The French government looks likely to impose a two year limit on auto entrepreneurs after which they will have to change to a different business system or stop trading.
Sylvia Pinel, the minister for artisans, commerce and tourism, is also set to split the auto entrepreneur system into two parts; those who have other employment but also undertake an auto entrepreneur activity that brings in revenue, and those who are full time auto entrepreneurs.
Many current auto entrepreneurs are furious, saying that they reason they signed up to the system was to keep their tax and accounting simple, paying as they go rather than have to get involved in complicated paperwork.
Indeed when the system was introduced it was hailed as a huge step forward for small businesses in France, enabling people to operate as a one man band without the red tape and paperwork normally needed.
But critics, mostly artisans who quickly found themselves going up against auto entrepreneurs who tend to charge less per day, have claimed that the system is unfair.
Having listened to arguments from both sides, Pinel says that she will impose the time limit on those who are full time auto entrepreneurs but not on those who have an existing job. But those who have a job and are also auto entrepreneurs will be limited to an income of â‚¬15,000 a year.
But representatives of the auto entrepreneur system say that the proposed time limit will kill it off as people wonâ€™t want to switch so wonâ€™t register in the first place. They say this will also be a blow for the government as over â‚¬1 billion has been raised for the State since the scheme’s inception in 2009 with around a million businesses registered.
â€˜The aim of the changes is to clarify and improve the regime. The scheme allowed a business to be created simply but there are distortions that means those carrying out the same activity are subject to different rules and I want to address that,â€™ explained Pinel in a press release.
â€˜In additions the current system does not allow small businesses to grow. Half of auto entrepreneurs do not generate turnover. The previous government had not intended this. In this context we want to clarify the regime and divide it into two distinct parts; main activity and secondary activity,â€™ she explained.
â€˜Regarding secondary activities, the government has decided to maintain this regime without a time limit to enable people, particularly those on a low incomes such as the unemployed, pensioners and students, to have an extra income.
â€˜Concerning main activities, the government wants to evolve this regime to allow businesses to expand with specific support,â€™ she said, adding that she also wants to introduce checks on qualifications and insurance for auto entrepreneurs. A bill will be presented to the Council of Ministers by the end of July and can expect to become law in September.
This will mean that training and help will be given to auto entrepreneurs after two years to enable them to expand their business and take on employees. But auto entrepreneurs say it will fail those who do not want to expand. Many auto entrepreneurs are happy to earn a specific income and not develop their business further, said the FEDEA, which represents auto entrepreneurs. It has launched a petition to defend the auto entrepreneur system.
FEDEA president GrÃ©goire Leclercq has also written to the French President Francois Hollande asking him to intervene. â€˜If this time limit goes ahead the negative effects will be immediate and profound. It would be a step backward, especially in light of your expressed desire to stimulate enterprise in out country,â€™ the letter says.
â€˜Also the duration of a business should remain at the discretion of the auto entrepreneur depending on their situation, constraints and ambition, with a simple tax system,â€™ it adds.
The petition can be found here: http://www.defensepoussins.fr/