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

Knowing your tax regime is important when you set up or run a company, particularly to know on what profits 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?

Read our article to find out.

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 tax on profits, which for most companies is the difference between turnover and the various costs incurred (e.g. social security charges ). As a result, accounting obligations change from one system to another.
• VAT application conditions.

There are various tax regimes:

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

Taxation system or tax regime?

Be careful not to confuse tax system and tax regime. The latter determines the method of taxation, i.e. whether you are subject to :

• corporation tax (IS), which mainly concerns capital-based companies. For example :
  • SAs (public limited companies),
  • SARLs (limited liability companies),
  • SAS (simplified joint stock company), etc;
• or income tax (impôt sur le revenu - IR) or direct taxation in the name of the partners, mainly concerning partnerships. These include
  • EURLs (one-man limited liability companies),
  • EIRLs (limited liability sole proprietorships),
  • SNC (general partnership), etc.

What are the different tax regimes?

The micro-BIC and micro-BNC tax regimes

What is the difference between BNC and BIC?

First and foremost, we need to differentiate between BNC and BIC, as we have seen that the nature of the business affects the choice of tax regime.

• The BIC regime (Bénéfices industriels et commerciaux) 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
  • charges and offices,
  • which do not fall into any of these categories.

Who is covered by the micro scheme?

• Micro-BIC scheme: companies with an annual turnover excluding VAT not exceeding :
  • 176,200 € for buying/selling activities or the provision of accommodation and food,
  • 72,500 for commercial services;
• Micro-BNC scheme: companies with annual sales excluding VAT not exceeding €72,500.

☝️ If you exceed the threshold for two consecutive years, you will no longer benefit from the micro scheme from the following 1 January. You will then switch to the actual taxation scheme.

What are the special features of this tax regime?

This system of taxation simplifies procedures, since a flat-rate allowance, i.e. a reduction in the tax base , is applied directly to turnover. This corresponds to :

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

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

The simplified real income tax system (or RSI)

Who is concerned by the simplified real income tax system?

This 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 scheme the following year, provided that this is the first time you have exceeded the threshold.

What are the special features of this tax regime?

Taxation is calculated on the basis of actual profits, by deducting all expenses from sales excluding VAT.

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

• the balance sheet
• the profit and loss account
• and the notes to the accounts.

However, under the simplified actual scheme, there are fewer accounting requirements:

• the company must keep cash accounts during the year (a daily journal records receipts and expenditure);
• debts and receivables are recorded at the end of the financial year;
• 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 applies to BIC companies. To be covered by the RRN scheme, 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?

This tax regime requires more stringent accounting than the simplified system. In particular, the companies concerned are required to:

• record all movements affecting their assets in chronological order,
• carry out an inventory every 12 months,
• draw up annual accounts comprising :
  • a balance sheet
  • an income statement
  • notes to the accounts.
• keep a journal and an accounting ledger.

The controlled declaration system

Who is covered by the controlled declaration system?

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

What are the special features of this tax regime?

• Unlike the simplified actual or normal actual systems, the controlled declaration system allows you to deThe company's profits are determined on the basis of expenses and income received, rather than expenses and income incurred.
  
  
• The accounting requirements involve keeping cash accounts using :
  • a daily journal showing receipts and expenditure,
  • a fixed assets and depreciation register.

See all software Accounting

The VAT taxation system

When we talk about tax regimes, we are also talking about VAT taxation regimes. Let's take a look at the different situations.

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 an annual turnover excluding VAT of less than :

• 85,800 for buying/selling activities and the provision of accommodation and food,
• 34,400 for commercial services and the liberal professions.

The simplified VAT scheme

What does this involve?

• Only one return per year is required, to be filed by the 2nd working day following 1 May. This return 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 the adjustment following the annual return.

Who is affected by the simplified VAT scheme?

Companies with an annual turnover 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.

Finally, to qualify for this scheme, the annual amount of VAT must remain below €15,000.

Standard VAT scheme

What does this mean?

Under this system, VAT is declared and paid each month.

Who is affected by the standard VAT scheme?

Companies with an annual turnover excluding VAT of more than :

• 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 whose annual VAT amount exceeds €15,000.