


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Brian KEEGAN
Local time: 04:38
French to English
+ ...
independent in France Feb 10, 2003

Hi Barbara,



I find that people tend to over-exaggerate the administrative hassle of being a freelance translator in France, and to under-estimate the burden of taxes.



To become a freelancer here is relatively simple. All you need to do is go to your local URSSAF office with your i.d., an electricity bill or other proof of residence, plus two recent invoices you have already issued to two different clients to prove that you are actually up and running (you could bring invoices you most recently issued from Ireland, for example; if you tell them you have only one client, they\'ll tell you that your client will have to employ you as a salaried worker...). URSSAF (the national agency responsible for collecting social security contributions from employers and freelancers) will issue you with an URSSAF number (which you must quote on all invoices), and they will inform the rest of the relevant tax agencies, which will gradually get in contact with you over the coming months asking you to fill out various declarations and to send them money (more about that later).



After that, the administrative side of being a freelancer consists of:

(i) maintaining an \"income and expenditure journal\", which is very simple once you have been shown how once;

(ii) filing quarterly VAT returns (also very simple once you have been shown how once);

(iii) filing your annual tax returns.



I would recommend that if you do decide to set up in France, one of the first things you should do is become a member (client) of an \"Association de Gestion Agreee\". An \"AGA\" is an organization that will audit your I&E Journal at the year-end and file your annual tax returns for you. The service costs around 240 euro per year plus around 500 euro to consolidate your accounting records, it is deductible from your revenue as a business expense (i.e. instead of being taxed on 20000 euro you are taxed on 19260 euro, less your other deductible expenses of course), and the fact of having your tax returns filed by an AGA gives you the right to a 20% rebate on your personal income tax (not twenty percentage points, but 20% of the total). AGAs tend to be very helpful with any administrative questions you may have (at least my one, AGAPAGE, is), and if you ever have a problem with the tax authorities they will represent you (a tax dispute is unlikely if your returns are filed by an AGA). To avail of the rebate, you must join an AGA within 3 months of setting up as a freelancer.



As for other administrative issues, it is very important to open a separate bank account for business purposes. I recommend La Poste (French post office), because they charge the lowest rates and they\'re not constantly bombarding you with marketing rubbish like the other banks. Once you have done that, you\'ll need to keep all bank statements and all receipts for business expenses. If you rent an apartment and work from home, up to half of your rent can be treated as a deductible business expense. Your mobile phone can be treated as a deducible business expense. Up to 70% of your land line phone bill can be treated as a deductible business expense. Any stationery, computer software, dictionaries you buy are deductible. Half of your electricity bill is deductible. The cost of trips to visit clients in Germany or wherever is deductible..... The most important thing is to keep all invoices and receipts, to pay for everything business related from your business bank account, and to present all of the documentation (invoices, bills, etc.) at the year end to your AGA.



Now to money and taxes...



Imagine that you bill your clients 20000 in the course of a year (excl. VAT). Imagine that the cost of running your translation business (rent, electricity, stationery, stamps, trips to clients, your own personal complementary health insurance, administrative costs such as AGA membership, banking fees, telephone, internet...) comes to 5000. That leaves you with a pre-tax and pre-social security contributions result (gross profit before tax) of 15000. Well, basically, the French state is going to ask you for roughly 7500 euro, or 50%, which you\'ll be paying throughout the year to URSSAF, the Tresor Public, CIPAV (compulsory state pension fund), and Assurances Maladie (compulsory medical insurance). These bodies send you tax demands around every three months based on the declarations you or (preferably) your AGA filed.



In the first year, you pay at a starting rate which assumes you are earning next to nothing (you pay around 3000 euro if I remember rightly). In year 2 you pay the difference on what you should have been paying in year 1, plus contributions calculated for year 2 on the basis of your year 1 actual revenue. It may sound a bit complicated, but really it\'s not. You pay taxes and social security contributions for the current year based on the assumption that your earnings haven\'t changed since the previous year, and in the following year they make the adjustment. They send you a demand, and you send them a cheque. The most important thing to remember is to leave at least 50% of what you earn in the bank so you can pay your taxes.



As for being obliged to do a course in business administration, haven\'t heard of that...



