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Non-Commercial Profit (NLC): tax regimes and reports

Verified 15 May 2022 - Directorate of Legal and Administrative Information (Prime Minister), Ministry of Finance

Non-commercial profits (NLCs) are a class of income tax applicable to persons engaged in a non-commercial professional activity, either individually or as partners. NLCs are part of taxable income. No distinction is made between the benefit of the individual business and the remuneration of the trader. They are subject to reporting obligations which depend on the applicable tax regime: micro BNC or normal.

AC less than € 72,600 (micro-BNC)

In order to benefit from the micro-BNC scheme, the company's annual duty-free turnover must be less than €72,600.

The non-commercial profits tax (NCA) applies to the following revenues:

  • Benefits professional
  • Revenue from offices and offices (e.g. notaries, bailiffs, clerks, auctioneers)
  • Copyright and income of certain professions in the communication and information sectors (e.g. advertising creator)
  • Industrial property income received by an individual
  • Income of priests
  • Revenue of intermediaries or transparent agents acting on behalf of their clients
  • Incidental income received by non-commercial professions in the course of their business.

Liberal professionals can use different statutes: Individual entrepreneur, traditional business, but also specific structures, such as professional civil business (PCS) or the business of liberal practice (LEM).

The Liberal accrual business is subject to the capital businesses regime and businesses tax except option (option for a family URL or SARL).

Commercial or agricultural income, received in the course of a professional activity, may also be taxed in the NLC category. They must then arise from non-commercial activity, the revenue of which must remain paramount.

FYI  

the contributions paid in the context of a quarterly repurchase by certain independent professionals (osteopaths, chiropractors...) are to be excluded from professional income.

Declaration

The company must declare its gross revenue (excluding VAT, without deducting any deduction) and any gains or losses it has made using the following forms:

The return must be made annually on the income tax return. This declaration may be made every month or every 3 months if the company has opted for income tax exemption.

The declaration must be made by dematerialisation on 2th next business dayto the following year in any of the following ways:

In case of doubt, the contractor may request administrative control over specific points.

What's the taxable profit?

The taxable profit is calculated from the annual turnover of the company to which a standard allowance for professional expenses of 34% turnover. The minimum reduction shall be €305.

What happens if there is an error?

If he made a mistake in his statement, the tax authority will not be able to punish him financially if the following 2 conditions are met:

  • The error is made for the 1st time, subject to the good faith of the contractor
  • This is a hardware error (input error, wrong address for example)

The professional may correct himself or be asked by the administration to regularise his situation.

Controlled Reporting Option

The trader subject to the micro-BNC scheme may opt for the controlled reporting scheme. This option must be requested at one of the following times depending on the company's situation:

  • At return of results for the year for which the option is requested
  • If you start your activity the option and you want to take this option directly you should do so when you file your first tax return

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 (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 waive the option.

CA greater than € 72,600 (return checked)

The company shall be subject to the procedure of the controlled declaration if it meets one of the following conditions:

  • Its revenue excluding tax is greater than €72,600
  • She opted before the second working day 1to May of the following year for the controlled reporting regime (valid option 2 years)

Warning  

if an individual contractor has Opted for EURL assimilation, it shall be subject to business tax and no longer subject to the rules on taxation of non-commercial profits.

The non-commercial profits tax (NCA) applies to the following revenues:

  • Benefits professional
  • Revenue from offices and offices (e.g. notaries, bailiffs, clerks, auctioneers)
  • Copyright and income of certain professions in the communication and information sectors (e.g. advertising creator)
  • Industrial property income received by an individual
  • Income of priests
  • Revenue of intermediaries or transparent agents acting on behalf of their clients
  • Miscellaneous income received by non-commercial professions in the course of their business

Liberal professionals can use different statutes: Individual entrepreneur, traditional business, but also specific structures, such as professional civil business (PCS) or the business of liberal practice (LEM).

The Liberal fiscal year business is subject to the capital businesses regime and businesses tax except option (option for a family URL or SARL).

Commercial or agricultural income, received in the course of a professional activity, may also be taxed in the NLC category. They must then arise from non-commercial activity, the revenue of which must remain paramount.

FYI  

the contributions paid in the context of a quarterly repurchase by certain independent professionals (osteopaths, chiropractors...) are to be excluded from professional income.

What's the taxable profit?

The taxable profit is the company's net profit.

The taxable profit corresponds to the net profit realised during calendar year taking into account actual income and expenses paid in the same year.

Therefore, claims that have been acquired and not yet received and expenses incurred but not yet paid are excluded. However, it is possible to opt for commitment accounting. This may include a note or invoice issued but not cashed.

The net profit is equal to the difference between the total income and the expenditure necessary for the exercise of the profession.

Revenues consist of:

  • Receipts received in return for the service rendered to the client (fees, commissions in particular)
  • Accessories: reimbursements of fees including lump sum payments, financial products resulting from the investment of funds received in customer deposits in the course of the profession, miscellaneous commercial revenues for example.

However, financial products derived from professional income may be taxed in the category of income from movable capital.

The net profit must account for gains or losses from:

  • Completion of assets allocated to the exercise of the profession constituting the professional heritage
  • Assignment of offices or offices
  • Receipt of compensation in return for termination of the profession or transfer of a client

Income and expenses relating to the taxpayer's private property are not taken into account. Capital gains in respect of the taxpayer's private property are subject to the personal capital gains tax regime.

Profit is included in the other income categories to constitute the total income of the beneficiary or the tax household.

Certain charges are deductible from the tax return of a company (for example: meal expenses, professional training expenses).

Declaration

The company must report using the following forms:

Declarations must be made by dematerialisation on 2th next business dayto the following year in any of the following ways:

In case of doubt, the contractor may request administrative control over specific points.

Increase

In some cases, a multiplier of 1.15 for the taxation of the year 2021 and 1.1 for the taxation of the year 2022 must be applied to the amount of the NLC. This applies to the trader who is subject to a real taxation regime which is in one of these 2 cases:

  • He is not a member of approved association (AA)directly or through a business or group subject to the taxation of businesses of persons
  • It does not call on the services of a public accountant or a Member business of the College of Public Accountants, which has signed an agreement with the

Only the income of the holding subject to the progressive scale of the tax is increased.

What happens if there is an error?

If he made a mistake in his statement, the tax authority will not be able to punish him financially if the following 2 conditions are met:

  • The error is made for the 1st time, subject to the good faith of the contractor
  • This is a hardware error (input error, wrong address for example)

The professional may correct himself or be asked by the administration to regularise his situation.

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