French income tax
2018 has been the year of a number of tax changes for French companies. In particular, the French income tax on long-term professional added values is going down, while the thresholds for you to apply to the micro-company tax regime are placed much higher.
Long-term professional added-values:
Professional added values refer to a company selling one of its assets for more money than it was initially bought. They are considered long-term if you held the assets for at least two years before selling it.
And, now, the taxation rate on added values will only be 12.8%, instead of the previous 16 percent. Just like before, there are another 17% of social contributions, bringing up the total to about 30%. As such, now, they are aligned on the “Flat tax” applied to the added values of individuals.
Micro-company tax regimes:
Another change comes in the form of the thresholds for the micro-company tax regime. Indeed, these thresholds have been roughly doubled; today, if you want to apply to this regime, you need to have an annual turnover before tax lower than:
- 170 000€ instead of 82 800€ for trade and accommodation activities
- 70 000€ instead of 33 200€ for services and liberal activities
However, be careful! If you’re used to the previous system, you might remember that micro-companies did not have to pay the VAT. That’s not quite true anymore, though; the VAT thresholds have not changed with the micro-company thresholds.
In other words, if your company deals in services or liberal activities, you won’t have to pay the VAT if your turnover is lower than 33 200€, just like before. However, if it is higher than that, you’ll still have to pay the VAT, even if you’re subject to the micro-company regime.
