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Microbic - my understanding of it!


nomorealurker
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Could anyone please confirm if my explanation (as i understand it) is correct.

I worked the figures out from info i gleaned from various websites but my french isn't good enough for me to be 100% confident with my results!

Having a microbic in my field (sales) i am allowed 27,000eur turnover of which 37% (9,990) is automatically allowed for expenses.

So, 27,000 - 37% = 17,010 which attracts tax/cotisations at around 48%

So, 17,010 less 48% = 8,845 payable for tax/cotisations

And 8,845 + 9,990 (expenses) = 18,835eur NET income.

So although tax/cotisations are at 48%, they are charged on the income AFTER expenses.

Expressed as a % of the total turnover (27,000) tax/cotisations are around 31% - a bit more manageable, i feel. All the press headlines saying french taxes are at around 50% don't mention this only applies AFTER all expenses are deducted. So whilst high, perhaps not quite as high as i feared!

If anyone can confirm my figures are roughly accurate.....or wildly in-accurate i'd be very greatful.

Also can one stay on a microbic if turnover is under the limits? Or is it only to be used for a limited time? ie. the first year or two of business.

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Different business than you but same system and all I can say is that I am far better off in France than I would be in the UK tax and cotistations wise. In fact assuming one MUST always pay tax's it a pleasure to do so in France, not nearly as painful. I think if you applied the UK system of NI deductions to your Fench income you might find that there is very litle difference. It looks bigger because it's done after all tax deductions and allowances are applied.

One thing I discovered this year is that your personal tax allowances appear to be cumulative. By this I mean that it appears on our tax form that we did not use all of ours last year so whats left has been added to this years allowance.

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It is important to know what you mean by "sales". For a business which is essentially concerned with buying and selling goods, 72% of annual turnover is deemed to be costs, and therefore the remaining 28% is profit, upon which 45% for social charges will be payable whilst for businesses offering purely a service, the costs are considered to be 37%. The thresholds for VAT and when you can no longer be a microbic also depend on what you do. The thresholds are €76,300 a year turnover for a commerce which buys and sells goods, and €27,000 for a business which offers a service. Gites fall under the rules for buying and selling goods, don't know why but I'm not complaining.

Sue
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Just read your question again.

You can stay a micro BIC as long as you dont't exceed the turnover limits for as long as you like. Some people do however choose to submit full accounts, if you can prove yor expenses are higher than the allowances that maybe the route for you, however, you will need an accountant and you will be audited.

Sue
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Many thanks for the replies.

They have prompted a further question, however!

Is it possible to have two microbics - one in service and one in sales?

To explain - if i continued my service job (37% allowance)and also ran a gite.

If my sales (supplying a service) job doesn't earn quite enough then a gite will provide supplementary income.

I understand both jobs must be separate as have different expense allowances, but are you allowed to have two microbics? If allowed, I guess this would involve two lots of regular social payments as well.
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Hi

Useful thread !

So after the deduction of 72% ( for sales business ) and remembering the upper limit of 27000, that leaves 7560, do they take 45% of this ? or does the personal income allowance interfere ? If not then your left with 4158, which hopefully will not attract any tax liability?

In that scenario one assumes people hope the costs of doing business are less than the 72%?

I also assume you do not need to submit accounts in this situation ?

regards

 

 

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I think you are doing your sums back to front.

First estimate what your turnover will be, if it's under 76,300 for sales/gites you can be a micro bic if it's under 27,000 for services you can be a micro bic.

Then see what your expenses will be, if it's under 72% for sales/gites then it's worth being a micro bic and if it's under 37% idem for services.

You don't have to keep detailed books for the tax man if you are a micro bic, but if you want to run a profitable business you should keep the books for yourself.

Calculating how much you can get away with, or how much you can get from the tax man should not be your priority when setting up a business plan.

Sue
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Hopefully my final question on this - and thank you to those who have helped so far!

Using a microbic, I believe cotisations are paid every 3 months in advance, as the french system doesn't work on arrears.

But how is the amount payable calculated when the turnover isn't declared (or known) until the end of the year?

Do the authorities assume you will have the maximum turnover and work the cotisations out based on that and then reduce the following year's payments if your turnover is lower than expected?

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  • 2 weeks later...

Hello, a question for the panel...theoretical.

Microbic with turnover 'approaching' 27'000

If I took on work that required the hire/purchase of materials, could I get the customer to pay for these in order to keep my turnover below the 27'000 threshold?

The result I would be aiming for would be to keep my turnover more profit rich than a mix of expenses and profit.

If this does indeed make sense and work, I am committing a folly by not simply jumping up to the next regime?

Thankyou

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Teamup oh mighty Guru...

You who are wise in all things answer me this...

What is the maximum velocity of an unladen swallow...

What I really mean to ask is... if I hire/command the materials but the client pays for them.

Do you think that by keeping my turnover more profit rich rather than than filling up my 27'000 allowance with expenses I shall be better off?

Will they still use the normal formula for calculating my social charges or will they look into my affairs and...

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Why don't you go and chat them up in somewhere that hires this sort of thing out and explain the situation. I would. How do you think we found out anything before the internet.

 

I really can't see any difference between this and say a painter getting his clients to buy their own paint. I'm sure that you will be able to sort something out. And I certainly know a painter who 9 times out of 10 gets his clients to buy their own paint.

Once you start getting into the best way to make most profit, I think that seeing an accountant would be a good investment.

nb never was a guru and am certainly not called one either these days, which I am mighty glad about.

 

And swallowing, well don't know how fast it goes down, but it takes me about a second to swallow, suppose that that is pretty normal. Laden, would that be food or drink?

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Ty - My builders set up an account with my local builders merchant using my name and address for the work they did. All materials used were put on that account and I paid it at the end of the month, they just charged me for their labour.

I have to say that at first I was somewhat taken aback by this and thought it a bit of a cheek and was very concerned about the account being open to abuse. What they did was to go through the account at the end and explain and show me all the items on the account and where they were used.

I suppose this is one of the positive things about using a local builder in as much as they would not dare to cheet their customers as we all know each other and we all know the builder, he lives over the road from me. I get the impression talking to others locally that this is quite a common method of working. I can't answer for hiring equipment as they didn't need to for my work but I could assume that it works the same although assumption is not always correct.

Hope this helps.

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Ty - talk to an accountant!

If you renovating for folks and they have to buy their own materials they can't benefit from the 5.5% YVA on your labour and the cost of the materials so they are paying over the odds! If your customers can't benefit from the 5.5% TVA go ahead, and ask them to buy their own materials but make sure you guide them on this otherwise they are going to buy things that you maybe won't be happy to use.

Congratualtions on getting to the 27000 as profit!! Go for the next regime, I say!
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