Micro-entrepreneurs living in the French overseas departments and regions (DROM) (Guadeloupe, French Guiana, Reunion, Martinique and more recently Mayotte) benefit from special tax advantages (lower social security contributions than in mainland France, longer exemption period, higher VAT exemption threshold, tax reductions). Here's a closer look at this tax system specific to French overseas departments and regions.
Social security contributions in the French overseas departments
Your social security contacts are :
- CGSS for craftsmen, shopkeepers and unregulated self-employed professionals.
- CGSS and CIPAV for self-employed professionals.
As in mainland France, this is a flat-rate social security contribution covering compulsory social security contributions: sickness/maternity, invalidity and death, family allowances, basic pension and compulsory supplementary pension. In addition to these contributions, there is a professional training contribution of :
- 0.10% for retailers and unregulated self-employed professionals.
- 0.30% for craftsmen.
- 0.20% for regulated liberal professions.
However, the rates are different from those applied in mainland France. Micro-entrepreneurs operating in the DROM (formerly DOM) benefit from a specific rate calculated on the basis of the full rates applied in mainland France.
Contributions for craftsmen, shopkeepers and unregulated self-employed professionals
- Period 1 - up to the end of the 7th calendar quarter: 1/6 of the full rate.
- Period 2 - up to the end of the 3rd calendar year: half the full rate.
- Period 3 - from the 4th calendar year: 2/3 of the full rate.
The various activities will be subject to the following rates:
- Sales activities (BIC): rates of 2.2% (period 1) - 6.4% (period 2) and 8.6% (period 3).
- Trade and craft services (BIC): 3.7% (period 1) - 11% (period 2) and 14.7% (period 3).
- Professional services (BNC): 3.7% (period 1) - 11% (period 2) and 14.7% (period 3).
- Rentals of classified furnished tourist accommodation: 1% (period 1) - 3% (period 2) and 4% (period 3).
CIPAV contributions for self-employed professionals
- Period 1 - up to the end of the 7th calendar quarter: 1/3 of the full rate.
- Period 2 - up to the end of the 3rd calendar year: half the full rate.
- Period 3 - from the 4th calendar year: 2/3 of the full rate.
They are subject to the following rates:
- Period 1: 7.40
- Period 2: 11.10
- Period 3: 14.80
Exemption from social security contributions
Micro-entrepreneurs starting their business in the DROM (formerly DOM) can benefit from an exemption under the following conditions:
- Total exemption, if annual business income is less than 110% of the PASS (annual social security ceiling).
- Exemption maintained for the amount corresponding to that applicable to income below 110%, if income is between 110% and 150% of the PASS.
- Graduated exemption, if income is between 150% and 250% of the PASS.
Good to know: the professional training contribution (CFP) remains payable even during the exemption period. It amounts to €119 for craftsmen and €103 for shopkeepers and self-employed professionals (regulated or not).
VAT
The threshold for VAT-free sales is 110,000 euros, which is higher than in mainland France. However, the micro-entrepreneur must not exceed sales of 100,000 euros for two consecutive years to continue to benefit from this exemption.
For the provision of services, the threshold is 60,000 euros, with a maximum turnover of 50,000 euros for two consecutive years.
Business property tax (CFE)
It is due from the 2nd year of business, but certain activities are exempt. In addition, an exemption applies if sales for the penultimate year are less than €5,000.
Income tax in the French overseas departments and territories (DROM)
Initially, tax is calculated in the same way as in mainland France. Then, the amount of tax is reduced as follows:
- Less 30% for taxpayers domiciled in Guadeloupe, Martinique and Réunion, up to a limit of €2,450.
- Less 40% for those in French Guiana and Mayotte, with a limit of €4,050.
These reductions apply to the tax due on income received during the entire year by taxpayers domiciled in a French overseas department at December 31 of the tax year.
If you have income both in mainland France and in the DROM (formerly DOM), you are taxed in full at the place of your main establishment on December 31 of the tax year.
If the place of taxation is in the French overseas departments and territories (DROM), the rules in force in the DROM are applied. If the place of taxation is in mainland France, all income is taxed according to mainland France rules.