AE & taxes

[crossy67]

Hi.

I am trying to calculate an estimated income for our soon to be B&B business venture in 36.  I have searched and read for about 30 minutes and found that 23% seems about the going rate for AE tax, hope I am getting this right?  I just want to confirm exactly what %age I am likely to be left with after taxes and deductions, is the 23% it or will there be income taxes on top?  We will eventually have 3-4 rooms.

Ooooh, just another thought for those of you that might have had some experience.  Habitation taxes, will they change if the property is to be used as a B&B?

Thanks in advance.

Ian

[halfblind]

Although not involved with B&B business I have been involved in the gite letting business for a number of years and my understanding is that if you offer food - ie. B&B - then you have to register for TVA. That could open up a whole bag of worms !

[Will]

Do you have a source for that 'understanding'?

It certainly goes against the experience of many people (us included) that tax from a B&B business is taxable under a micro regime - as long as it comes under the statutory turnover limit - and thus is specifically excluded from TVA.

The 23% figure mentioned in the original question includes tax (at 1.7%) as well as cotisations at 21.3%, which applies to a service industry (i.e. 'prestations de service') under the BIC regime. My understanding is that several people have claimed the lower rate for gites and B&B, under 'ventes de marchandises (BIC)', which is 12% (13% with tax included).

Note that these rates apply to turnover, not profit, so no other costs can be offset. If you have a large number of properties that you are renting out then you may well do better to go for a 'réel' regime where you can offset all your allowable costs and expenses and benefit from charging and recovering TVA,  

You can opt for payment of tax with your monthy or quarterly declaration under the autoentrepreneur/micro social regime as above. However, if your income is low so you are not actually liable to pay income tax in France it is pointless opting to pay it; and if your income is above a certain level you cannot pay this way, you have to add the income to your normal tax return.

Source

 

[crossy67]

As I understand it you would need a food hygiene course certificate at lots of Euros if serving hot food, breakfast is ok..

Thanks for the info Will, so it looks like if I base my calcs on 23% then I should be ok, anything less would be a Brucy Bonus[:D].

We (me to be honest) are thinking of another property close by that would make a great home with potential for a gite and to rent the house out peak season.  I think we probably would need more rentals to get enough of an income to live, I am not after large sums, just enough to feed our selves and pay bills.

[halfblind]

[quote user="Will"]

Do you have a source for that 'understanding'?

It certainly goes against the experience of many people (us included) that tax from a B&B business is taxable under a micro regime - as long as it comes under the statutory turnover limit - and thus is specifically excluded from TVA.

The 23% figure mentioned in the original question includes tax (at 1.7%) as well as cotisations at 21.3%, which applies to a service industry (i.e. 'prestations de service') under the BIC regime. My understanding is that several people have claimed the lower rate for gites and B&B, under 'ventes de marchandises (BIC)', which is 12% (13% with tax included).

Note that these rates apply to turnover, not profit, so no other costs can be offset. If you have a large number of properties that you are renting out then you may well do better to go for a 'réel' regime where you can offset all your allowable costs and expenses and benefit from charging and recovering TVA,  

You can opt for payment of tax with your monthy or quarterly declaration under the autoentrepreneur/micro social regime as above. However, if your income is low so you are not actually liable to pay income tax in France it is pointless opting to pay it; and if your income is above a certain level you cannot pay this way, you have to add the income to your normal tax return.

Source

 

[/quote]

As regards the TVA the "understanding" comes from a booklet, in French, from the French Tax authorities - Ref GP 178 dated March 2009 - page 9 to be precise !

[Benjamin]

halfblind

No need to gtet shirty and use !!!!!!!!!!!!!!!!!!!s  [:D]

This forum has a tendency to routinely ask for a source when phrases such as "I heard it down the pub" are used. That way the information given gains some creedence.

[halfblind]

OH dear, one exclamation mark and you have a wobbly - get a LIFE - yes I know "capitals".

[Will]

I don't disbelieve you, but I can find no reference to that particular booklet (GP 178) on any of the impots websites; indeed the official guide (http://doc.impots.gouv.fr/aida/brochures_ir2010/) about taxation of furnished property income makes no reference as far as I can see to charging TVA if serving meals.

Where is somebody like Quillan with current experience of serving meals at a B&B?

Edit: The Autoentrepreneur guide (see my 'source' in previous post) says:

Attention : certaines activités sont exclues du régime fiscal de la micro-entreprise et par conséquent du régime auto-entrepreneur.

Sont notamment concernées, les activités relevant de la TVA immobilière (opérations de marchands de biens, lotisseurs, agents immobiliers, opérations sur les parts de sociétés immobilières), les locations d’immeubles nus à usage professionnel, certaines activités commerciales ou non commerciales comme la location de matériels et de biens de consommation durable.

