Individual entrepreneur: moving from income tax to business tax
Verified 15 May 2022 - Directorate for Legal and Administrative Information (Prime Minister)
As an individual entrepreneur, you are automatically subject to income tax. If you wish to be subject to business tax, you must opt to be treated as a EURL.
As an individual entrepreneur, you are subject automatically to theincome tax in the category of industrial and commercial profits (BIC: titleContent) or non-commercial profits (NBC: titleContent) on the taxable profit generated by your activity.
You are then subject either to an effective tax regime (simplified or normal) or to a micro-tax regime (micro-BIC or micro-BNC).
You can, however choosing to be taxed on businesses. To do this, you must opt for equating it to a single-person company with limited liability (EURL: titleContent).
Assimilation to a EURL: titleContent subject to ISIS to several consequences.
From a tax point of view, this assimilation creates a tax personality distinct from yours. Your company is subject to certain specific business tax rules. In particular those relating to deficit carry-over and those concerning capital gains.
Impact on the taxation of your remuneration
Your remuneration is taxed on income tax in the wages and salaries. Your income other than your earnings is taxed on income tax in the income from movable capital (RCM).
Impact on your social security contributions
You are subject to social contributions of self-employed persons on your net earnings. This is your remuneration after deducting your mandatory personal social contributions and your actual expenses (expenses incurred in the course of your business). Such remuneration shall also be increased by optional premiums and contributions.
You are also subject to the social contributions of the self-employed for those parts of the income distributed above 10% of your net profit.
You must send a request by mail company Tax Service (SIE) on which your company depends (where the main establishment is located):
Who shall I contact
You must specify the next items :
- First Name
- Name : or
You must notify your option for assimilation before the end of 3eme fiscal month of your activity.
The option to be assimilated to a EURL: titleContent is irrevocable.
However, you can ultimately decide to waive the business tax. This renunciation can be made up to the month preceding the payment of the first installment of SI of 5eme next financial year the one in which you opted to be assimilated EURL.
The waiver must contain next items :
- Name of your company
- If it is different from the address, the place of its main establishment
- Fiscal year to which the waiver applies
if you are micro-entrepreneur, you benefit from the micro-company scheme, so you can't opt in for business tax.
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