INDEPENDENT businesses operate under three distinct tax regimes, depending on turnover and the nature of the business.
The most popular regime for expat businesses is the micro-entreprise, as it is meant for low-turnover, individual businesses and is simple.
Regulations have been kept to a minimum and accounting is easy. It is also outside the scope of VAT registration.
Very small businesses can be taxed as micro-entreprises under two separate regimes: Micro-BIC (Bénéfices Industriels et Commerciaux, which is for businesses in commerce, trades or industry) and Micro-BNC (Bénéfices non-Commerciaux, for professionals); businesses with turnovers under certain thresholds are taxed in the régime du réel simplifié and businesses with turnovers over the threshold come under the régime du réel normal.
Professionals and tradespeople cannot earn more than €32,100 to qualify for their respective Micro-BNC and Micro-BIC regimes.
Commercial traders cannot have an annual turnover of more than €80,300 to access the Micro-BIC regime.
Turnover thresholds for the régime du réel simplifié are €766,000 for BNC and €231,000 for commercial traders in the BIC.
However, the simplicity of the micro-entreprise regime has its own cost and you cannot write off expenses against tax.
Instead, there are fixed allowances against turnover with the remainder being your profit for tax and social charges calculations.
The allowances vary from 71% for commercial traders, 50% for Micro-BIC regime and 34% for Micro-BNC.