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Which companies can choose to tax profits on income?

Verified 27 January 2021 - Directorate for Legal and Administrative Information (Prime Minister)

Certain types of companies may opt for income tax (IR) in the category of industrial and commercial profits (BIC), instead of profit taxation in business tax (IS).

The companies that can opt for income tax on profits are:

  • Anonymous business (SA)
  • Simplified Action business (SAS)
  • Limited Liability business (LLC)

The company must meet all of the following conditions:

  • It must be principally engaged in an industrial, commercial, craft, agricultural or professional activity, except for the management of its own movable or immovable property
  • It should not be listed on the stock exchange
  • It must employ fewer than 50 employees
  • It must have an annual turnover or a balance sheet total of less than €10 million
  • It must have been in existence for less than five years when it applied for income tax on profits
  • Voting rights and capital must be held at least 50% by one or more natural persons
  • Voting rights and capital must be held at least 34% by one or more of the following persons: the chairman, the managing director, the chairman of the supervisory board, one or more members of the executive board or the manager.

The option for the business plan requires the agreement of all partners.

It must be notified to the tax department of the companies on whom the company depends in the first 3 months of the 1er the financial year for which it takes effect.

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It shall be valid for 5 years, unless early surrender is notified within the first 3 months of the financial year for which the option is to apply.

In case of early exit, the option is no longer possible later.

It has the effect of making each partner personally taxable on his share of the company's profit.