Regarding the \"portage salariale\" thing, I wouldn\'t recommend it, for several reasons. With portage salariale, you become a \"part time intermittant\" employee of a company, whose role is to process your invoices and turn the proceeds into a salary. Under the contract you sign with the company, you are only employed by them when you are working on a translation project that they will bill on your behalf. Sounds weird? Apparently the French tax authorities think so too... A portage salariale company will tell you that if you suddenly have no work, you\'ll be able to collect unemployment benefit. Not true! To collect unemployment benefit, you have to be unemployed, but a portage salarial company will never fire you, and you won\'t be entitled to unemployment if you resign. On top of that, they charge up to 10% commission for every invoice they issue, and you end up being over-taxed with personal income tax. In my view, the administrative relief a PS company provides is not sufficient to justify the cost.



Hope that helps!



Best of luck,

Brian



PS. I\'m moving to Spain - taxes are lower there











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Buzzy
Local time: 04:38
French to English
French taxes... Feb 11, 2003

may not work out in the end to be as dreadful as you think. (Note: I am not claiming they are low!)

Brian has admirably summed up how being a freelancer works in France. I heartily agree that it is not as frightening as you may imagine. I don\'t know how things work in Ireland but it\'s true that we Brits, who could get started in the UK with hardly any paperwork and certainly not have to begin paying \"charges sociales\" straight away, tend to view it with great suspicion.



I want to make two points about French social security and taxes:



1) The income tax sytem is definitely skewed in favour of families - so Kaori, if you have any children they could be a good tax asset! Childcare costs are partly deductible and good schooling is free.

There are loads of benefits, again many especially for families. Why do you think so many Brits are buying up all the houses here? It\'s not just the house prices! (but thank goodness unlike some of them, you are asking the questions FIRST).



2) I often think that compared to the UK, the healthcare you get (so far) in the French public system is the equivalent of a private healthcare plan in England, and no one seems to take that into account when they \"compare\" costs. How much more would you have to pay in England/Ireland to get comparable treatment?



Yes, I like living here, and although it took time to persuade me to go \"indépendant\" I don\'t know now why I was so reluctant. If you\'re going to do it, take Brian\'s advice and don\'t go for \"portage salarial\", the formalities aren\'t that tricky and you might as well save a little money for yourself and do it yourself. You just have to remember from one year to another to keep enough money by to pay next year\'s charges - easy when your earnings are going up, not so easy on a downturn.

Bienvenue au club et bonne chance !


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Nikki Scott-Despaigne  Identity Verified
Local time: 04:38
French to English
Setting up in France - advantages and pitfalls Feb 12, 2003

Brian said



”To become a freelancer here is relatively simple. All you need to do is go to your local URSSAF office with your i.d., an electricity bill or other proof of residence, plus two recent invoices you have already issued to two different clients to prove that you are actually up and running (you could bring invoices you most recently issued from Ireland, for example; if you tell them you have only one client, they\'ll tell you that your client will have to employ you as a salaried worker...). URSSAF (the national agency responsible for collecting social security contributions from employers and freelancers) will issue you with an URSSAF number (which you must quote on all invoices), and they will inform the rest of the relevant tax agencies, which will gradually get in contact with you over the coming months asking you to fill out various declarations and to send them money (more about that later).”



You have to register with the URSSAF, literally, the Union for the Recovery of social security and family allowance payment, a very simple process. Once you have your URSSAF number, you can get going. YOU MUST NOT INVOICE A SINGLE CLIENT WITHOUT HAVING FIRST REGISTERED. Sorry Brian! The URSSAF informs other social funds that you have set up and you will receive invoices for minimum contributions from health and retirement funds. You will also be given the list of organisations you can chose from. Annual minimum health contributions for a sole practitioner/liberal profession are in the region of £1,750 and around £2,000 for retirement. (You will find it worthwhile to take out complimentary cover, but this may mean doubling these amounts for effective cover.) In the first 2 years, the URSSAF contributions are not too heavy but thereafter, they will be based on your profit and you will see the difference !



No obligation to register for VAT when your annual sales are below roughly £17,500. Above that amount, you have to register for VAT, although if it happens at the end of a year and you only just go over – up to about £20,000, they will not hassle you to collect the amount of VAT you ought to have billed. Once you are liable to charge VAT and/or if you decide to register for VAT at the outset, as a member of the liberal profession, you pay only the VAT on the amounts actually received, unlike limited companies who pay the VAT on the amount they have billed, whether or not their client has paid them. When sending back and paying over the VAT due, you take the amount of VAT you have received from clients you have billed and then you deduct VAT on any relevant purchases you have made. (If you are not VAT registered, you pay the VAT on purchases and cannot deduct that amount. But don’t worry, you deduct your expenses all inclusive of VAT when filing your annual (income) return.



