Micro Finance Taxes: What You need to Be Aware of

A micro-entrepreneur is likely to engage his responsibility in the same proportions as a “classic” individual entrepreneur. Since 2015, his main residence has been protected. It cannot be subject to seizure to pay professional debts. Likewise, the micro-entrepreneur’s other land assets can be protected by means of a declaration of insurability. However, this requires the intervention of a notary.

The Other Options

Otherwise, if he wishes to strengthen the protection of his assets, he has no other choice than to opt for the EIRL (sole proprietorship with limited liability). He will then make a declaration of allocation of his professional assets.

On option, the partners may however request the application of the progressive scale of tax on income. Dividends can then benefit, subject to conditions, from a 40% reduction and a fraction of the CSG paid becomes deductible from their taxable income (6.80%).

Whichever tax is chosen, income received as dividends falls under the category of income from movable capital (RCM). Partners must use their personal income tax return to report them.

The taxation of the share of results increased to the partners

Partners and business leaders concerned

In this category, we find all the structures subject to income tax (IR). It can therefore be, in the first place, a sole proprietorship, having opted or not for the micro tax system. The use of the tax return calculator is important there.

Also, these provisions concern all companies which fall under the IR and which have not opted for the CIT or, conversely, those subject by right to the CIT but which temporarily opt for the IR . This therefore includes:

  • The sole partner of a EURL or the partners of a family SARL,
  • Partners of a SAS / SASU / SA / SARL who have opted for the tax regime for partnerships,
  • Or the partners of an SNC or a civil society (SCI for example).

Taxation applicable to profit sharing

Income paid to partners, shareholders or company heads is subject to taxation different from those presented above. They are not considered as wages, or as dividends. In fiscal jargon, we speak of “result” (sole proprietorship) or “share of the result augmenting to the partners” (company).

Thus, for all these structures subject to income tax, automatically or at their option:

  • The remuneration paid to directors is non-deductible expenses results of the company (they are therefore subject to tax reintegration);
  • The share of increased profits to the partner as well as his remuneration (if he exercises management functions) is taxed together, in the category corresponding to the activity carried out.

This may be the category of:

  • Industrial and commercial profits (BIC),
  • Non-commercial profits (BNC),
  • Land income (RF),
  • Gold agricultural profits (BA).

Here, it is once again the progressive scale of income tax that applies.

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