Over a year ago I signed on for the new status of auto-entrepreneur. Even though I was already self-employed, I wanted to benefit from the preferential tax treatment. As an American in France, I need to renew my carte de séjour every year. Since I have not changed the nature of my activity (English teacher), I thought there would be no problem. Was I wrong! My carte de séjour expired over six months ago and I have a meeting at the préfecture at the end of the month in the office handling the business carte de séjour, and the documents required are all for that kind of card. I cannot comply with their demands. Last time I was there, they kept saying that auto-entrepreneur is a business status and I will lose my residency if I do not comply. How is this situation possible?
I am not sure I can explain how the préfecture ended up making such an erroneous interpretation of the law. Nor can I figure out why your past status was not taken into consideration when it was time for renewal. But I can tell you there is a reason for tightening the requirements for issuing a professional (profession libérale) carte de séjour, which explains at least the initial reaction, if not the change of office and the kind of documents you are being asked to show.
Auto-entrepreneur has been such a popular status that a lot of people are taking advantage of it, some of them for the right reasons, but others as a sometimes desperate attempt to get out of a failing situation. I have mentioned in a previous issue that the majority of new businesses created this way have involved unemployed people who are running out of ideas as well as money and are desperate to get a new job. As long as these people do not hold a carte de séjour, I tend to look at their endeavor favorably, since I have an American way of looking at this. Taking initiative and moving forward when unemployed is always a good thing, and for sure a better thing to do than waiting, hoping for something to happen.
Once there is a carte de séjour issue, however, I become a lot more skeptical, because aside from the difficulties of running any type of business in France, the préfecture will insist that the new business become successful quickly to be a good enough reason to grant the right to stay and work in France. The préfecture, which is always very suspicious by nature, looks at the huge increase in the number of requests as a systematic attempt to defraud the system unless proven otherwise.
Now, how do you prove that you have created a legitimate business that is going to be successful? Using the legal definition of proof, that is just plain impossible: there is no way to guarantee that something like this will happen, no matter how certain it appears.
Here is the advice I give people signing up for this status. It is related to the creation of a business. I would like to go through it since some of these tips may be pertinent to you.
1 – Check to see if there is a better immigration status you can either keep or obtain. I am thinking of employee status and student status, in particular.
2 – Write down a pretty decent business plan for the next two years or so. The prefecture does not require it for profession libérale status but it sure helps you in managing your business and it shows a professional approach, which could impress the authorities.
3 – Focus even more on the cash flow issue. One of the best features of auto-entrepreneur status is that, just like in the USA, the taxes you pay are based on the actual performance of your business. Still, even having to pay a small increment for three months (if you choose to pay quarterly) can be a significant burden if it is not properly planned for. Even more important is that the monthly payment is defined by a schedule valid for ten months. Such a rigid setup might not be a good solution. The French system has been pushing for people to accept this regime of fixed monthly payments for just about everything, including taxes and social charges. This is only possible if your business plan is excellent and you have full control over your cash flow.
4 – Keep careful enough track of your income that you can see well in advance when you will go over the limit of €32,000 in sales for a given calendar year. This is essential, since the tax office backtracks to January 1 of that year to calculate your tax burden, TVA included, regardless of when during the year you exceed the limit. If your billing exceeds €20,000 in the first half, for instance, you might be better off switching to another fiscal status then, at least as far as your personal accounting is concerned, since it will be obvious by then that you will exceed the limit before the end of the year. If possible, you might want to change your fiscal status officially, as well, since that would resolve several potential problems linked to what would then be cheating on your taxes if you declare too late.
Now, my explanation of your situation, which is purely based on the impression I get from what you describe, is that the first civil servant to handle your request saw you as a cheater who was taking advantage of a preferential tax status that this person thought you did not deserve. Such a decision could also have been triggered if you committed some transgression in the past, in the eyes of the préfecture; even if you got away with it at the time, a record of it would stay in your file, and could cause the decision to apply the law in the strictest way possible. Since auto-entrepreneur covers all the three possible types of self-employment status and the other two (merchant and craftsman) are dealt with by another office, you were sent to this office with the assumption that there was a good chance that you belonged there. YES, this is 100% bad faith, but once you alienate a civil servant in France, you get punished, with very little recourse for the most part. How can a civil servant be blamed for applying the law? There is no obligation to use common sense or to apply the preferential treatment that North Americans often get.
My guess is that you will not lose the right to live and work in France. Very likely, you will be issued three-month temporary cards, called récépissés de demande de carte de séjour, until you decide to give up auto-entrepreneur status and ask for a change to the standard professional self-employed status, or until they are convinced that you are running a legitimate business and that you are a law-abiding professional, or until you give up entirely and, being totally disgusted, move back to the USA.
The lesson from this very unpleasant incident is that one should always know what is happening. It is especially important to find out if there is a hidden agenda with the préfecture.
YES, you can get your rights back if you file a court case – knowing that the first hearing will occur about two years later and the procedure itself can be pretty long, which means putting your life in France on hold for several years. The alternative is to bend in the direction the préfecture wants you to go. The reality is that it is not as bad as it first sounds. In this case, the préfecture is right to be suspicious of all the requests for immigration status based on auto-entrepreneur status. If you cannot convince the prefecture that your request is legitimate, then move on to the next step. Since that is probably all that is required for you to get back in good standing, I consider it not to be much of an imposition. Now, if you choose to wave your American passport and state that you have rights and that the American Constitution grants you freedom of choice as long as the law permits it, then you might not be suited for living in France – but that is a different topic