What is the difference between EI (Entreprise Individuel) and Micro-Entreprise

When you start your business, it is often difficult to decide which status to choose. Here I suggest looking at the difference between Entreprise Individuel (EI) and Auto-Entrepreneur status.

Entreprise Individual (EI) – is an individual entrepreneur (individual). In this status, there is an option to apply the Micro-Entreprise (Auto-Entrepreneur) mode. This option entitles you to a simplified financial reporting and taxation system.

Micro-Entreprise Mode is the easiest way to do business in France. With this status, you can start your business and test your business idea without unnecessary expenses and bureaucratic hassle.

Who can apply the Micro-Entreprise option

EI status has no turnover limits, and Micro-Entreprise status can be used if your turnover does not exceed certain limits. The annual turnover ceiling for Auto-Entrepreneur in 2022 should not exceed:

• 72,600€ for consultations, commercial and craft services,
• 176,200€ for the sale of goods/sale of food/rent of housing.

Once your turnover exceeds the specified limits, your status automatically switches to Entreprise Individual status, or you need to create a company with legal entity status.

Activities

Additionally, Micro-Entreprise mode is not compatible with all activities; for example, you cannot use this option if you:

• Are engaged in agricultural activities and are associated with the MSA social security system.
• Profession Liberal, not part of the Cipav pension fund.
• Your activities are subject to real estate taxes.
• An artist associated with the association Maison des artistes or Agessa.
• Gérant majoritaire or are a member of the Collège de gérance.

Social contributions and taxes

The difference is that the Auto-entrepreneur pays social contributions (Charges Sociales) and taxes from turnover, and EI from profits (that is, minus expenses).

Depending on the type of activity, the Auto-entrepreneur's Charges Sociales are:

• Purchase and sale – 13% from turnover;
• service sector – 22.5% from turnover.

Income tax

When you complete your annual tax return, Auto-entrepreneur's turnover is automatically subject to tax relief, which reduces your taxable income. Its size depends on the field of activity:

• purchase and sale – 71%,
• BIC services - 50%,
• BNC services – 34%.

The minimum benefit amount is 305 € for each type of activity.

VAT

As for Value Added Tax (TVA), in both cases you benefit from a franchise if your turnover does not exceed the following thresholds:

• €34,400 for consultations, commercial and craft services - full exemption, €36,500 - excess threshold.
• €85,800 for the sale of goods/sale of food/rent of housing - full exemption. 94,300 € is the threshold for exceeding.

Let's look at how this works using an example for an entrepreneur who provides consulting:

• Its turnover is €30,000: it is exempt from VAT.
• His turnover is €35,000 how it works: he is exempt from VAT, but if he exceeds the basic threshold for the second year in a row, in which case he will have to issue a VAT invoice from 1 January.
• His turnover is 40,000€: from the month in which he exceeds the increased threshold (36,500€), he must issue a TVA. Next year it will also charge TVA on the first euro charged.

Live video

Last week on my profile on Instagram I conducted a joint live broadcast with a lawyer Olga de Weck

On the air we talked about the difference between EI (Entreprise Individuel) and Micro-Entreprise and answered questions from subscribers.

Help for individual entrepreneurs