Everything you need to know about the taxation of an individual entrepreneur

Verified 01 January 2023 - Directorate for Legal and Administrative Information (Prime Minister)

We present you a list of words and concepts that you will find often, with their definition:

  • Abatement : Flat-rate or proportional reduction applied on the basis of a tax calculation (income, value of property, etc.)
  • Subjugation : Being compelled to pay something (for example, having to pay business tax)
  • Turnover : Sum of a company's sales of goods or services in an accounting year
  • Controlled Declaration : Reporting scheme for non-commercial profits above €77,700 HT: titleContent
  • Relief : Partial or total remission of a tax
  • Fiscal year : The period during which a company records each economic event in the course of its activities. An accounting period generally lasts for 12 months
  • Exemption : Exemption from payment of tax
  • VAT exemption : Special scheme which exempts the company from declaring and paying VAT on supplies or sales made by it
  • Income tax : Tax calculated and levied on income, profits and capital gains
  • Recovery : Payment of a tax
  • Micro-tax system : Special tax arrangements for individual companies whose turnover HT: titleContent does not exceed certain thresholds
  • Normal Actual Speed : Taxation regime that applies to profits and VAT. It applies to companies with a turnover HT: titleContent above certain thresholds
  • Simplified real regime : Taxation regime that applies to profits and VAT. It applies to companies with a turnover HT: titleContent between 2 thresholds.
  • VAT : Tax that is not directly collected by the State. This tax is added to the price of all products to which it applies

As an individual entrepreneur, you are automatically subject to the income tax system (general case). However, you can decide to be subject to business tax by opting to be assimilated EURL.

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General case 

You are engaged in a commercial or craft activity

You are subject to the income tax in the category of industrial and commercial profits (BIC: titleContent).

The simplified real regime applies when you meet the following conditions

  • Your sales do not exceed the following amounts:
    • €840,000 for activities relating to the sale, catering or supply of accommodation
    • €254,000 for other activities
  • The amount of VAT you have to pay is less than €15,000

If you do not meet these 2 conditions, you are subject to the normal real speed.

Simplified real regime

You must report your net income to which you add the realized gains or losses using the following form:

Supplementary declaration of income from self-employed occupations

You must also contact your BIC income statement and the annexed Tables No 2033-A to 2033-G.

You must file your tax return before the 2nde working day following 1er May of the current year, by dematerialized means:

  • Through an EDI (electronic data interchange) partner (EDI-TDFC mode)
  • Directly from your subscriber area on the impots.gouv.fr website (electronic form exchange or EFI)

Online tax account for professionals (EFI mode)

Normal Actual Speed

You must report your net income to which you add the realized gains or losses using the following form:

Supplementary declaration of income from self-employed occupations

You must also contact your BIC income statement and the accompanying tables #2050, No. 2051, #2052, #2053, No. 2059-E, #2059-G.

You must file your tax return before the 2nde working day following 1er May of the current year, by dematerialized means:

  • Through an EDI (electronic data interchange) partner (EDI-TDFC mode)
  • Directly from your subscriber area on the impots.gouv.fr website (electronic form exchange or EFI)

Online tax account for professionals (EFI mode)

You're in a business

You are subject to the the controlled income tax return in the category of non-commercial profits (NBC: titleContent).

You must report your net income, which includes your income and expenses paid using the following form:

Supplementary declaration of income from self-employed occupations

You must also contact your NLC income statement and Annexes 2035 A and 2035 B.

You must file your tax return before the 2nde working day following 1er May of the current year, by dematerialized means:

  • Through an EDI (electronic data interchange) partner (EDI-TDFC mode)
  • Directly from your subscriber area on the impots.gouv.fr website (electronic form exchange or EFI)

Online tax account for professionals (EFI mode)

You're opting for the business tax

As an individual entrepreneur you can opt to be assimilated EURL and benefit from the business tax system.

You must file an income statement, the date of which will depend on the date on which the last accounting period of your company was closed, by paperless means:

The declaration must be made at one of the following times:

  • If the accounting year is not closed on 31 December, within three months of the end of the financial year
  • If the accounting year is closed on 31 December, on 2e working day after 1er May of the following year

The payment of the SI is made in 5 times via the EDI or EFI modes: 4 deposits and 1 balance. The tax rate is a reduced rate of 15%. It shall apply to the share of profits up to €42,500. Beyond that, the tax rate is 25%.

