Understanding tax differences in France
When you are self-employed in France, it is essential to understand the different tax regimes that apply. Two commonly used regimes are the Industrial and Commercial Profits regime (BIC) and the Non-Commercial Profits regime (BNC). In this article, we’ll explore the key differences between these two tax regimes, to help you choose the one best suited to your situation.
1. BIC (Industrial and Commercial Profits):
The BIC regime concerns commercial, industrial and artisanal activities carried out individually or in a company. If you sell goods or services as a trader, craftsman or entrepreneur, you will generally be subject to the BIC regime. Here are some important points to remember:
- Taxation: Profits made under the BIC regime are subject to income tax and social charges. You will be taxed according to a progressive scale, which varies according to your marginal tax bracket.
- Real regime: Under the BIC regime, you have the possibility of opting for the real tax regime. This means that you will have to keep accounts and declare your real income. You will be able to deduct your expenses and depreciation linked to your activity, which can reduce your tax base.
- VAT: If your turnover exceeds certain thresholds, you will be subject to VAT and will have to collect it from your customers. In return, you will be able to deduct the VAT that you paid on your professional purchases.
2. BNC (Non-Commercial Profits):
The BNC regime concerns liberal activities carried out on an individual basis. If you are a liberal professional, such as a doctor, lawyer, consultant, or architect, you will generally be subject to the BNC regime. Here are the main features of the BNC plan:
- Taxation: Profits made under the BNC regime are also subject to income tax and social charges. However, unlike the BIC regime, profits are taxed according to a system of brackets specific to BNCs.
- Controlled declaration regime: Under the BNC regime, you must opt for the controlled declaration regime. This means that you must keep accounts and report your actual income. You will be able to deduct your professional expenses, including your office, training and equipment costs.
- VAT exemption: As a liberal professional, you are generally exempt from collecting VAT. This means that you do not charge VAT to your customers and cannot recover VAT on your business purchases.
In France, the BIC and BNC tax regimes are designed to adapt to different professional activities. It is crucial to understand the differences between these two plans to determine which is best for your situation. If you carry out a commercial, industrial or craft activity, the BIC regime is generally applicable. On the other hand, if you are a liberal professional, the BNC regime applies. It is recommended to consult an accountant or tax advisor for personalized advice based on your business and financial goals.
