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The French Tax System
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The French Tax System
In order to become a self entrepreneur you must register your activity to the “Centre de formalités des enterprises” or to the Chamber of Commerce (“Chambre de commerce”) if you have a commercial activity.
There are some conditions to this statute:
– Regarding the turn over (“chiffre d’affaires”): The turn over must not exceed 80.000 Euros when your activity is to sale goods, objects, supplies, food or if you give housing services;
The turn over must not exceed 32.000 Euros if you provide any other services than those listed above;
The turn over must not exceed 32.000 Euros if you provide services included in the non commercial profit category (“benefices non commerciaux”).
– You must benefit VAT exemption (“franchise de TVA”);
– You can pay your income tax as a lump-sum settlement (“règlement forfaitaire”) based on your turn over if your tax household (“foyer fiscal”) does not exceed 25.195 Euros.
– Regarding the social costs (“charges sociales”) and fiscal liabilities (“charges fiscales”):
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101115 – THE SELF ENTREPRENEUR
The trust deed (« la fiducie ») is defined by the article 2011 to 2031 of the French Civil code (Law n° 2007-211 of February 19th 2007).
The trust deed is the mean for one or many principals (“constituants”) to transfer properties (“biens”), titles (“droits”) and safeties (“sûretés”) to a trustee (“fiduciaire”). Those properties are separated from the trustee’s patrimony, who is acting in a determined manner for some beneficiairies (“bénéficiaire”).
Article 2011 of the French civil code: La fiducie est l’opération par laquelle un ou plusieurs constituants transfèrent des biens, des droits ou des sûretés, ou un ensemble de biens, de droits ou de sûretés, présents ou futurs, à un ou plusieurs fiduciaires qui, les tenant séparés de leur patrimoine propre, agissent dans un but déterminé au profit d’un ou plusieurs bénéficiaires.
The trust deed can be either legal or contractual.
The trustee’s property right (“droit de propriété”) is limited to:
– The use of its right in a determined manner defined by the trust deed; and
– Its right is temporary.
The trust deed can include either buildings (“immeubles”) or movables (“biens meubles”).
Summmary :
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100121 THE TRUST DEED
Definition : (article 35 of the French revenue Code).
A property dealer (“marchand de biens”) is a person who buys in its own name, in order to sale buildings, businesses/commercial establishments (“fonds de commerce”), shares of a real estate comp any, or who usually subscribes those shares, in order to sale.
A person who, usually, buy real property (“bien immeuble”) in order to build properties and sale them. They are submitted to the payment of the Income tax (“impôt sur le revenu ”) within the category of profit from industrial and commercial occupations (“bénéfices industriels et commerciaux).
In order to be considered as a property dealer, you will have to fulfill two criteria:
The operation made must have an usual character; and
The speculative intending (“intention speculative”) at the time of the acquisition.
The profit or losses (“pertes”) are calculated from the difference between the sale’s price of the buildings and the coast prices (“prix de revient”) increased by the expenses (“frais et charges”). The profits are submitted to the income tax unless they are made by a civil company (“société civile”) in which case they are submitted to the corporate tax (“impôt sur les sociétés”).
The calculation base of the VAT (value added tax) is made from the margin (“marge’) and not the entire amount of the sale price.
The gross margin (“marge brute”) is the difference between:
The expressed price (“prix exprimé”) and added expenses; and
Either, the sum paid by the assignor (“cédant”) for the property;
Or either, the nominal value (“valeur nominale”) of the shares given in exchange of transfers in kind (“apports en nature”) made.
The VAT rate is 19,6%.
According to the article 257
7 of the French income Code, the operations contributing to the construction of buildings (the purchase of a building land (“terrain à bâtir”), the sale of new buildings, or of real estate company’s securities (“titre de sociétés immobilières”)) are submitted to the property VAT
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100113 – Property Dealer & Property VAT
Any Person / Company wishing to start a business should register himself accordingly at the Registrar of Business (“registre des societés”) where a Business Registration Number (“numéro d’immatriculation”) will be allocated to him.
Details such as the type(s) of business activities, the address of the propose trade and the expected date of commencement should be submitted thereat.
Entrepreneurs can form a company without having to go through notary services.
An annual registration fee of 2000 Rs is payable to the Registrar of Companies by small private companies (companies with a turnover of less than 30 Million Rs).
Under the Business Registration Act 2002, the company must also register with the Commercial Registry (“ registre du commerce”) to get a business registration card.
Therefore, the company must complete an application form1(downloaded from the Internet: http://www.boimauritius.com).
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100112 – BUSINESS LICENSING AND CORPORATE TAX
Only natural person (« personne physique ») domiciled in France are submitted to the wealth tax.
No matter its nationality, the natural person who has his tax domicile (“domicile fiscal”) in France is submitted to an unlimited fiscal obligation (“obligation fiscale”) and all its possessions (“biens”) whether located in France or in a foreign country, are in the scope of the wealth tax.
Exemptions:
– An International Tax Convention is signed with France for an indebted person (“redevable”) who has possessions in a foreign country;
– Double taxation is avoided by charging (‘”imputation”) the wealth tax payable in France with the wealth tax paid in other countries regarding properties or possession located outside of France; and
– Since August 6th 2008 persons who transfer their domicile in France can be temporarily ONLY taxable regarding their French possessions1, if:
The person had his tax domicile in a foreign country during 5 years before his settlement in France; and The person keeps his tax domicile in France during 6 years after his settlement. Regarding the natural persons domiciled outside of France, they are only taxable for the possessions located in France2. The tax domicile is defined by the article 4 B of the French revenue code.
Summary :
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100128 – The Wealth Tax
