Tax Régimes: BIC, BNC and BA
Understanding the tax implications of setting up a business in France...
- The profits of a commercial, industrial or artisanal business are taxed on a tax régime called Bénéfices Industriels et Commerciaux (BIC).
- Professional operations are taxed under the Bénéfices non Commerciaux (BNC) régime.
- Those in agriculture are taxed under the Bénéfices Acricole (BA) régime.
A business may be exempt from being registered for VAT. However a business not charging VAT may not reclaim VAT expenses.
If a business turns over less than a certain figure per year it qualifies for a somewhat simpler tax system known as the régime du réel simplifié. The turnover thresholds are: BNC: €76,300; BIC: €763,000 for resellers, and those providing furnished accommodation or €230,000 for those providing services. If it exceeds those thresholds it must pay taxes under the régime du réel normal.
It's highly recommended to consult an accountant before and during the setup of any business to ensure full understanding of the taxes, charges and possible rebates that apply, and which of the many options are most suitable for a specific case.
The very smallest businesses can opt for a régime that has substantially less complexity than even the régime du réel simplifié. The turnover thresholds to qualify for these - which, once again, vary with the nature of the business - are substantially lower.
This greatly simplified tax system is called the régime micro-entreprise (split into Micro-BIC and Micro-BNC régimes) and is available to:
- Those re-selling goods and materials, or renting furnished rental accommodation with an annual turnover not exceeding €80,000 HT (hors taxes, or ex-VAT) - Micro-BIC
- Professionals - Micro-BNC - and artisans - Micro-BIC - with an annual turnover not exceeding €32,000 HT
In the micro-entreprise, taxation is greatly simplified because a fixed percentage of revenues is written off as the business's expenses, and the remainder is taxed as profit - so there is no need to account for actual expenses. The actual percentages involved depend on the nature of the specific business.
A business may exceed these thresholds for two consecutive years before being required to change régime to régime simplifié d'imposition. A business may opt to change its régime from micro-BIC but there are restrictions on how and when this happens.
- APCE have full details on the Micro-BIC and Micro-BNC tax régimes (in French)
Since the beginning of 2008, businesses that are micro-entreprises have qualified for the régime micro-social, which provides a similarly simplified way of paying social charges.
There are strict laws governing the use of invoices and the information that must appear on an invoice.
It is obligatory for the sale of goods or services between companies to be recorded with an invoice. It is also obligatory that a business make invoices available to the customer, regardless of the price of goods or services sold.
An invoice issued in France must include the following information:
- Invoice date
- Date of sale or services rendered
- Description of goods or services sold
- Price of goods or service (per unit) and discount amounts
- Total amount excluding VAT (prix HT, hors tax), the VAT (TVA) amount and the total sale price TTC (including VAT). Or a mention that VAT is not charged
- Client name and address
- Company or business owner's name
- Company form and capital (for example: Dupont Chauffage, SARL au capital de 5,000 euros)
- Business's registered address
- Business SIREN number (and RCS if applicable)
- Mamicroenterprise has full details (in French)
Following the passing of the loi de modernisation de l'économie, a new way of setting up the smallest businesses (those qualifying for the micro-entreprise tax régimes) has been introduced. The purpose is to simplify the administration and lower the charges required of these small businesses. The auto-entrepreneur can start a business with a simple declaration (on paper or via the Internet) which leads to the issuing of SIREN and SIRET numbers by URSSAF, and has no need to be on the Registre de Commerce et des Sociétés (RCS) or the Répertoire des Métiers (RM).
The auto-entrepreneur may pay combined tax and social charges - thanks to a the régime micro-social simplifié and régime micro-fiscal simplifié - on a fixed percentage of actual monthly or quartely earnings. Opting for this payment method frees the auto-entrepreneur from having to pay other social charges or income tax. The auto-entrepreneur is exempt from taxe professionnelle for three years from the start of the business.
The auto-entrepreneur can cease trading with a minimum of formalities and no financial obligations.
- The French government's dedicated website has more details (in French)