9. Taxation of Business Profits in France

  1. Main Options
  2. Micro-Entreprise
  3. Regime Réel
  4. Company Tax
  5. Dividends

9.3. Regime Réel - Impot sur le Revenu (IR)

This form of taxation is available to a sole trader, and to certain family run companies.

Under the tax status of régime réel (IR) you are liable for tax and social security contributions on your actual net profits. This distinguishes from micro-entrepreneur tax status in which tax is charged based on turnover.

For those in one of the business activities who declare their profits as bénéfices non commerciaux (BNC), the tax regime is called régime de la déclaration contrôlé, although it amounts to much the same tax system.

Tax is payable on net profits - the difference between your sales and eligible business costs - using the tax rates and bands in the personal tax system.

Those rates and bands can be seen at French Income Tax Rates.

Taxation on the basis of personal income tax rates distinguishes it from company taxation.

In the event that the business incurs a loss in the year then losses can be carried over.

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-entrepreneur regime.

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 this date does tend to vary from year to year.

The option for régime réel may be made until the date for filing the profit and loss statement, a concession. Broadly speaking, that is May or June the following year. Thus, a business taxed as a 'micro' in 2023 has until May/June of the following year to opt for the new tax regime in 2023.

Next: Company Taxation

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