May deadline for 25% tax rebate
Small business owners have until the end of the month to join a group and benefit from a 25% reduction on income tax.
IF you are a small business owner who started trading on January 1 or before, you have until the end of May to benefit from a 25% reduction on income tax when you come to make your income tax returns for 2008 next spring.
This tax saving comes with membership of a centre de gestion agréé (CGA) - “approved management centre” for small businesses which declare income as bénéfices industriels et commerciaux – (BIC) or an association de gestion agréé (AGA) for the professions libérales, who declare as bénéfices non commerciales - (BNC).
A small business in France can be taxed on the basis of actual revenue and expenditure (le régime réel), or through a fixed allowance for all costs based on turnover as part of the micro-entrepreprise tax regime (which has a membership ceiling of €27,000 income in the year for professions libérales and €76,000 for BIC).
One disadvantage of the latter is that the authorities tax you as though you were earning more than you are, seemingly on the assumption that many people try to fiddle the books.
Those who choose the régime réel – taxed according to actual expenditure – are treated the same, unless they belong to a CGA or AGA, which liaises with your accountant (if you have one), checks your tax declarations and provides an added assurance that that they have been done properly. The result of membership is in effect a 25% reduction in the tax bill paid.
The declaration itself has to be done with the assistance of an expert-comptable (chartered accountant) in the case of a CGA, and this is recommended in the case of an AGA.
Apart from the tax advantages, a CGA or AGA can help with business advice and training.
Belonging to one involves an annual fee of about €200, however, for those who income is less than €76,000 a year (for BIC) or €27,000 (for BNC) an additional income tax deduction of up to €915 a year is available to help cover this cost and accountants’ fees.
To benefit when you come to make your declarations for 2008’s income you need to have joined by the end of May 2008 if you started your business on or before January 1. However thanks to a recent legal change, if you start a business, or restart after a break, during the course of this year, you have five months in which to join to benefit.
You can find CGAs at www.centre-de-gestion-agree.net and the AGAs at www.association-de-gestion-agree.net
