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Taxation of the micro-entrepreneur (micro-tax and social system)

Verified 09 December 2022 - Directorate of Legal and Administrative Information (Prime Minister), Ministry of Finance

As a micro-entrepreneur, you are subject to the micro-tax regime and the micro-social regime. The micro-tax system concerns your taxation and the micro-social system concerns your social contributions and contributions.

Micro-tax scheme

On the tax side, you have a choice between the classic (micro-tax system) and the optional release system. The purpose of the micro-tax system is to allow you to reduce your tax returns and the accounting of your business.

This is the standard plan that applies automatically, unless you choose the release option.

The traditional micro-company tax regime is applicable when you are taxed on income tax in one of the following categories of income:

  • You are engaged in a commercial, industrial or craft activity, this will be the category of industrial and commercial benefits (micro-BIC)
  • You are a liberal, it will be the category of non-commercial profits (micro-BNC)

You don't have to provide a business statement of profits for your BNCs or BICs. You just have to add your profits into your supplementary income tax return (n°2042-C Pro) ::

  • The annual amount of your gross turnover (GDP) must be indicated in the section "Industrial and commercial professional income"
  • The amount of your income (NLC) must be indicated in the "Non-commercial Revenues" section

You must also indicate any gains or losses realised or incurred in the year in question.

You must include the following information on your tax return in the section "Identification of persons engaged in a self-employed activity":

  • Your civil status
  • Address of your primary establishment
  • Your SIRET number
  • Nature of your realised income (BIC or BNC)

The taxable benefit is determined by the tax authority. It shall apply one of the lump sum depending on your type of activity:

  • 71% of AC: titleContent for buying-to-sell or providing accommodation (for furnished rentals this only applies to furnished rentals of tourism and bed and breakfast)
  • 50% of AC: titleContent for other BIC activities
  • 34% of AC: titleContent for NLC

The abatement cannot be less than €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 €175,000 in 2022.

The calculation of the allowance shall be as follows: €175,000 x 71% = €124,250

The taxable net profit is therefore: €175,000 - €124,250 = €50,750.

FYI  

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

Once calculated, the taxable profit is subject to income tax with the other income of the tax household.

The micro-tax regime applies when your annual turnover excluding tax does not exceed certain thresholds.

The micro-company regime is applicable while your CAHT: titleContent annual (actual revenue received in the calendar year) does not exceed the following thresholds:

  • For business activities and supply of accommodation (hotels, bed and breakfast, rural gites classified as tourist furnished, tourist furnished), the threshold is €176,200.
  • For service provision activities and if you are a professional, the threshold is €72,600.

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

In the case of mixed activity (sale and provision of services), the following two thresholds must not be exceeded:

  • The CAHT: titleContent globalCAHT: titleContent sale +CAHT: titleContent provision of services) shall not exceed €176,200
  • The CAHT: titleContent on the provision of services shall not exceed €72,600

If your turnover exceeds these thresholds, you cannot benefit from the micro-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 is only available to you if your N-2 reference tax income is less than or equal to a threshold based on your family quotient.

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

The calculation of income tax shall be made at the effective rate.

Tableau - N-2 reference tax income for the option to release

2019 reference tax income for application to 1to January 2021

2020 reference tax income for application to 1to January 2022

Single person (1 share of family quotient)

€27,794

€25,710

Couple (2 shares of family quotient)

€55,588

€51,420

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

€69,485

€64,275

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

€83,382

€77,130

This option allows you to set one payment your income tax and your mandatory social contributions.

The payment is made in one and only direct debit on the turnover.

The release is equal to:

  • For companies engaged in the sale of goods, articles, supplies and foodstuffs to be taken or consumed, 1% of CAHT: titleContent
  • For companies with a service activity, 1.7% of CAHT: titleContent
  • For NLC taxpayers, 2.2% HT revenue

In addition to these rates, there are those corresponding to the lump sum payment of payroll.

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 the amount of your turnover.

To opt for this payment, you must contact theUrssaf: titleContent (or to the general social security funds overseas) before one of the following dates depending on your situation:

  • Before September 30 of the previous year the one for which you are seeking the release. If you apply before September 30, 2021, the release will apply to income earned on or after September 1to January 2022.
  • If you start your business, before the end of 3th month following creation of your company. If you started your business in September 2021, you must apply for a release before November 30, 2021.

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 your turnover in the "Micro-entrepreneurs who opted for the income tax exemption" box.

Source Pick

In the absence of an option for the release, the source sampling (PAS) dialogue box. Income from the activity of a micro-entrepreneur results in the payment of prepayments directly from the bank account every month or every quarter.

The option can be terminated under the following conditions:

  • You can denounce the option. The denunciation is made in the same way as the request for option, i.e. by contacting the Urssaf or the general social security funds
  • If you opt out of the micro-company scheme., that is, if you exceed the turnover thresholds provided for in the micro-tax scheme
  • If you exceed the thresholds for release

If you exceed 1ere Once the threshold of turnover in one year N, the micro-company regime continues to apply in the next year N+1.

If you exceed the thresholds over 2 successive years (N and N+1), the micro-company regime no longer applies to your situation. Reporting your activity will have to be done on the basis of the actual tax regime.

You are subject to a value-added declaration based on the turnover you make.

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Turnover below € 152,500

If you have a turnover less than €152,500, you do not have to report.