So for just a normal B&B rather than a professional property rental business, AE would seem to be fine, and as you cannot charge/recover/register for TVA as an AE it would seem to follow that the requirement to operate under the TVA regime doesn't apply.

[halfblind]

Hi Will,

The booklet points to a part of the site www.impots.gouv.fr and follows the following tabs Professionnels>Vos preoccupations>Creation d'Activity.

I have had a brief look and can find no reference to TVA and "herbergement avec prestations" so I guess the system has changed since the publication of the booklet in 2009.

Something else for the recycle bin.

PS The title of the brochure is "loueurs en meuble non professionnels" and I picked it up from the local tax office a while back.

[Will]

Thanks for that HB. It shows how quickly tax matters can change, then apparently change back again.

It would still be interesting to get some input from somebody, like Q, who currently runs a B&B serving meals. He would also be able to answer the question regarding taxe d'habitation. My recollection is that it's not affected - though a 'tourist tax' operates in some communes, and you do of course need to make sure your house insurance covers B&B risks.

 

 

[londoneye]

Hi

We have a gite complex and are registered under AE - for the last year and a half we have been declaring under the 12% (vente de merchandise (sp?)) - we clearly identified that we were a gite business ... no come-back.

Not sure why there should be a difference between chambre d'hote and gite, but I don't know enough to say that there is not.

...

[Lollie]

Am I right in thinking that as a family with two children, as long as my husbands salary and my earnings do not go over 75k I can register and opt for PAYE at 23% under the AE scheme.

Lollie

[Danny]

Lollie,

PAYE does not exist in France. PAYE is how most salaried people pay income tax in the UK. In France income tax is not Paid As You Earn but is paid after the year is complete and you declare your earnings and the tax office send you a demand.

It is also declared as a family unit rather than individually. So all your income is put together (including your income as an AE) and declared as a family income.

Income tax is completely separate from cotisations or social charges which I think you are referring to These are paid by the self employed. In a 'micro entreprise' and under the AE, it normally works out at about roughly 23 % of your turnover.

Danny

[Lollie]

PAYE in the lose term, ie pay my tax and cotisations monthly or quarterly as is permitted under the AE scheme.

Having paid taxes in France as a family unit for over 7 years I am well aware of how it works. Still it is a good explanation for people who are perhaps looking to move to France or who are in their first year here.

[Will]

[quote user="Lollie"]Am I right in thinking that as a family with two children, as long as my husbands salary and my earnings do not go over 75k I can register and opt for PAYE at 23% under the AE scheme. Lollie[/quote]

That is more or less the case. By 'PAYE' I am assuming that you want to pay your cotisations and taxes together in a single quarterly or monthly payment, in which case the rate is 23% if you are providing a service under a BIC regime - different rates apply to other types of business. If your total household figure is above a certain figure then you can only pay the cotisations, the tax part has to be declared with your other income on your normal tax declaration.

Conversely, if your income is likely to be too low to actually pay tax, it is pointless opting to pay that extra 1%-2.2%.

The figure you quote is actually slightly below the real amount: from the guide at www.lautoentrepreneur.fr

Il peut opter pour le versement libératoire de l’impôt sur le revenu, à condition que le revenu de son foyer fiscal ne dépasse pas 25 926 € par part de quotient familial en 2008, soit :

- 25 926 € pour une personne seule ;

- 51 852 € pour un couple ;

- 77 778 € pour un couple avec deux enfants.

[Lollie]

By my income being too low to actually pay tax, you mean the 'household' income? Mine certainly would be, but with hubbies salary no chance.

I dont like big bills at the end of the year!

Thanks Will.

[Will]

Yes, in France you are taxed as a couple, not as individuals.

 

[Howie]

What if you're not married and one of you is resident in the UK and earns their income solely in the UK. Whilst the other is making, say, 15,000 euros and is in France for 200+ days a year?

[Will]

If you are not married or in a legal partnership (PACS) you are taxed individually in France.

If you are married or PACSd though you have to declare your worldwide income in France, i.e. UK + French income (remember to declare the UK income as tax having already been paid). The resulting household income is likely to take you into a higher tax bracket in France, so there will be more tax payable than would have been due solely on the French resident spouse's income. Because in UK you are taxed individually, your spouse's income in France is of no interest to the tax authorities there so you don't need to declare it in England, just the UK employment income.

[Howie]

[quote user="Will"]If you are not married or in a legal partnership (PACS) you are taxed individually in France.

If you are married or PACSd though you have to declare your worldwide income in France, i.e. UK + French income (remember to declare the UK income as tax having already been paid). The resulting household income is likely to take you into a higher tax bracket in France, so there will be more tax payable than would have been due solely on the French resident spouse's income. Because in UK you are taxed individually, your spouse's income in France is of no interest to the tax authorities there so you don't need to declare it in England, just the UK employment income.[/quote]

Thank you for this information. I'm about to go down the AE route and am really pleased to find out that I will be taxed as an individual. Thank heaven we never married!