What taxes and duties when you are freelance, in France?
A freelancer is subject to the tax payment regime as a sole proprietorship in the same way as industrialists and commercials. How do I calculate a freelancer's levy and tax rate and what are their legal obligations? Is he entitled to a tax allowance or exemption? Let's take a closer look at the tax administration part for freelancers and micro-entrepreneurs.
Defining the status of auto-entrepreneur in order to understand his microsocial regime
A freelancer is a micro-entrepreneur – often confused with a liberal activity – who generally opts for a simplified social regime. Thanks to this self-employed status, he can exercise his function while reducing his tax regime somewhat. Its simplified tax system is based on the declaration of income with payment of social security contributions. This is generally done by flat-rate deduction in discharge in proportion to his income received and deducted from his professional expenses.
A turnover threshold not to be exceeded for freelancers
The finance law allows the freelancer to choose his income tax system: he can choose a classic profit tax or a final levy. Note, however, that the liberal professions and auto-entrepreneurs will not be able to remain in the micro-entrepreneurship regime if they exceed a certain turnover threshold. A single person taxed as a freelancer must not exceed 72,500 euros for his services which relate to industrial and commercial profits or non-commercial profits. In the case of a purchase-resale or accommodation activity, it must not exceed 176,200 euros. Beyond these amounts for all income, it will have the obligation to become a business.
Calculating micro-enterprise income tax: Filing your tax return as a freelancer
Note that since 2014, a freelancer with a commercial activity is now required to be registered with the Trade and Companies Register. A social property contribution tax will therefore also be deducted from you for this registration. In terms of the tax and social aspect, a freelancer, considered to be a self-employed company, is subject to the same types of social security contributions.
To declare your reference tax income as a freelancer, you will need to provide your annual income to Urssaf. You will receive a tax certificate summarizing your overall income for the year and the declared income. Depending on your choice of the type of income tax and your professional activity, you will be able to declare your net taxable income to the BIC / Industrial and Commercial Profits or BCN / Non-commercial profits section. Please note that choosing the final tax payment does not exempt you from the declaration of income for the year. However, this declaration will serve as information when the amount of tax has already been paid in advance.
If you have instead chosen to be deducted directly from taxable income, the income you have declared will be used to calculate your IRPP or Personal Income Tax. You should know that if you are at the beginning of your activity, you can claim the tax reduction. The average tax rate on your entrepreneurial activity will then be decreasing over the next 3 years of activity, depending on the type of exemption you will obtain. For this, you will have to prove an annual income less than or equal to 40,524 euros.
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