Choosing the Right Tax and Social Regime for Your Non-Commercial Profits (BNC)
When you start a professional activity or seek to optimize your situation, it is essential to choose a tax and social regime suited to your needs. Here are the three main options available to you:
The Micro-BNC Regime The micro-BNC regime (Non-Commercial Profits) is aimed at self-employed professionals with moderate annual revenue.
Revenue Ceiling: €77,700 excluding VAT per year. Exceeding this threshold for two consecutive years results in exit from this regime.
Advantages:
- Simplified accounting.
- Flat-rate expense evaluation with a 34% tax deduction on turnover (only for income tax).
- Favorable social contribution rates:
- 24.6% for those not affiliated with CIPAV.
- 23.2% for those affiliated with CIPAV.
- Withholding tax:
- Income tax paid directly through social contributions.
- Overall rate: 26.8% (non-CIPAV) or 25.4% (CIPAV).
- Available based on income conditions. This regime is particularly suitable if your professional expenses are low and your turnover remains below the threshold.
The Controlled Declaration Regime If your revenue exceeds €77,700 excluding VAT for two consecutive years, the controlled declaration regime becomes mandatory.
Advantages:
- Ability to deduct actual expenses, including social contributions.
- Cash accounting method, providing management tailored to cash flow.
- Taxation and social contributions:
- Net profit serves as the basis for income tax (IRPP) and social contributions. This regime is recommended if your actual expenses, including contributions, exceed the 34% flat-rate deduction offered by the micro-BNC.
The Sole Proprietorship with Corporate Tax (EI at IS) This regime allows a sole proprietor to opt for corporate taxation (IS) while maintaining the legal structure of a sole proprietorship.
Accounting:
- Based on the accrual principle, meaning that revenues and expenses are recorded when they occur.
Taxation:
- Profits are taxed at the IS:
- 15% up to €42,500.
- 25% beyond that.
- The entrepreneur’s salary can be freely paid and is deductible. This salary is the basis for social contributions and income tax. This regime is ideal for those who wish to separate their personal income from business profits, especially for investment or tax optimization purposes.
How to Choose the Right Regime?
- Micro-BNC: Prefer this regime for low expenses and revenue under €77,700 excluding VAT.
- Controlled Declaration: If your actual expenses are significant, this regime becomes more advantageous.
- EI at IS: Ideal for reinvesting profits or optimizing personal tax liability.
To go further, you may also consider setting up an operating company coupled with a holding company. This structure enables better management of your investments and increased tax optimization.
Need help choosing the regime best suited to your situation?
Contact our GAMEIRO firm, specializing in supporting entrepreneurs, for personalized advice.