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Taxation of micro-entrepreneurs (micro-tax and social system)

Verified 10 août 2021 - Directorate of Legal and Administrative Information (Prime Minister), Ministry of Finance

Micro-tax scheme

In terms of taxation, the micro-entrepreneur has a choice between the classic and the optional discharge scheme. The purpose of this plan is to allow the corporation to reduce its tax returns and the accounting of its business.

This is the traditional regime that applies automatically, unless the micro-entrepreneur chooses the option of a release.

The general system of taxation of micro-company shall apply to micro-entrepreneur that is taxed on income tax in the class

  • industrial and commercial benefits (micro-BIC) for a commercial or craft activity
  • or non-commercial profits (micro-BNC) for a liberal activity.

The micro-entrepreneur is exempt from filing a professional NLC or BIC earnings return.

All he has to do is carry in the supplementary income tax return (n°2042-C Pro) the annual amount of gross turnover (GDP) or revenue (NGB).

It shall also indicate any gains or losses realised or incurred in the year concerned.

He must indicate the following information on his tax return to the party General :

  • Primary Institution SIRET Number
  • Nature of realised income (BIC or BNC)
  • Taxation scheme.

The taxable profit is determined by the tax authority which applies to the reported turnover a lump sum from:

  • 71% of AC for buying and selling or providing accommodation (except for furnished rentals other than tourism and bed and breakfast),
  • 50% of AC for other BIC activities,
  • 34% of AC for NLCs,

with a minimum reduction of €305.

In the case of mixed activities, the allowances shall be calculated separately for each fraction of the turnover corresponding to the activities carried out. In this case, the minimum deduction is €610.

Example :

A taxpayer who carries on a sales activity carries on a €155 000 in 2019 and €185,000 by 2020.

Turnover in 2019 does not exceed €176,200, so the micro-BIC scheme applies automatically in 2020, even if the turnover in 2020 exceeds the threshold.

Therefore, calculation of the abatement: €185,000 x 71% = €131,350.

The taxable net profit is therefore: €185,000 - €131,350 = €53,650.

Once calculated, the taxable income is subject to income tax along with other income in the tax household.

  FYI : where the micro-tax system is applicable, the flat-rate reductions for costs shall be applied to the entire turnover.

The micro-tax regime applies where the annual turnover of the micro-entrepreneur does not exceed certain thresholds.

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2021 Income Tax Return for 2020

The micro-company speed shall apply as long as the CAHT annual (actual revenue received in the calendar year) does not exceed the following thresholds:

  • €176,200for trade and supply activities of accommodation (hotels, bed and breakfast, rural gites classified as tourist furnished, tourist furnished)
  • €72,600services and the liberal professions covered by BNC or BIC.

If the activity is created during the year, the thresholds must be adjusted to temporis of operation, except in the case of seasonal companies.

In case of mixed activity (sale and provision of services), CAHT global must not exceed €176,200. Within this ceiling, the CAHT relating to the provision of services shall not exceed €72,600.

If the turnover exceeds these thresholds, it is not possible to benefit from the self-company regime.

2020 Income Tax Return for 2019

Revenue received in the calendar year (CAHT) must match the following thresholds:

  • €176,200 for business activities and supply of accommodation (hotels, bed and breakfast, rural cottages classified as tourist furnished, tourist furnished).
  • €72,600 services and the liberal professions covered by BNC or BIC. The threshold is raised to €176,200 for 2020 income tax

If the activity is created during the year, the thresholds must be adjusted to temporis of operation, except in the case of seasonal companies.

In case of mixed activity (sale and provision of services), CAHT global must not exceed €170,200. Within this ceiling, the CAHT relating to the provision of services shall not exceed €72,600.

If the turnover exceeds these thresholds, it is not possible to benefit from the self-company regime.

The micro-entrepreneur who respects the turnover thresholds and who is thus subject to the micro-tax system may, if he so wishes, opt for a flat-rate tax-free social levy.

Single Payment

This option allows the micro-entrepreneur to opt for a tax-free income payment. It allows him to pay both income tax and compulsory social contributions in a single social and tax payment.

The payment is made in a single direct debit on the turnover.

This option allows you to pay a percentage of the turnover corresponding to the amount of income tax. This amount must be paid with the same payroll tax return. Just apply an additional percentage on the revenue.

