Taxation in 7 points
1 – Take the time to choose your type of income tax
There are two types of taxation on profits , which depend on the legal structure chosen, or chosen by the managers:
Income tax (IR). It is the partners of the company as a natural person who are liable for this.
Corporate tax (IS) . It is the corporation which is liable for tax.
Study your own situation to decide what will be most beneficial for you.
2 – And for the micro-enterprise regime?
This only concerns individual companies, and it’s even simpler:
either the tax administration itself determines the taxable profit by applying to the annual turnover declared by the entrepreneur a flat-rate allowance representing professional expenses,
either, on option and subject to income, the entrepreneur declares each month or quarter his turnover and pays the income tax corresponding to 1%, 1.7% or 2.2% of the turnover. business excluding taxes, depending on the nature of the activity carried out.
3 – Do not confuse “taxation of profits” and “method of determining taxable profit”
There are 2 tax regimes, that of the micro-enterprise and the real profit regime (for BICs) or of the controlled declaration (for BNCs), which depend, on the one hand, on the chosen legal structure, and on the other hand, the importance of the turnover likely to be achieved.
4 – Territorial economic contribution (CET)… Quesaco?
Since 2010, the CET has replaced the professional tax, and it is made up of:
The business property tax (CFE), which incorporates a large part of the provisions of the old professional tax.
The contribution on the added value of companies (CVAE). The latter is payable by companies and self-employed workers from a certain turnover and is calculated according to the added value produced by the company.
This tax is due in each municipality where the company has premises and land. The applicable rates are defined by the local authorities concerned. The overall rate therefore varies from one municipality to another.
It is a local tax, contributing to the financing of local communities, collected from the year following that of creation. Indeed, the CET is not due between the date of creation of the company and December 31 of that same year.
5 – Value added tax (VAT)
In principle, this indirect tax on consumption concerns all goods and services paid for by consumers. You, companies play the role of tax collectors on behalf of the State: they charge VAT to their customers, at the rate of 20% (standard rate) or 10% or 5.5% (reduced rate) and then return it to the Public Treasury after deduction of the VAT they will have paid on their purchases. It is therefore the final consumer who bears the burden of VAT, and not the companies which contribute to the production of goods and services.
6 – VAT for micro-entrepreneurs: how does it work?
There is a VAT exemption system for micro-entrepreneurs for all companies whose turnover is less than € 82,800 (if activity of sale of goods) or € 33,200 (if provision of services), benefit from the VAT deductible. That is to say, they do not charge VAT to their customers, but in return, they do not recover it on their purchases.
Do not forget to request your intra-community VAT number from the business tax service (SIE) if you sell products or provide services in the European Economic Area!
7 – New for 2019: the withholding tax (PAS)
The PAS consists of deducting tax directly from income when it is collected. It takes the form of either:
a withholding tax collected by the employer for employees, pension funds for retirees, employment center for job seekers,
a deposit directly taken by the tax administration from the taxpayer’s bank account for property income and income from self-employed workers.
The PAS does not change the method of calculating income tax.