Can an entrepreneur's personal wealth be seized?
Verified 15 May 2022 - Directorate of Legal and Administrative Information (Prime Minister), Ministry of Justice
The individual entrepreneur automatically has 2 distinct assets: professional heritage and personal heritage.
The micro-entrepreneur is responsible for the company's professional debts over all its assets. while the individual contractor with limited liability (EIRL), is responsible for the company's professional debts on its professional assets. His personal heritage is therefore protected.
What applies to you ?
Micro-entrepreneur
Automatic non-seizure of the main residence
Where there are professional debts, the principal residence of the micro-entrepreneur cannot be seized.
The main residence is protected from prosecution creditors professionals (suppliers, distributors...).
The main residence is said to be elusive be held in full ownership in usufruct or nude.
This protection is automatic.
When a part of the main residence is used for the professional activity (office, storage, workshop, medical practice...), the part assigned to the dwelling is also elusive.
In this situation, in order to benefit from the protection, there is no prior declaration or description of division of the building to be made.
Example :
A professional who carries out his activity at home does not have to make a prior declaration or a descriptive state of division of the premises to benefit from the elusibility.
In case of sale of the main residence, the price obtained from the sale remains elusive if the money is reused to purchase a new principal residence. However, this purchase must be made in the year of sale.
FYI
in case of fraud or serious breaches of tax, social or accounting obligations, the principal residence may be seized by the tax authority.
Where the elusiveness of the principal residence ceases
The elusibility of the principal residence rights shall cease in the following cases:
- Renunciation of the contractor's rights to his principal residence. This waiver is made before a notary and is mentioned in the Commercial and business Register (RCS) or the Business Directory
- Death of the Contractor (elusibility remains until the liquidation of the estate)
- Divorce of the Contractor (the elusiveness remains if the Contractor is assigned the property, i.e. the property was assigned to him at the time of the divorce judgement)
The individual entrepreneur can protect his or her real estate, that is, land built or unbuilt as part of his personal heritage.
It can be a second home or a lot.
To do so, it must a declaration of elusibility a notary.
This declaration contains the following:
- Detailed description of property
- Specifying their character (clean, common good or undivided)
The declaration of ineligibility shall be published:
- Land Advertising Service
- In a professional register (Trade and business Register (CSR), Business Directory, etc.) or in legal ad support for people who are not required to register (such as farmers)
Land becomes elusive only for professional debts which have arisen after the publication of the declaration.
In case of fraud or serious breaches of tax, social or accounting obligations, the property may be seized by the tax administration.
Warning
the declaration of incapacity made when the micro-entrepreneur is already in termination has no value.
Where the declaration of the immovable property is no longer feasible
The declaration of ineligibility shall cease in the following cases:
- Waiver of the Contractor's return on all such real property or certain of its property. This waiver is made before a notary and is mentioned in the Commercial and business Register (RCS) or in the Business Register.
- Death of the Contractor (but the elusibility is valid until the liquidation of the estate)
- Divorce of the Contractor (but the elusibility is valid if the Contractor is assigned the property, i.e. the property was assigned to him at the time of divorce)
Individual Entrepreneur (ISD)
The personal heritage of theindividual contractor is automatically separated from professional heritage. It is therefore protected.
It includes assets (such as principal residence) and liabilities (such as borrowing to purchase a personal vehicle) that are not part of the professional heritage.
These are all elements that are not useful for the professional activity.
Where there are professional debts, personal assets (such as the principal residence) cannot be seized. There are exceptions to this principle.
Tax authorities and social security agencies can obtain payment of their professional debts by seizing your personal heritage in the following cases:
- Fraud
- Severe and repeated non-compliance with social or fiscal obligations (for example, voluntary loss of profit over several years).
Your entire heritage can also be seized for the following debts:
- CSG: titleContentand CRD: titleContent
- Property tax on buildings useful to the professional activity
The judge does not need to give his or her prior authorisation to have your personal property seized.
Limited Liability Individual Contractor (LPIA)
Automatic non-seizure of the main residence
Where there are professional debts, the principal residence of EIRL cannot be subject to foreclosure.
It shall be protected from creditors professionals (suppliers, distributors...).
The main residence is said to be elusive be held in full ownership in usufruct or nude.
This protection is automatic.
When a part of the main residence is used for the professional activity (office, storage, workshop, medical practice...), the part assigned to the dwelling is also elusive.
In this situation, in order to benefit from the protection, there is no prior declaration or description of division of the building to be made.
Example :
A professional who carries out his activity at home does not have to make a prior declaration or a descriptive state of division of the premises to benefit from the elusibility.
In case of sale of the main residence, the price obtained from the sale remains elusive if the money is reused to purchase a new principal residence. However, this purchase must be made in the year of sale.
FYI
in case of fraud or serious breaches of tax, social or accounting obligations, the principal residence may be seized by the tax authority. For example, the non-payment of VAT by the EIRL constitutes a serious breach of its tax obligation.
Where the elusiveness of the principal residence ceases
The elusibility of the principal residence rights shall cease in the following cases:
- Renunciation of the contractor's rights to his principal residence. This waiver is made before a notary and is mentioned in the Commercial and business Register (RCS) or in the Business Register.
- Death of the Contractor (elusibility remains until the liquidation of the estate)
- Divorce of the Contractor (the elusiveness remains if the Contractor is assigned the property, i.e. the property was assigned to him at the time of the divorce judgement)
EIRL can protect land built or unbuilt as part of his personal heritage.
It can be a second home or a lot.
To do so, it must a declaration of elusibility a notary.
This declaration contains the following:
- Detailed description of property
- Specifying their character (clean, common good or undivided)
The declaration of ineligibility shall be published:
- Land Advertising Service
- In a professional register (Trade and business Register (CSR), Business Directory, etc.) or in legal ad support for people who are not required to register (such as farmers)
Land becomes elusive only for professional debts which have arisen after the publication of the declaration.
In case of fraud or serious breaches of tax, social or accounting obligations, the property may be seized by the tax administration.
Warning
the declaration of incapacity made when the individual contractor is already in termination has no value.
Where the declaration of the immovable property is no longer feasible
The declaration of ineligibility shall cease in the following cases:
- Waiver of the EIRL's return on all such real property or certain of its property. This waiver is made before a notary and is mentioned in the Commercial and business Register (RCS) or the Business Directory
- Death of the EIRL (but the elusibility is valid until the liquidation of the estate)
- Divorce of the EIRL but the elusibility is valid if the EIRL is attributed to the property (i.e. the property was assigned to it at the time of the divorce judgement)
EIRL creates an assignment heritage which details the goods assigned the professional activity necessary or used for the professional activity.
Only assets in the assignment property can be seized in case of difficulty of the LPIA.
The contractor's personal assets are therefore protected.
The EIRL shall designate the assignment heritage at the company Formalities Centre (CFE) of the EIRL.
The separation of heritage concerns only creditors whose rights have appeared after the assignment declaration.
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