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Taxation Limits and the Right Levels for You

If option exercised or tacitly renewed on or after 1st January 2020 for the normal real regime of a company that is at the microphone system, it is valid for one year and automatically renewed each year for one year.

The company can voluntarily opt for this method of taxation even if its turnover is below the limits of application of the regime.

The mini-real tax regime, an alternative solution

Some companies have the option of opting for the mini-real scheme, which consists of combining:

The actual normal VAT regime and the real regime simplified in terms of the taxation of profits.

For an individual entrepreneur, there is no taxation of profits carried out at the level of the enterprise itself, which has no separate personality from that of the entrepreneur. The individual entrepreneur is personally liable with income tax (IR) on the tax profit made.

This file presents the tax system, the calculation rules and the formalities for declaring tax benefits for an individual entrepreneur.

Tax benefit of the individual entrepreneur

  • Taxation of the tax result of the individual entrepreneur
  • The principle of taxation of fiscal profits

As the sole proprietorship does not have a separate personality from that of the entrepreneur (confusion of assets), the profits are taxed directly in his hands.

They are added to the other income of the individual entrepreneur and members of his tax household, then the overall amount is then taxed in income tax.

Finally, if the individual entrepreneur has not joined an approved management center and is taxed under a real tax regime, a 25% increase is applied to his taxable profit. Use the tax calculator  for the right calculation of the same.

The category of income on which the tax benefits depend

The profit made by the sole proprietorship is taxed with income tax, at the progressive scale, in the category:

  • Industrial and commercial profits (BIC) for commercial, craft or industrial activities,
  • Non-commercial profits (BNC) for liberal activities,
  • Or agricultural profits (BA) for agricultural activities.

We discuss the calculation of the amount to be declared in the second part of the file.

These publications will provide you with all the information you need about these categories:

  • Industrial and commercial profits (BIC)
  • Non-commercial profits (BNC)
  • Agricultural profits (BA)

Taxation in the event of an option for the withholding tax withholding tax

The tax system is different for individual entrepreneurs with a micro-enterprise regime who have opted for the withholding tax. In this case, income tax is calculated by applying a flat rate on the amount of revenue collected:

  • 1% of revenues for the sale and supply of housing activities,
  • 1.7% of revenue for other activities under the BIC,
  • 2.2% of revenue for liberal activities.

Example: an individual entrepreneur carrying out a trading activity, under the micro regime with option for the withholding tax withholding tax, and declaring his income quarterly, has collected 20,000 euros in income for the quarter declared. For this quarter, he will pay 200 euros for the withholding tax in respect of IR.

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