AFI France Sàrl, part of the AF International group, is our specialist provider of contract management solutions for contractors working in France.
France is a very technologically advanced country, with many job opportunities for highly qualified IT consultants. If you are considering a work contract in France, there are many benefits in doing so. France is known for its extensive welfare benefits that even the self-employed and personal service company (PSC) directors can enjoy. For example, by making a small contribution to an unemployed insurance one can, in case of need, receive unemployment benefits.
Auto-entrepreneur (AE) or Micro-enterprise (ME) is a form of self-employment introduced to simplify the tax burden and the regulatory demands on relatively lowly paid self-employed workers and start-up businesses.
Turnover should not exceed a threshold (plafond) to qualify for AE/ME, which depends on the activity to be eligible for AE/ME. The limit is €70,000 maximum per year for services such as IT professionals or professions libérales.
The most crucial advantage of auto-entrepreneur status is probably that the tax authority determines taxable profit by applying a standard tax deduction to annual turnover. This flat rate allowance varies according to the nature of the activity. For services such as professions libérales, this flat rate allowance is 34% of turnover.
It will be better taxwise to move to régime réel simplifié,(see below) where the social charges linked to the profit earned if the total of expenses exceed 34% of turnover.
An AE with only a modest turnover does not charge VAT, under a system called regime de la franchise TVA. They are required to make that declaration on all invoices, with the statement ‘TVA non-applicable, art. 293 B du CGI.’. For this specific purpose, the turnover limit for professions libérales is €33,200.
It is not possible to change tax-paying status away from auto-entrepreneur during a tax year. It is possible to make the change from the start of the tax year in January as long as the Impôt and URSSAF are informed by the end of the previous October that the taxpayer wishes to change over to normal tax-paying status. A contractor can change status and remain a sole trader (entreprise individuelle) with the same SIRET number.
Regime Reel Simplifie
If the projected turnover for the forthcoming year is above the Auto-entrepreneur thresholds, it is necessary to move to régime réel simplifié (RRS). RRS involves keeping the same SIRET number but with a different way of calculating social charges. Alternatively, one can open an incorporated business (i.e. EURL, SARL, SAS or SASU).
All business expenses and social security charges are deductible in striking the taxable profits.
Sociétés de Portage are a specific feature of the contract market in France. Portages Salarial have legal standing under L2015-380 of April 2nd 2015 which currently sets the framework for Portages Salarial.
These constructions allow an individual to freely provide his services to a business customer to achieve a specific task. The individual negotiates the terms of his engagement with the client. He then delegates all the administrative functions generated by his activity to the Portage’s management. He must warrant that he has sufficient qualifications, experience and independence to negotiate freely with the End User Client. This arrangement enables him to benefit from the protection of employment status that comes with working with a Portage. The Société de Portage receives fees by the customer, and it then, in turn, pays the employee a salary, having retained any social contributions and management fees. From January 1st 2019, employers in France withhold wage tax from their employees.
Portage is explained by this diagram:
The employee must have expertise and independence.
The employee will have to prove expertise, qualification and autonomy that allows him to search his customers and to agree with them the conditions of his performance, the nature of the service and the price
It is the responsibility of the employee and not the Portage to solicit the client.
The portage company is not required to provide work for the employee.
Restrictions on Use
The client company may only use an employee for the performance of an occasional task that is not part of its regular activity or for a one-off service requiring an expertise that it does not have.
The duration of the assignment cannot exceed 36 months.
The client company cannot hire the employee to:
- replace a suspended employee whose contract of employment is suspended as a result of a collective labour dispute;
- perform particular work that is considered dangerous;
- All personal service activities (childcare, assistance for the elderly or disabled)
Only an approved Portage Salarial can enter into portage contracts.
The client company is responsible for the working conditions under which the employees work.
Limited Company or Personal Service Company (PSC)
A contractor may use a limited company to contract in France provided that the contractor has the legal right to work and the contractor and the company both comply with the relevant law on immigration, tax, social security and VAT.
For reasons of Delit de Marchandage (see below) the limited company should contract directly with the client or recruitment business.
Glossary of Terms
Contracts in France – CDD and CDI
The permanent contract (CDI) represents the usual form of the employment contract between an employer and an employee. If there is no written document specifying the terms of the employment contract, it is by default a full-time permanent contract.
