The micro-enterprise is a simplified regime for the individual enterprise legal status. Becoming an independent contractor this way is free and easy: simply fill out a form and attach a copy of your ID.
Not to mention:
- Your accounting and tax obligations are far less demanding than any of the other regimes or legal statuses. You just need to maintain a ledger that shows your incoming payments and expenses and declare your revenue on a monthly or quarterly basis.
- There is no corporate tax on micro-enterprises. You have to pay income tax and fill out your usual yearly individual tax return.
- The social charges rate is capped at 22% for commercial and artisanal services rendered or liberal professions that pay into the general social security regime and 22.2% for liberal professionals that pay into the liberal retirement fund (CIPAV).
On the other hand, the limits of the micro-enterprise are:
- The comingling of personal and professional assets. If ever your business hits a rough patch, you are personally responsible for any debt, which could affect your personal estate.
- Revenue for micro-enterprises is capped: if you go over €77,700/ year (for services or liberal activity) or €188,700/year (for commercial activity), two years in a row, you need to change regimes.
- Micro-enterprises are not allowed to make itemized deductions.- You are not subject to VAT, until you hit a certain ceiling: you don't have to pay VAT for the first €36,800 you earned (for services or liberal activity) and on the first €91,000 you make through commercial activity. If your annual income exceeds those limits, you'll need to pay VAT and to include VAT in your invoices.
It’s the perfect no-cost, low-stress regime for testing out a new solo business idea. But due to the limitations we mentioned above, it’s often used as a “stepping stone” regime for freelancers.