Taxes and contributions for the self-employed—what you need to know

On your way to becoming self-employed in France and wondering what taxes and contributions you’ll need to pay? Understanding your projected costs is a critical part of financial planning as an independent business owner. That’s why we’ve put together this practical guide to the various taxes, costs, and deductions you can expect when self-employed––as well as how to make your payments the easy way.

When running your own solo business, there are four types of costs you’ll need to take into account:

• Self-employment taxes
• Social security contributions
• Contribution for vocational training (CFP)
• Chamber of Commerce duties

Your self-employment taxes are calculated using a variable rate, which is determined by your business sector. The good news is that exemptions, credits and reductions are possible, especially if you’ve just started your business. To make things simple, we’ve broken the process down in detail below. 

Tax contributions for the self-employed are divided into two categories:

• Income tax
• Business Property Tax (CFE)

Your income tax is calculated based on your revenue minus a self-employment deduction, which varies depending on your sector. The CFE, formerly known as the ‘professional tax’, is a compulsory local tax for all businesses regardless of their status––provided they have a net income over €5,000. The minimum payment amount is €223, but this will vary depending on your income and the municipality in which your business is registered. Here’s a breakdown of what you can expect to pay based on your revenue:

• €223 to €531 for revenue of up to €10,000
• €223 to €1,061 for revenue of €10,001 to €32,600
• €223 to €2,229 for revenue of €32,601 to €100,000

Rates increase progressively with your income. To find out exactly how much you’ll need to pay in CFE and make your payment directly, simply log in to your online federal tax account.

Did you know? For the first year of running your own business, you’ll be exempt from paying the CFE tax. However, you’ll need to complete a CFE declaration to claim this exemption. In your second year, you’ll only pay 50% of the CFE tax, and after that, there are even more credits and exemptions that you may be able to access. Find out more about self-employed CFE here. 

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In addition to taxes, you’ll also need to pay social security contributions based on your revenue through the “Sécurité Sociale des Indépendants”––the office that collects social security for freelancers and the self-employed. For 2022, the social security contribution rate for the self-employed is as follows:

• 12.8% of revenue for sales and related activities
• 22% of revenue for trade, commercial, and professional services

These contributions cover healthcare and parental leave, disability and death, family allowances, basic and supplementary retirement, a daily allowance in the event of illness, as well as CSG and CRDS social security taxes.

Did you know? When you’re self-employed, you may be eligible for a 50% reduction in social security contributions for the first calendar year of your business activity. To qualify, you’ll need to meet the criteria for the “Aide aux Créateurs et Repreneurs d’Entreprise” (ACRE), which offers assistance to business founders. Check the eligibility criteria here to see if you qualify.

Lastly, you’ll need to factor in two other costs when setting up your own business:

• Contribution to Vocational Training (CFP): This contribution gives you the right to participate in professional training. The contribution adds up to 0.1% of your revenue for sales and related activities, 0.2% for private services and commercial services, and 0.3% for those in the trade sector.
• Chamber of Commerce duties: This tax helps finance the Chambers of Commerce. The amount depends on your revenue and the chamber corresponding to your business sector. Those providing a private service won’t need to pay this tax. Here’s a breakdown of self-employment Chamber of Commerce fees by sector: 

1. Activities including sales will need to pay 0.015% of their revenue to the CCI (Chamber of Commerce and Industry)
2. Those providing services will need to pay 0.044% of their revenue to the CCI
3. Those providing trade services will need to pay 0.48% of their revenue to the CMA (Chamber of Trades and Crafts)
4. Self-employed tradespeople engaging in a buy/sell activity will need to pay 0.22% of their revenue to the CMA

Tradespeople with double registration will need to pay 0.007% of their revenue to the CCI in addition to the tax due to the CMA.

Need to pay your social security contributions but not sure where to start? Here’s all the info you’ll need:

• To declare your turnover, you need to register on the Urssaf website. Once you’ve logged in, click "Déclarer et payer" (Declare and pay) in the "Mon auto-entreprise au quotidien" (My self-employed business) tab.
• You’ll need to declare your first quarter’s revenue after 90 days of business
• You can choose to pay by month or quarterly via direct debit, credit card, or SEPA bank transfer. 

If you’re wondering how to complete your tax return as a self-employed person, you’re in luck. There are two options for how to file:

1. You can opt to use withholding tax, which is the default method of the French tax office. In this case, you’ll have to declare your income for the previous year using this form. A standard deduction for professional expenses will apply, which varies depending on the type of activity:

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

2. Under certain conditions, you may also be able to file under "Versement Libératoire". This method makes it possible to levy income tax and self-employed social security contributions simultaneously through Urssaf. To do this, you’ll add a percentage determined according to your activity, ranging from 1% to 2.2%. 

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Did you know that every self-employed person in France needs to open a business account if their turnover exceeds €10,000 for two consecutive years? N26 Business Standard, our account for self-employed and freelance customers isn’t just convenient––it’s free. Here are just a few of our benefits

• :Open your account online in 8 minutes 
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• Make payments abroad for free
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We also offer premium accounts for the self-employed. With an N26 Business Smart, N26 Business You, and N26 Business Metal bank account, you’ll get access to: 

• Up to 10 Spaces sub-accounts to organize your finances
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