Can an entrepreneur's personal wealth be seized?
Verified 01 January 2023 - Directorate of Legal and Administrative Information (Prime Minister), Ministry of Justice
The Individual Contractor (IO) automatically has 2 distinct heritages : a professional and personal heritage. This status shall also apply micro-entrepreneur. On the other hand, the individual contractor with limited liability (EIRL) is responsible for the company's professional debts solely on his professional assets. His personal heritage is therefore protected.
What applies to you ?
Micro-entrepreneur
Automatic non-sealability 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...).
It is said that the main residence is elusive that she be held in full ownership, in usufruct or naked-property.
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 the 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 in order to benefit from the elusibility.
In case of sale of the main residence, the price obtained from the sale shall remain elusive if the money is re-used to purchase a new principal residence. However, this purchase must be made within the year of the sale.
FYI
in the event 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 National company Register (RNE)
- Death of the Contractor (elusibility remains until the liquidation of the estate)
- Divorce of the Contractor (the elusibility 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 to 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 (RCS: titleContent, RNE: titleContent, 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 the event 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 of payments has no value.
Where the declaration of the immovable property's non-marketability ceases
The declaration of ineligibility shall cease in the following cases:
- Waiver of the Contractor's return on all such real property or on certain of its property. This waiver is made before the notary and is mentioned in the RCS: titleContentor RNE: titleContent
- 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 the hotelindividual contractor is automatically separated from the professional heritage. It is therefore protected.
It includes assets (such as the 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 asmain residence) cannot be entered. 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:
- Fraudulent schemes
- 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.
Your personal property may be seized if, at the request of a creditor, you have waived the separation of assets by completing and signing a waiver.
Limited Liability Individual Contractor (LPIA)
Automatic non-sealability of the main residence
Where there are professional debts, the principal residence of a EIRL cannot be subject to foreclosure.
It shall be protected from creditors professionals (suppliers, distributors...).
It is said that the main residence is elusive that she be held in full ownership, in usufruct or naked-property.
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 the 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 in order to benefit from the elusibility.
In case of sale of the main residence, the price obtained from the sale shall remain elusive if the money is re-used to purchase a new principal residence. However, this purchase must be made within the year of the sale.
FYI
In the event 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 the notary and is mentioned in the RCS: titleContent or RNE: titleContent.
- Death of the Contractor (elusibility remains until the liquidation of the estate)
- Divorce of the Contractor (the elusibility remains if the Contractor is assigned the property, i.e. the property was assigned to him at the time of the divorce judgement)
The 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 to 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 (RCS: titleContent, RNE: titleContent, 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 the event 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 of payments has no value.
Where the declaration of the immovable property's non-marketability ceases
The declaration of ineligibility shall cease in the following cases:
- Waiver of the EIRL's return on all such real property or on certain of its property. This waiver is made before the notary and is mentioned in the RCS: titleContent or RNE: titleContent
- 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)
Warning
From 1to January 2023, it is no longer possible to make your paperwork in a company Formalities Centre (CFE). You have to make them on the website of company formalities window.
At the time of the creation of the EIRL an assignment heritage has been constituted. This one details the property assigned to the professional activity necessary or used for the professional activity.
When the assignment heritage already built is modified either by assigning property or by withdrawing assets from the affected assets, the contractor must make this change at the single window of the formalities.
Only assets in the assignment property can be seized in case of difficulty of the LPIA.
The entrepreneur's personal heritage is therefore protected.
The separation of heritage concerns only the creditors whose rights have arisen after the assignment declaration.
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FAQ
- Lie to questions: handling individual contractor's difficultiesMinistry of Economy
- The new status of individual entrepreneurMinistry of Economy
- Frequently Asked Questions on the Status of the Individual EntrepreneurMinistry of Economy