Any profit (if liberal profession) is taken into account on the household tax return, which for most folks mean paying 10% income tax. Any loss can be deducted too. In the first couple of years, this might be useful as although you can operate a business without going into the red, you may find that once you have entered all the right figures into the right columns, you can technically declare a loss. Very important : if you start up as a “micro-entreprise” which has certain advantages, do note that you cannot deduct any losses.



As for VAT, as and when you register, you can choose to pay over the actual amount received, either monthly or quarterly. You can also choose to pay the same amount every month and then pay out (or receive) any difference on the last quarter.







Brian said :



“I would recommend that if you do decide to set up in France, one of the first things you should do is become a member (client) of an \"Association de Gestion Agreee\".”



I agree. However, joining one does not entitle you to a tax rebate, but to the same abatement provisions as an employed person. I have the choice of two AGA’s for my structure (professiona libérale) in my region, southern Brittany. One charges twice the amount of the other, completes and files the annual return. The other one does apparently a lot less. I took a long time to realise that it was also useful to have an accountant.



Brian said :



“You must join an AGA within 3 months of setting up as a freelancer”.



Yes, if you wish to benefit from the 20% abatement in the year you set up. Otherwise, you have to be enrolled with the AGA on 1st January in the year in which you seek entitlement to the abatement.





Brian said :



“It is very important to open a separate bank account for business purposes.”



I would add that it is important to have your business account in a different establishment from where you keep your personal account.



As for expenses which can be deducted when working at home, I have been advised by my accountant and my AGA that you can deduct anything as long as you can justify it. I am very conservative in my expenses. Soem folks try - and succeed - in putting all sorts of things through their business. Apart from our social contributions, electricity, etc and the odd computer giving up the ghost when you can least afford it, then acutal spending in our profession is not incedibly high, as a rule. It does depend how much you travel too of course. I\'m begining to do more of that. When working from home, what is generally done is to decide what surface area of your accommodation is given over to your professional activity and then you deduct ( in my case 14%) pro rata of your electricity, heating and other relevant expenses. I’m moving into an office outside shortly so the pro rata thing will be a thing of the past for me!



On Brian’s last two paragraphs :



Sooner or later, after the first couple of years where your social contributions are more or less on a fixed basis, you will start paying contributions taxes which are directly related to your turnover/profit.



Very roughly, 55-60% of what you bill out goes to the state in the form of contributions, and 10% in the form of income tax. Basic VAT here is at 19.6% so if you are/become VAT registered, the figures you have to bear in mind must be exclusive of tax. That 19.6% has to be paid over to the taxman sooner or later – and it always feels like sooner!



Brian said :



“As for being obliged to do a course in business administration, haven\'t heard of that... “



There is no obligation to do any such course. It is of course useful to do a (good) course.



Brian said :



“Regarding the \"portage salariale\" thing, I wouldn\'t recommend it, for several reasons.”



I would avoid this like the plague. Brian’s explanation is very lucid. The tax authorities are not sure on this one, as the whole thing started out in a part of France where certain rules and regulations differ. It’s a loophole thing and I’d be worried about getting stuck in it!









[ This Message was edited byn2003-02-12 09:38]

[ This Message was edited by:on2003-02-12 09:42]


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Brian KEEGAN
Local time: 04:38
French to English
+ ...
regarding URSSAF Feb 13, 2003

I had a slight problem when I first tried to register with URSSAF a few years ago: because I had only one client, they refused to register me, telling me I would have to become a salaried employee of my client. \"Rather difficult\", I explained, \"given that my client is located in Moscow and I live in Paris\". \"We don\'t care\", was their response. A short time later when I tried to register for the second time, they asked me if I worked for agencies. When I replied that I did, the registrar looked at me suspiciously and asked if my clients were agencies only. When I said I had direct clients also, her face relaxed and she said she could register me after all. When I asked what the problem was, she said that if I had been working for agencies only, I would have had to become a salaried employee of one of the agencies... !!! I didn\'t know it at the time, but apparently the best solution in these cases of nutty French bureaucracy is to ask the official to put what he/she just said in writing. Apparently that makes them think more clearly...

Second point: maybe the rules have changed since, but at the time they demanded to see at least two invoices already issued before they would register you (if a client asks - as they invariably do - \"do you have an URSSAF number?\", you tell them it\'s \"en cours\" and quote \"URSSAF en cours\" on your invoices. That\'s what I did at any rate).