Tableau - Dates of payment of the advance payments of the SI in year N

Closing date of the financial year concerned

1er down payment

2e down payment

3e down payment

4e down payment

From 20 February to 19 May N

15 June N-1

15 September N-1

15 December N-1

March 15 N

May 20 to August 19 N

15 September N-1

15 December N-1

March 15 N

June 15 N

20 August to 19 November N

15 December N-1

March 15 N

June 15 N

September 15 N

November 20 N to February 19 N+1

March 15 N

June 15 N

September 15 N

December 15 N

Tableau - Date of payment of the balance of the SI

Closing date of the financial year concerned

Balance

31 December N-1

15 May N

In year N

The 15th of the 4the month after closing

A sole trader may be subject to payment of a number of taxes, including:

  • Value added tax (VAT)
  • Company Property Tax (CFE)
  • Company Value Added Tax (VAE)
VAT

Depending on the turnover and the annual amount of VAT that the entrepreneur carries out, he will be subject to a different VAT regime:

  • It shall be subject to the exemption from VAT if he realizes a turnover HT: titleContent less than €36,800 for the provision of services or less than €91,900 for trade and accommodation activities.
  • It shall be subject to the simplified real regime if he has a turnover HT: titleContent between €36,800 and €254,000 for the provision of services or between€91,900 and €840,000 for trade and accommodation activities. The annual amount of VAT must be less than €15,000.
  • It shall be subject to the normal real speed in one of the following 2 cases:
    • If he has a turnover HT: titleContent greater than €254,000 for the provision of services or€840,000 for trading and providing housing
    • If the annual amount of VAT is more than €15,000 even if the amount of turnover HT: titleContent is within the limits of the thresholds of the real simplified procedure

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VAT exemption

The trader is not subject to payment of VAT.

Simplified real regime

The declaration shall be made no later than 2e working day following 1er May.

VAT must be paid in two installments:

  • 1er deposit of 55% in July
  • 2nd deposit of 40% in December

The amount remaining to be paid is payable at the time of the next year's return.

The declaration and payment shall be made by dematerialized means:

Normal Actual Speed

The declaration and payment of VAT are to be made every month for the preceding month's VAT by dematerialized means:

CFE

A new entrepreneur is not liable to the CFE in the year of its creation and it benefits from a reduction on 1re taxation year.

Depending on the activity of the entrepreneur and where he is located, it is possible that he is temporarily or permanently exempt from the EWC.

The CFE is payable by the contractor who fulfills the following conditions:

  • It has a turnover or revenue exceeding €5,000
  • She habitually pursues a self-employed occupation

The contractor must make an initial declaration no later than 31 December of the year of creation at the companies tax office of the place of its registered office:

Initial Declaration 1447-C-SD (CFE)

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CVAE

A new entrepreneur is not liable to the CVAE in the year of its creation. On the other hand, it is liable to the CVAE from the first year if it is a transfer of activity.

The CVAE is due by the contractor who meets the following 2 conditions:

  • He does more than €500,000turnover HT: titleContent
  • He is engaged in gainful and habitual self-employment

If the entrepreneur has a turnover higher than €152,500, he must make a declaration of added value and staff numbers even if it is not necessarily subject to the payment of the CVAE.

The declaration is to be made on 2e working day following 1er May by dematerialized means:

The payment of the CVAE is made by means of 2 installments each corresponding to 50% of the contribution due where it is more than €1,500 :

  • 1er deposit payable no later than 15 June of the taxation year
  • 2e deposit payable no later than 15 September of the taxation year

A declaration of winding-up and regularization shall then be lodged, no later than 2e working day after 1er May of the year following the taxation year.

These payments and the winding-up declaration shall be made by dematerialization with the same intermediaries as the declaration (EDI or EFI).

You have the opportunity to benefit fromtax relief and tax credits.

There are several tax breaks that will depend on either your business, or oflocation of your head office, oractions you will take :

FYI  

When you start your business, you can benefit of tax exemptions over a short period. This is the case for the company property tax (CFE).

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