This percentage is:

  • 1% for companies engaged in the sale of goods, articles, supplies and foodstuffs to be taken or consumed,
  • 1.7% for companies performing a service activity,
  • 2.2% for taxpayers holding NLC.

The effective rate of the lump sum payment applicable in 2020 is therefore:

  • 12,8% for the purchase/resale of goods, sale of foodstuffs to be consumed on the spot and accommodation services (BIC) + 1% = 13,80%
  • 22% for the provision of craft and commercial services (BIC/BNC) + 1.7% income tax rate = 23,70%
  • 22% for liberal activities (NLC) + 2.2%= 24,2%.

  Please note : in the absence of turnover, no payment is required. However, you are obliged to report your income, and to register nil instead of your turnover.

This option is only available to a micro-entrepreneur whose N-2 reference tax income is less than or equal to a threshold based on the family quotient.

Beyond the threshold, the option for the release is not possible.

The calculation of income tax is made at the effective rate.

N-2 reference tax income for the option to release

2017 reference tax income for application to 1to January 2019

2018 reference tax income for application to 1to January 2020

2019 reference tax income for application to 1to January 2021

Single person (1 family quotient share)

€27,086

€27,519

€27,794

Couple (2 family quotient shares)

€54,172

€55,038

€55,588

Couple with 1 child (2 parts + 1 half part)

€67,715

€68,797.5

€69,485

Couple with 2 children (2 parts + 2 half parts)

€81,258

€82,557

€83,382

To opt for this payment, you must contact theUrssaf :

  • When reporting activity (or within 3 months) with immediate application
  • In operation, no later than September 30 for application the following year.

If you have an option for the discharge, you must include the supplementary income tax return (n°2042-C Pro) the turnover achieved by your micro-company. You must enter the turnover in the context of "micro-entrepreneurs who have opted for the income tax exemption". You must indicate the revenue amounts you have deducted from the amounts reported to the social security collection agencies and general social security funds.

The amount of revenue or revenue is included in the taxable income of the household and will be used to determine the tax bracket of the tax household.

Source Pick

In the absence of an option for the release, source sampling (PAS) dialogue box. The income from the activity of micro-entrepreneur gives rise to the payment of contemporary prepayments taken directly from the bank account every month or every quarter.

The option can be terminated under the following conditions:

  • Denouncing the option. The denunciation is made in the same way as the request for option, i.e. by contacting the Urssaf or the social security fund of the independent schemes.
  • In the case of exit of the micro-company speed. This means exceeding the turnover thresholds provided for by the micro-tax system
  • In the event of exceeding the thresholds for release.

Attention: for 2020 income tax, if you exceed the threshold for turnover for the first time in year N, the micro-company regime continues to apply for the next year N+1.

But if you exceed the thresholds over 2 successive years (N and N+1), the micro-company regime no longer applies to your situation. Therefore, the reporting of your business should be based on the actual tax regime.

The CVAE is due by companies who realise more than €500 000 revenue excluding tax. Therefore the micro-entrepreneur is exempt from paying the CVAE.

However, if the micro-entrepreneur realises a turnover greater than €152,500, it must make a declaration of value added even if it is not liable for the EBAF.

Declaration of the company subject to the CFE

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Turnover below 152,500

The micro-entrepreneur who realises less than €152,500 does not have to report.

Revenue above 152,500

The micro-entrepreneur with a turnover greater than €152,500 shall make a declaration of the value added and of the employed workforce.

A micro-entrepreneur who just started a company is exempt from EFC in the first year of existence. It is imposed on company property assessment (EFC)) under the same conditions as any company creator and does not benefit from any specific exemption.

Micro-BIC entrepreneurs have the option to change their tax regime and opt for a normal effective tax regime.

The change in the tax regime does not prevent the micro-entrepreneur from continuing to benefit from the micro-tax VAT regime.

Therefore, even if the micro-entrepreneur opts for the actual tax regime, he can continue to benefit from the VAT-free.

This option is taken for a period of one year and tacitly renewed for a new year as long as the micro-entrepreneur remains within the scope of the micro-company tax regime.

Microsocial

The simplified micro-social scheme allows the micro-entrepreneur to pay his contributions based on his turnover. This means applying a contribution rate to monthly or quarterly turnover that varies according to the activity carried out.

