Can you become a micro-entrepreneur and still collect unemployment benefits?
Verified 03 September 2024 - Directorate for Legal and Administrative Information (Prime Minister)
As a jobseeker receiving unemployment benefit, you have the opportunity to become a micro-entrepreneur. You can choose to keep your allowances or receive assistance for taking over or creating a company (Arce).
As a job seeker, you can decide to set up your micro-company to resume a professional activity. You can do any of the following:
- Commercial activity, only if you are of age or emancipated minor
- Handicraft activity
- Activity regulated liberal if you meet the conditions specific to the activity you wish to carry out
- Activity unregulated liberal
You should check whether your previous employment contract provides for a non-compete clause.
This clause prevents you from engaging, after the termination of your employment contract, in an activity similar to your former activity as an employee. To be valid, this clause must be limited in time or space (place). It only applies to a specific activity. Finally, she must be paid.
So you can't build a company that could compete with your former employer. However, there is nothing to prevent you from being a micro-entrepreneur in another field.
France Travail offers two types of aid to jobseekers who wish to start or take over a company. If you meet the conditions for accessing these aids, you must choose the one you want to receive.
1. Return-to-work assistance (ARE) allowance
If you are registered at France Travail and you receive a Return to Work (RRE) benefit, you can choose to combine this benefit with your micro-company's income.
The rules regarding the cumulation of these amounts vary depending on your date of registration in France Travail:
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Register before creating your micro-company
When you are already registered in France Travail at the time of the creation of your micro-company, you can accumulate the amount of the Return to Employment Assistance (RWA) and your employment income. The amount cannot exceed the amount of your last salary (gross)).
Register after creating your micro-company
When you sign up for France Travail after creating your micro-company, you can accumulate in full your Return to Employment Assistance (RWA) and your employment income.
To learn more about the cumulation between the ARE and your professional income, you can consult the France Travail factsheet dedicated to the subject:
2. Recovery and company creation aid (Arce)
If you are registered at France Travail as a job seeker and then you decide to set up your micro-company, you have the opportunity to request help with recovery and company creation (Arce).
To do this, you must complete the following conditions :
- You must set up your micro-company after the end of your employment contract if you were an employee.
- You must receive Return to Employment Assistance (RWA) benefits.
- You must benefit from the aid for company creators and buyers (Acre) which fully or partially exempts you from social security charges for 1 year. To learn more about the Acre, you can consult our dedicated card.
Aid for recovery and company creation is financial aid equal to 45% or 60% the capital of your remaining right to return-to-work allowances. This percentage varies depending on when your last contract ended. The Arce is paid in 2 installments at 6-month intervals. To learn more about the Arce, you can consult our dedicated card.
You must declare your turnover as a micro-entrepreneur every month (automatically) or every 3 months (on request). Your turnover is taxed at the micro-tax system.
Depending on the assistance you receive in addition to your professional income, you are also subject to income tax (IR) on the amount received.
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You chose to collect the RCA
The amount of return-to-work assistance is subject to income tax. You must declare it on the line "Other taxable income" of the heading ‘Salaries and wages’ of your tax return.
You chose to collect the Arc
The amount you received under the CRA is subject to income tax. You must declare it on the line "Other taxable income" of the heading ‘Salaries and wages’ of your tax return.
You have to pay social security contributions on the turnover you make as a micro-entrepreneur. You are subject to the regime micro-social.
Depending on the assistance you receive in addition to your professional income, you are also subject to the payment of social contributions on the amount received.
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You chose to collect the RCA
The amount of return-to-work assistance shall be subject to the CSG: titleContent and to the CRDS: titleContent.
You chose to collect the Arc
The amount you received under the CRA is subject to the CSG: titleContent and to the CRDS: titleContent.
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Tax treatment of micro-companies
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