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xxxNicolette Ri
Local time: 04:38
French to Dutch
+ ...
Petit rajout Feb 13, 2003

Pardon d\'écrire en français mais mon anglais n\'est pas très bon. Nikki a bien expliqué ce qu\'il faut faire. Je ferais très attention aux sociétés de portage salarial, surtout si tu as des clients, car petit à petit le fichier clients devient propriété de la aociété, et en échange le patron peut très bien décider de ne plus donner du travail du tout, et faire signer un contrat de travail avec des clauses de confidentialité et de non-concurrence, ce qui rend très difficile un retour en arrière.

Comme pour Brian, l\'URSSAF m\'a demandé aussi des factures (trois, à l\'époque, de trois clients différents). On peut tricher en mettant \"URSSAF en cours\" sur les premières. Mais il faut alors régler la situation dans les trois mois qui suivent.

Ce qui est difficile quand on est à son compte, ce n\'est pas le début (car tout le monde t\'aidera pour ça) mais de le rester, avec tous les petits et grands soucis au quotidien.

Bon courage !

Nicolette


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Brian KEEGAN
Local time: 04:38
French to English
+ ...
This is a little off-topic perhaps... Feb 14, 2003

but during Raffarin\'s recent TF1 interview concerning pension reform, one of the questions the interviewer asked touched on the inequalities between various sectors in France, specifically the professions liberales and salaried employees in the private and public sectors (retirement age of 50 for train drivers, blah blah blah, compared with 65 for us; ultra-high social contributions, etc.). Instead of really answering the question (which was basically asking if he was going to do something about it), he said something along the lines of \"Mais vous savez, tout ca, la securite sociale, ca remonte a la liberation. Ce sont les anciens resistants qui ont fait notre systeme de securite sociale\". Would I be wrong, or are we being penalized for the disloyalty of a section of the French professional classes during the last war? Or is that completely ridiculous? (Is anything completely ridiculous in this country???)



Also, given that the law on the \"35 heures\" does nothing for independent translators or indeed independent anyone in France, is there some kind of pressure group in existence that lobbies on behalf of the professions liberales for a better deal on the tax front to compensate? After all, if things continue as they are now, they might as well get it over with and shackle us all up in the Conciergerie and have us churning out the volume night and day while the rest of the population sun themselves on Paris Plage...


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Barbara Cashin
Local time: 03:38
Member
German to English
TOPIC STARTER
All this information is great Feb 15, 2003

Once again, thanks to everyone for their input. I\'m beginning to get a picture of the situation in France and I\'m still quite keen to go. The general plan is a recky around April, sell up here, rent a house in France for a few months to familiarise ourselves with an area and to look around for somewhere to buy.



The secondary plan is for my husband to set up a kennels, starting small. Does anyone have any suggestions as to who might provide information on this? - I know this is REALLY off the subject



I hope I might meet some of you at some time and thanks once again.





Quote:


On 2003-02-14 11:50, BKeegan wrote:

but during Raffarin\'s recent TF1 interview concerning pension reform, one of the questions the interviewer asked touched on the inequalities between various sectors in France, specifically the professions liberales and salaried employees in the private and public sectors (retirement age of 50 for train drivers, blah blah blah, compared with 65 for us; ultra-high social contributions, etc.). Instead of really answering the question (which was basically asking if he was going to do something about it), he said something along the lines of \"Mais vous savez, tout ca, la securite sociale, ca remonte a la liberation. Ce sont les anciens resistants qui ont fait notre systeme de securite sociale\". Would I be wrong, or are we being penalized for the disloyalty of a section of the French professional classes during the last war? Or is that completely ridiculous? (Is anything completely ridiculous in this country???)



Also, given that the law on the \"35 heures\" does nothing for independent translators or indeed independent anyone in France, is there some kind of pressure group in existence that lobbies on behalf of the professions liberales for a better deal on the tax front to compensate? After all, if things continue as they are now, they might as well get it over with and shackle us all up in the Conciergerie and have us churning out the volume night and day while the rest of the population sun themselves on Paris Plage...



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Lesley Clayton
France
Local time: 04:38
French to English
+ ...
This link may help Feb 16, 2003

Barbara,



To answer your \'off-topic\' questions about moving to France, visit www.livingfrance.com. Click on \'members\' on the front page and you will arrive at the forum, where you can ask any question you like and get answers from people who\'ve \'been there, done that\'.



Good luck,

Lesley


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