2021 Income Tax Return for 2020

The micro-company speed shall apply as long as the CAHT annual (actual revenue received in the calendar year) does not exceed the following thresholds:

  • €176,200for trade and supply activities of accommodation (hotels, bed and breakfast, rural gites classified as tourist furnished, tourist furnished)
  • €72,600services and the liberal professions covered by BNC or BIC.

If the activity is created during the year, the thresholds must be adjusted on a pro rata basis, except for seasonal companies.

In case of mixed activity (sale and provision of services), CAHT global must not exceed €176,200. Within this ceiling, the CAHT relating to the provision of services shall not exceed €72,600.

If the turnover exceeds these thresholds, it is not possible to benefit from the micro-social system.

2020 Income Tax Return for 2019

The micro-social regime shall apply as long as CAHT annual (actual revenue received in the calendar year) does not exceed the following thresholds:

  • €176,200 for trade and supply activities of accommodation (hotels, bed and breakfast, rural gites classified as tourist furnished, tourist furnished)
  • €72,600 services and the liberal professions covered by BNC or BIC.

If the activity is created during the year, the thresholds must be adjusted on a pro rata basis, except for seasonal companies.

In case of mixed activity (sale and provision of services), CAHT global must not exceed €170 000. Within this ceiling, the CAHT relating to the provision of services shall not exceed €70 000.

If the turnover exceeds these thresholds, it is not possible to benefit from the micro-social system.

Self-employed persons who are subject to the micro-company (micro-BIC or micro-BNC) tax regime are subject to the general regime, as are employees.

Contributions and social contributions are paid on the basis of turnover or insured income.

Calculation of amount

The amount shall be calculated by applying a flat rate to the actual revenue (or revenue) received: if it is zero, there is no levy.

The social contributions of the micro-company are:

  • Maternity and sickness insurance contribution
  • Family Allowance Contribution
  • CSG/CRDS
  • Disability Death
  • Basic and supplementary pension contributions.

The micro-entrepreneur must report the actual revenue for each period cash, not billed.

Social lump sum payment of the micro-social scheme

Activities

Social contributions

in 2019

Social contributions in 2020

Social contributions in 2021

Sale of goods and provision of accommodation (except rental of furnished accommodation and furnished tourist accommodation)

12,8%

12,8%

12.8%

Furnished flat rental

22%

22%

22%

Rental of furnished accommodation

6%

6%

6%

Provision of services (including rental of furnished accommodation)

22%

22%

22%

ISS professions

22%

22%

22%

CIPAV professions

22%

22%

22,20%

For example, a monthly turnover of €3,500 made in 2021 when selling goods gives rise to a payment of €448 contributions and social contributions under the simplified micro-social scheme.

Calculation: €3,500 x 12,8% = €448.

If the micro-entrepreneur carries out several activities in different categories, his own contribution rate shall be applied to each activity. The declaration shall specify the breakdown of turnover by separate activity.

At the beginning of the activity, a micro-entrepreneur can accumulate his status with thecompany Create or Resume Help (Acre) in order to benefit from reduced social security contributions.

The micro-social scheme allows the micro-entrepreneur to benefit from:

  • sickness or maternity benefits,
  • access to vocational training (however, in order to benefit from it, it must pay a contribution),
  • pension rights, based on the amount of contributions paid.

The micro-social scheme does not allow the micro-entrepreneur to collect unemployment benefits paid by pole employment.

  FYI : the lump sum payment does not include contribution to vocational training in addition to the social contributions paid under the micro-social scheme.

Declaration and payment of social contributions

The contractor must report monthly or quarterly (depending on his/her choice) to allow the calculation of contributions and social contributions.

The declaration of turnover and the payment of social contributions must be made at the meadow of the Urssaf.

Entrepreneurs under the micro-company tax system do not have to submit the self-employed person's social return (ISD) annually.

Micro-entrepreneur: online turnover reporting (simplified micro-social regime)

Urssaf

The micro-entrepreneur pays social contributions as he realises a turnover. But if his turnover is zero, he is not obliged to pay social contributions unless he chooses the option for minimum contributions. These are the contributions that micro-entrepreneurs pay in order to qualify for certain guarantees. For example, daily allowances.