Micro-entreprise (auto-entrepreneur): definition and how it works

The micro-entreprise regime is only available if the annual collected turnover remains below thresholds set by activity category:

For mixed activities (sales + services), total turnover must not exceed €188,700, with a maximum of €77,700 for the services portion.

Exceeding thresholds: the micro regime remains in place for the first year of exceeding and the following year. Only after the second consecutive year of exceeding does the business switch to the standard sole trader regime (or to a company).

These thresholds are periodically reassessed (every 3 years), so always check the current year’s applicable values.

A micro-entreprise generally benefits from the VAT exemption scheme: it does not charge VAT to customers and cannot reclaim VAT on purchases. Invoices must include the note 'VAT not applicable, Art. 293 B of the French Tax Code (CGI)'.

The exemption applies as long as turnover remains below the VAT exemption thresholds, which are separate from the micro regime thresholds:

• Goods sales: exemption threshold around €85,000 (with a higher tolerance threshold above this).
• Service provision: exemption threshold around €37,500 (with a higher threshold).

Above the VAT threshold, the micro-entrepreneur becomes liable for VAT (must charge, declare and deduct it) — while still remaining in the micro regime as long as turnover does not reach the regime’s thresholds.

VAT thresholds have been subject to recent debate and adjustments; it is advisable to verify the exact applicable amounts for the current year with the tax authorities before invoicing.

Social contributions: calculated as a percentage of turnover collected (nothing collected = nothing to pay). Indicative rates for 2026:

In addition, there is a professional training contribution and, unless exempt, the CFE.

Income tax: profits are taxed under IR after a flat-rate allowance (71 % for sales, 50 % for BIC services, 34 % for BNC). The liberating payment option (IR payment as a % of turnover) is available under certain fiscal income conditions.

Advantages:

• Ultra-simplified creation and management, streamlined accounting (revenue ledger).
• Contributions proportional to turnover: no turnover, no contributions.
• Ideal for testing an activity or working alongside another job.

Limitations:

• Turnover ceilings that can block growth.
• No deduction of actual expenses (purchases, equipment, rent): penalising if costs are high.
• Personal assets exposed (the individual entrepreneur status now protects the primary residence, but coverage remains limited).
• Weaker social protection than for employees.

When turnover approaches the ceilings or expenses become substantial, switching to an EURL or SASU becomes relevant. Orizen Support helps choose the right time and structure, then organises invoicing and monitoring once the transition is complete.