Turnover greater than € 152,500

If you have a turnover greater than €152,500, you must report the value added and employee headcount.

However, you will not have to make a payment because the CVAE rate is equal to 0 for companies whose turnover is less than €500 000.

If you just created your company, you do not have to pay the EFC in the first year of life. Then you are forced to CFE under the same conditions as any company creator who does not benefit from a specific exemption.

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Micro-BIC

You are automatically subject to the micro-BIC plan, but you have the option to change the tax regime and opt for a normal effective tax regime.

The option must be requested before one of the following dates depending on your situation:

  • On your previous year's tax return for which the option is to be exercised.
  • If you were subject to the actual tax plan in the previous year, your tax return for the year for which the option is to be exercised
  • If you are starting your activity with the option and you want to take this option directly, you must do so when you file your first tax return

This change in the tax regime does not prevent you from continuing to benefit from the micro-tax VAT regime. You will continue to benefit from the VAT-free.

This option is taken for one year and tacitly renewed for another year as long as you remain within the scope of the micro-company tax regime. That is, as long as you do not exceed the turnover thresholds.

If you want to opt out of this option, you must do so when the previous year's declaration of results the one for which you want to opt out.

Micro-BNC

You are automatically subject to the micro-BNC regime, but you have the option of changing the tax regime and opting for the controlled reporting regime.

The option must be requested before one of the following dates depending on your situation:

  • During your return of results for the year for which the option is to be exercised
  • If you are starting your activity with the option and you want to take this option directly, you must do so when you file your first tax return

This change in the tax regime does not prevent you from continuing to benefit from the micro-tax VAT regime. You will continue to benefit from the VAT-free.

This option is taken for one year and tacitly renewed for another year as long as you remain within the scope of the micro-company tax regime. That is, as long as you do not exceed the turnover thresholds.

If you want to opt out of this option, you must do so when the previous year's declaration of results the one for which you want to opt out.

Micro-social

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

The micro-company regime is applicable while your CAHT: titleContent annual (actual revenue received in the calendar year) does not exceed the following thresholds:

  • For business activities and supply of accommodation (hotels, bed and breakfast, rural gites classified as tourist furnished, tourist furnished), the threshold is €176,200.
  • For service provision activities and if you are a professional, the threshold is €72,600.

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

In the case of mixed activity (sale and provision of services), the following two thresholds must not be exceeded:

  • The CAHT: titleContent globalCAHT: titleContent sale +CAHT: titleContent provision of services) shall not exceed €176,200
  • The CAHT: titleContent on the provision of services shall not exceed €72,600

If your turnover exceeds these thresholds, you cannot benefit from the micro-company regime.

Your contributions and social contributions are calculated based on the turnover or the income you earn.

How much do you pay in social contributions?

The amount is calculated by applying a flat rate to the actual revenue (or revenue) received: if your revenue or revenue amount is equal to €0, there are no levies.

The social contributions included in the contribution rate are:

  • Maternity and sickness insurance contribution
  • Family Allowance Contribution
  • CSG/CRDS (general social contribution/contribution to social debt repayment)
  • Disability-death contribution
  • Basic and supplementary pension contributions.

You must report the actual revenue for each period cashed, not billed.

Tableau - Social lump sum payment of the micro-social scheme

Activities

Social contributions in 2022

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

12.3%

Furnished flat rental

21,2%

Rental of furnished tourist accommodation

6%

Provision of services (including rental of furnished accommodation)

21,2%

ISS professions

21.1%

Professional occupations under the CIPAV

21,2%

For example, a monthly turnover of €3,500 when goods are sold, a payment of €430.5of social contributions and contributions under the simplified micro-social scheme.

Calculation: €3,500 x 12.3% = €430.5.

If you have more than one activity in different categories, each activity has its own contribution rate. Your return must specify the distribution of revenue by separate activity.

If you are in the beginning of activity, you can accumulate your status with the device company Creation or Recovery (Acre) to benefit from reduced rates of social contributions.

The micro-social plan allows you to enjoy the following benefits:

  • Sickness or maternity benefits
  • Access to vocational training (however, you must contribute to it),
  • Retirement rights, based on the amount of contributions paid

The micro-social plan does not allow you to receive unemployment benefits paid by Pôle emploi.

FYI  

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

You can request that your contributions not be less than minimum amount of social security contributions.

You need to contact your request to theUrssaf: titleContent (or general social security funds overseas) before one of the following dates depending on your situation:

  • No later than 31 December of the year preceding the year for which you want this option to be applied
  • If you start your activity, by the last day of 3e month after creation your company

This option applies until you decide to terminate it before 31 December the year before the year for which you want the option to no longer apply. This denunciation is to be made with theUrssaf: titleContent or general social security funds.

How do I report and pay your social contributions?

You have to report monthly or quarterly (depending on your choice) to allow you to calculate your contributions.

The declaration of turnover and the payment of social contributions must be made at theUrssaf: titleContent.

When you are subject to the micro-tax system, you do not have to submit the self-employed person's social return (ISD) annually.

The declaration must be made online:

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

You pay your social contributions as you realise your turnover.

If your turnover is zero, you don't have to pay payroll taxes. However, if you chose the option for minimum contributions, even if your turnover is zero, you will have to pay contributions. These are the contributions you make to qualify for certain guarantees. For example, daily allowances.

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