WHAT TAX REGIME SHOULD YOUR COMPANY ADOPT?

Which tax system is right for your company?

Lawyers in Bastia - Lawyers in Corsica - Law firm in Bastia - Corporate law Bastia - Tax law Bastia

In the same way as in social matters, each legal status has its own basic tax regime, sometimes with the possibility of opting for another method of taxing profits.

There are two methods of taxing profits:

I.- Income tax (Which tax regime for your company?) :

When a company is subject to income tax, it is the partners who pay the tax in their name and on their behalf. Depending on the nature of the profession (trader, craftsman, farmer or self-employed professional), the corresponding income will be taxed in the category of Industrial and commercial profits (BIC), Farm Profits (BA) or Non-commercial profits (BNC). Within each category, there are specific tax arrangements based on turnover (this is particularly the case for the micro-entrepreneurwith micro-BIC or micro-BNC).

The following structures are subject to income tax:

- L'EURL when its shareholder is an individual (option to pay corporation tax);

- Sole proprietorship ;

- L'EIRL (option to pay corporation tax) ;

- The SNC (option to pay corporation tax).

II - Corporation tax (Which tax regime for your company?) :

In this case, it is the company that pays the tax (at the standard rate of 25% with, under certain conditions, the application of a reduced rate of 15% in respect of the first 38,120 euros of profits). Shareholders wishing to receive the fruits of their investment will have to distribute dividends and will be subject to income tax (at the single flat-rate withholding tax of 30% or, as an option, at the marginal income tax rate after an allowance of 40%).

A.- The structures subject to corporation tax :

- EURL when the partner is a legal entity;

- SARLs (family SARLs may opt for income tax or, subject to certain conditions, a temporary option for the partnership tax regime);

- SAS or SASU (temporary option for partnership tax under certain conditions) ;

- The SA (temporary option for partnership tax under certain conditions).

The use of an income tax structure will be particularly attractive if the company benefits from a profit exemption such as an "urban free zone". ZFUfor example.

B.- For the rest, the challenge is to optimise the tax position of the company and its director by :

-. Determining the partners' financial strategy. Do they want to receive all the profits in the form of dividends, or do they intend to reinvest them in the company?

-. Choosing the most appropriate tax regime for the executive's tax situation. In particular marginal tax rate,

-. A trade-off between remuneration and dividends.

Lawyers in Bastia - Lawyers in Corsica - Law firm in Bastia - Corporate law Bastia - Tax law Bastia