9. Taxation of Business Profits in France

1. 9.1. Main Options
   9.2. Micro-Entreprise
   9.3. Regime Réel
   9.4. Company Tax
   9.5. Dividends

9.3. Taxation of Business Profits Under Regime Réel

Under the tax status of regime reel you are liable for tax and social security contributions on your actual net profits. No automatic fixed rate allowance applies, as occurs for a micro-entreprise.

Those taxed under this tax regime are:

• A business whose main activity is commercial sales or furnished accommodation, with a turnover in excess of €80,000 (wef 1/1/09);
• A service based business with turnover in excess of €32,000 (wef 1/1/09);
• A business excluded from micro-entreprise status;
• A business that charges VAT, or;
• A small business which has elected to use this tax regime.

In the event that the business incurs a loss in the year then losses can be carried over for up to a maximum of six years.

Capital gains or losses are taxed under a separate tax regime.

There are special regulations governing those such as writers, artists, sportsmen/women, or composers.

Of necessity, the accounting requirements need to be more detailed (double entry book-keeping) than that under a micro-entreprise regime.

The CGA will prepare your accounts at a reasonable cost, and provide you with business and accounting advice.

This multiple is only used for income tax purposes; your social charges will be based on your actual profit.

A new business is exempted from having to make a tax declaration in the first year, but the second year declaration must cover the period since start-up.

The tax declaration should normally be made by 30th April each year, although the Government does tend to vary this date from year to year.