Important news for individual entrepreneurs in France with EI/EIRL/Micro-entrepreneur status – live broadcast

On May 15, 2022, a bill on a single status for all entrepreneurs came into force.

An independent entrepreneur is an individual who performs one or more professional activities on his own behalf.

How to determine whether EI (Individual Entrepreneur) status applies to your activity?

So this category includes:

• Craftsmen,
• Traders,
• Liberal professions (Professions Libérales), such as nurses, lawyers, doctors, real estate agents, taxi drivers, etc.

Before the new law came into force, there were 2 types of individual entrepreneurship, these are EI and EIRL. We could obtain Micro-entrepreneur status if we earned up to 176,000 € per year if you are a businessman and up to 76,000 € per year if you are a Profession Libérales.

What changes for registered entrepreneurs from May 15, 2022

Now all documents related to the professional activities of an individual entrepreneur must indicate EI status.

Entrepreneur's property

Before the new law came into force, the entrepreneur was liable with all his property for professional debts. To protect family assets, limited liability EIRL status was introduced. Thus, the division of property into personal and professional took place through special administrative procedures.

After the entry into force of the new law, all personal property of new individual entrepreneurs by default becomes untouchable for professional creditors.

For previously registered entrepreneurs, this division will be in effect from the date of entry into force of the law, that is, from May 15, 2022.

How to define personal and professional assets?

Personal earnings do not belong to professional property if they do not relate to professional activities

Division does not occur if an individual takes out a loan for professional activities secured by personal property.

Tax debts for professional activities can be collected from the personal accounts of the entrepreneur.

In order to simplify the procedure for dividing property into personal and professional, it is necessary to open a bank account for professional activities, if the average income exceeds 10,000 euros over the last two years.

Conditions for receiving benefits in the amount of 800 €/month are being simplified

Conditions for receiving benefits until May 15, 2022:

• The activity continues without stopping for at least 2 years. Suspension of activities occurs due to legal liquidation or by a court decision “redressent judiciaire”
• The minimum average income for the last two years must be 10,000 € per year.
• Own income (Capitaux propres) must be less than RSA (revenu social).

Conditions after May 15, 2022:

• Stopping the company’s activities due to “non-viable” in the opinion of CFU.
• Income for one of the best years should be at least 10,000 €.
• Let's look at this with an example:

N-2: M Kompot earned 5000€ per year,

N-1: Monsieur earned 11,000€ per year

It turns out that N-1 is the best year for which Monsieur Compote earned at least 10,000 € per year. As a result, he is entitled to a benefit of 800 €/month.

Before the change in the law, his average earnings over the last two years would have been 8,000 € (5,000 + 11,000 / 2 = 8,000), which ultimately would not have allowed him to qualify for benefits.

Simplified transition to legal entity status

In addition, from May 15, 2022, entrepreneurs have the opportunity to make a smooth transition from the status of an individual to a legal entity. In this case, payment of income tax becomes a tax on corporate activities.

Why may you need to switch from the status of an individual to a legal entity? In cases:

• company donations,
• business sales,
• contributing it in the form of an equity share to enter another company.

After May 15, 2022, an entrepreneur no longer needs to completely close previous activities in order to create a new one, as was the case before.

Procedure for repaying debt on social contributions for SARL managers

Thanks to the entry into force of the new law, now if SARL managers have debts on social payments, you can combine them with individual debts, which will increase the amount of your personal debt.

After this, by court decision, this amount may be reduced to a repayable debt, or completely written off. But it must be remembered that these situations are individual and the decision remains with the judge.

 Help for individual entrepreneurs

Video recording of a live broadcast with a lawyer on this topic:

Source: https://entreprendre.service-public.fr/actualites/A15664