Standard, simplified, BNC... Find out about your tax regime and obligations

Knowing your tax regime is important when setting up or running a company, particularly to know on what profit you will be taxed.

Are you subject to the micro-BIC or micro-BNC tax regime?

Or are you subject to the simplified or standard real income tax regime?

Find out in our article.

See all software Accounting

Tax regime: definition

What is a tax regime?

A tax regime is a set of rules to which a company must adhere, depending on its legal status and the nature and volume of its business, in order to determine :

• the methods used to calculate the taxation of profits, corresponding to the difference between sales and the various costs incurred ( e.g. social security charges ) for most companies. As a result, accounting obligations vary from one system to another.
• VAT application conditions.

There are different tax regimes:

• the micro regime (micro-BIC or micro-BNC),
• the simplified actual system,
• the normal actual system,
• the controlled declaration system.

Tax or fiscal regime?

Be careful not to confuse a tax regime with a fiscal regime. The latter determines how you are taxed, i.e. whether you are subject to :

• corporate income tax (IS), which mainly concerns capital-based companies. For example :
  • SA (société anonyme),
  • SARLs (limited liability companies),
  • SAS (simplified joint-stock company), etc;
• or income tax (IR), or direct taxation in the name of the partners, aimed primarily at partnerships. Examples include
  • EURL (entreprise unipersonnelle à responsabilité limitée),
  • EIRL (entrepreneur individuel à responsabilité limitée),
  • SNC (general partnership), etc.

What are the different tax regimes?

Micro-BIC and micro-BNC tax regimes

What's the difference between BNC and BIC?

First and foremost, we need to differentiate between BNC and BIC, since we've seen that the nature of the activity impacts the choice of tax regime.

• The BIC (Bénéfices industriels et commerciaux) tax regime applies to you if your company carries out :
  • commercial,
  • industrial
  • handicrafts,
  • providing accommodation or food;
• The BNC regime (non-commercial profits) applies to you if your company carries out :
  • liberal professions,
  • of offices,
  • that do not fall into any of these categories.

Who is concerned by the micro regime?

• Micro-BIC scheme: companies with annual sales excluding VAT not exceeding :
  • 176,200 € for activities involving the purchase/sale or supply of accommodation and food,
  • 72,500 € for commercial services;
• Micro-BNC regime: companies with annual sales excluding VAT not exceeding €72,500.

☝️ If you exceed the threshold for two consecutive years, you are no longer eligible for the micro scheme from the following January 1. You then switch to the real tax system.

What are the special features of this tax system?

This tax system simplifies the process, since a flat-rate allowance, i.e. a reduction in the tax base , is applied directly to sales. It corresponds to :

• 71% on sales excluding VAT for purchase/sale activities and the provision of accommodation and food under the BIC system,
• 50% on sales excluding VAT for BIC commercial services,
• 34% on sales excluding VAT for activities covered by the BNC tax.

💡 The amounts obtained give the profit on which income tax is calculated.

Simplified real income tax system (or RSI)

Who is concerned by the simplified real income tax system?

This system applies to BIC companies.

To be covered by the RSI scheme, annual sales excluding VAT must be between :

• 176,200 € and 818,000 € for purchase/sale activities or the provision of accommodation and food,
• 72,500 and €247,000 for commercial service providers.

☝️ If you exceed the threshold, you can still benefit from the simplified real income tax system the following year, provided you exceed it for the first time.

What are the special features of this tax system?

Tax is calculated on actual profit, by deducting all expenses from sales excluding VAT.

However, to confirm to the tax authorities the accuracy of the information declared, a number of accounting obligations must be met, including the keeping of annual accounts:

• balance sheet,
• income statement,
• and notes.

However, under the simplified real-estate regime, the accounting burden is reduced:

• the company must keep cash accounts during the year (a daily journal records receipts and expenses);
• debts and receivables are recorded at year-end;
• the balance sheet and income statement are simplified.

The normal actual tax regime (or RRN)

Who is concerned by the normal actual tax regime?

This system applies to BIC companies. To qualify for RRN, annual sales excluding VAT must exceed :

• 818,000 € for purchase/sale activities or the provision of accommodation and food,
• 247,000 € for commercial service providers.

What are the special features of this tax regime?

Compared with the "réel simplifié" (simplified actual) system, this tax regime requires more demanding accounting. In particular, the companies concerned are required to

• chronologically record all movements affecting their assets,
• carry out an inventory every 12 months,
• prepare annual financial statements comprising :
  • a balance sheet,
  • an income statement,
  • appendices.
• keep a journal and an accounting ledger.

The controlled declaration system

Who is concerned by the controlled declaration system?

This system applies to BNC companies with annual sales in excess of €72,500 excluding VAT.

What are the special features of this tax regime?

• Unlike the simplified actual or normal actual tax regimes, the controlled declaration regime allows you to deIn contrast to the simplified or standard tax regimes, under the controlled declaration regime, the company's profit is calculated on the basis of expenses and income received, rather than expenses and income incurred.
  
  
• Accounting obligations involve keeping cash accounts using :
  • a daily ledger of revenues and expenses,
  • a fixed assets and depreciation register.

See all software Accounting

The VAT tax system

When we talk about tax systems, we're also talking about VAT tax systems. Let's take a look at the different scenarios.

VAT exemption

What does this mean?

You are exempt from declaring and paying VAT. However, you cannot charge it to your customers.

Who is eligible for VAT exemption?

Companies with annual sales excluding VAT of less than :

• 85,800 € for purchases/sales and the provision of accommodation and food,
• 34,400 € for commercial services and the liberal professions.

Real simplified VAT regime

What does this involve?

• Only one declaration per year is required, made no later than the 2nd working day following May 1st. This declaration lists all taxable transactions for the previous calendar year.
  
  
• VAT is paid in two instalments (one in July and one in December). The balance, if any, is paid at the time of regularization following the annual declaration.

Who is eligible for the simplified VAT scheme?

Companies with annual sales excluding VAT of between :

• 85,800 and €818,000 for purchase/sale activities and the provision of accommodation and food,
• 34,400 and €247,000 for commercial services and the liberal professions.

To qualify for this scheme, annual VAT must be less than €15,000.

Standard actual VAT system

What does this mean?

In this case, VAT is declared and paid on a monthly basis.

Who is concerned by the normal actual VAT system?

Companies with annual sales excluding VAT in excess of :

• 818,000 € for buying/selling activities and the provision of accommodation and food,
• 247,000 € for commercial services and the liberal professions.

This also applies to companies with annual VAT sales in excess of €15,000.