Like any other employment contract, the CDI must be written in French, even if a foreign employee may request a translated copy in another language. It must specify if the CDI is part-time. The CDI must contain the minimum provisions specified by the Labour Code:
- The identity and address of the parties
- Function and status of the worker
- Work-place location
- Hours of work (the employee can work on a flat rate or 35 hours per week)
- Remuneration (salary, bonuses)
- Paid holiday
- The duration of the trial period
- The periods of notice in the event of a breach of contract
- A non-competition clause (if agreed by both parties)
- Termination of the CDI
The CDI is open-ended. It is, therefore, the will of one or other of the parties that can put an end to it. The employee can resign via a letter of resignation. The employer may dismiss or retire the employee. The two parties can also agree on the context of the conventional break. The CDI can also be broken in case of force majeure.
The length of the trial period in a CDI can depend on many factors including the status of the employee. Each collective agreement is free to set its probationary period. The trial period may be renewed once. For a senior staff member of the Syntec collective agreement, the trial period is three months and is renewable once.
A CDD relates to a fixed-term contract between an employer and an employee for a pre-determined duration. A CDD can be renewed twice or converted to a CDI (see above). A CDD should include the following information as a minimum:
- Notice Period
- Contract duration
- Salary (and bonus if applicable)
- Work location
- Pattern of working hours
- Job Title
- Collective Agreements covering the conditions of employment
- Procedure for alterations to the contract
- It also may include:
- Description of the roles and responsibilities of the employee
- Employee benefits
- Grounds of termination
The Cipav or Interprofessional Provident and Old Age Insurance Fund for the liberal professions is a retirement and provident fund in France. It is an inter-professional section of the National Old Age Insurance Fund for the Liberal Professions (CNAVPL) which groups together trades that are not attached to another part and self-employed entrepreneurs.
Delit de Marchandage
The concept of “marchandage” is ancient and has a long-established legal history. It emerged in the nineteenth century when there were intermediaries to “resell” the work of workers. They were called “marchandeurs”. A decree of March 1848 abolished “the exploitation of workers by intermediaries”
There have been many legal evolutions of this concept, and in the present day, any profit-making operation whose sole purpose is the lending of labour is prohibited in France. All occupations that involve the provision of a service in return for a profit or subcontracting that relies on personnel intervention potentially fall under the offence of unlawful hire of labour. There must be a profit involved as the hiring of labour for no fee can never be categorised as illegal labour leasing, which is why it is essential in France to keep contract chains as short as possible. A chain of organisations earning a margin for the work done by an individual for an End User Client would automatically represent delit de marchandage and can be prosecuted by a labour inspector.
The relationship of subordination is one of the three essential elements of the contract of employment in France between the employee and his employer, the other two elements being the work and the remuneration. If the subordination link links the employee and the client, one of the elements of the employment contract is missing, and the employment contract is not valid.
Delit de marchandage could happen in intellectual services, consulting, communication, advertising, design office or computer services. It could also be manual services, such as maintenance, cleaning, guarding or security. There are three exceptions to these formal prohibitions: temporary employment work, time-sharing and Portage.
The penalties for engaging in illegal labour leasing are very severe. There is a maximum fine of €150,000 for the entity and possible dissolution of the company, a prohibition to carry on the activity concerned (Penal Code article 131-39), a prohibition to exercise the activity of subcontractor for a period from 2 to 10 years, posting or publication of the judicial decision (L8241-1 and L8243-1);.
A survey in 2013 confirmed a conviction rate of 90% for cases of delit de marchandage of which 70% were limited to fines. However, apparently, one case out of seven gives rise to a prison sentence.
Apart from the actual direct sanctions, the resulting damage to the corporate image should cause clients and their service providers to be cautious. Criminal co-responsibility between the client and its supplier in the commission of these offences is will break the trust between them if a breach occurs. The prosecution can be made via Article L8231-1 or Article L8241-1 of the Labour Code.
EU, EEA, and Swiss nationals who are moving to France to live, work, and study, will not need a French visa or permit. They will not need to show any other documentation besides a valid passport or national ID.
There are, however, some other processes that may apply after you move to France.
Family members of EU/EEA/Swiss citizens can also live in France, even if such family members are not from the EU themselves. They will, however, require the appropriate permit for more extended stays in France.