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Understanding the Process of Taxations for the Entrepreneurs

The entrepreneur who falls under the micro-enterprise regime can opt for the final tax payment when the reference tax income of his tax household for the penultimate year is less than or equal, for a part of the family quotient, to the upper limit. The second tranche of the income tax scale for the year preceding that in respect of which the option is exercised. This limit is increased respectively by 50% or 25% per additional half or quarter share.

The option for the final tax payment must be made:

Before September 30 of the year preceding that of the application of the discharge payment,

Or at the latest on the last day of the third month following the creation of the company for new micro-enterprises.

The final tax payment is calculated and paid monthly or quarterly on the amount of turnover collected by applying a flat rate equal to:

  • 1% of turnover for sales or housing supply activities,
  • 1.7% of turnover for service provision activities under the BIC,
  • 2.2% of turnover for activities relating to BNCs.

In practice, not all micro-entrepreneurs have an interest in opting for the discharge payment.

Micro-enterprise and VAT

The micro-entrepreneur must invoice customers without applying VAT when he falls under the VAT-based franchise regime.

  • In this situation, the law specifies that each invoice issued must include the following statement: “VAT not applicable, art. 293 B of the CGI”.
  • Since 2017, the thresholds for the micro-enterprise regime are no longer aligned with those for the VAT-based franchise. A micro-entrepreneur can therefore be subject to VAT.
  • If the micro-entrepreneur is not exempt on the basis of VAT, he must invoice VAT to his customers and make VAT declarations respecting the periodicity provided for by the regime to which he falls.
  • For more information on this subject: the deductible based on VAT. With the tax refund estimate you can have the best choices there.

The calculation of social contributions to the micro-enterprise scheme

Since 1st January 2016, entrepreneurs are micro-enterprise system automatically benefit from the simplified micro-social regime. We remind you that a micro-entrepreneur is affiliated to the social scheme for self-employed workers in respect of his professional activity. For more information on social protection, we invite you to consult this file: social cover for micro-entrepreneurs.

The calculation of social contributions to the micro-social scheme

The entrepreneur’s social contributions to the simplified micro-social scheme are calculated on the amount of turnover declared monthly or quarterly by applying a flat rate. For revenues collected in 2020, this rate is equal to:

  • 12.80% for trade and housing supply activities,
  • 22% for the activities of artisanal and commercial services, as well as the liberal activities falling under the RSI under the old age insurance,
  • 22% for liberal activities falling under the CIPAV under old age insurance.