We are getting close to the 2020 income tax declarations (paper declarations to be posted by 20th May 2020 midnight). Here is a short guide specifically for micro entrepreneurs. Just a quick reminder that you have to fill in a 2020 income tax form whether or not you opted for the income tax at source called “impot libératoire”, as this process enables the tax office to work out your overall household income called “revenu de reference” or ‘revenu fiscal”.
5 other facts to bear in mind before completing your 2020 income tax form:
- The tax office has put an emphasis on the fact that you have to declare your foreign bank accounts as a French resident. Payment platforms such as Paypal, Stripe or Wise are seen as foreign accounts, so have to be declared. Also check the IBAN of your online bank, as N26 or Revolut are based abroad and need to be declared. You have to indicate your account number, when it was created and what it is used for. If it is used for your business, you will have to give your SIRET number. Use form 3916.
- Online sales via collaborative platforms are also considered as professional when reaching at least 3,000€ per year. For instance, someone selling 15,000 euros of clothes on Vinted, would need to declare them as micro BIC.
- You are declaring your income earned between 1st Jan 2020 and 31st December 2020.
- This is the only time in the year when you can update your personal details with the tax office. So, if you have moved home, got married/divorced, or have had a child, now is the time to update your personal details.
- As a micro entrepreneur, you cannot deduct your running expenses and have to declare your total sales cashed in 2020: No deduction or rebates to be applied to your sales.
If you are filling your first declaration, you have to do so on paper. Read my previous blog entry to download the 2020 income tax forms.
If you complete your declaration online, your income tax bill will be confirmed at the end of your declaration. You will be able to correct your declaration until December 2021 if need be. Once you log in, select all the forms that you may require for your declaration under Annexes. I have highlighted on this screenshot the various forms you may have to pick according to your personal situation: from employee (in France) to artist or nonprofessional gite as LMNP.
How to fill in form 2042 C Pro as a Micro Entrepreneur
1 - Download your Attestation Fiscale from URSSAF
Log in to your autoentrepreneur.urssaf.fr account and go to Mes Documents/ Mes Attestations and select "Attestation fiscale (annuelle)", then click on validate. The attestation should add itself in the table below. This document confirms the yearly turnover that you have to declare. It also usually mentions where to declare this amount in the short text below the table. It will, for instance, confirm if you are a:
- Benefices Non Commerciaux (BNC),
- Benefices Industriels et Commerciaux (BIC),
- as well as whether you opted for the income tax at source.
URSSAF may also have posted to you a copy of this attestation fiscale earlier in the year. If you don't have either of these attestations, add up your 2020 yearly sales that you have declared to URSSAF on a monthly or quarterly basis. Don't deduct any running expenses or social charges. If you are TVA registered, do not include the TVA.
2- You have opted for Impot liberatoire
Impot libératoire is when you pay an extra percentage every month or quarter, together with your social charges. This represents 1% of your turnover for trade, 1.7% for manual services (services commerciaux et artisanaux) and 2.2% for profession liberale.
You still have to file a 2020 French income tax form, but will not be taxed again. Enter your sales, don't apply any rebate. If you are TVA registered, don't include TVA.
Declare your 2020 yearly turnover under "Micro Entrepreneur (auto entrepreneur) ayant opté pour le versement liberatoire de l'impot sur le revenu" on page 1 of form 2042 C Pro:
- Trade, buy to resell, ecommerce - Vente de marchandises et assimilés: cell 5TA.
- Manual services and furnished rental - Prestations de services et locations meublées : cell 5TB.
- Profession liberale - Revenus non commerciaux : Cell 5TE.
Looking at the financial help from URSSAF with the covid crisis. If you opted for some social charges exoneration with URSSAF from March to May/June 2020. Indicate the turnover which was exempt from social charges in the relevant cell 5TJ, 5TK or 5TL under “Dont chiffre d’affares de mars à mai/juin exonéré de charges sociales”.
3 - You did not opt for Impot liberatoire - regime micro BIC/BNC
Your fiscal regime is called micro BIC for Benefices Industriels et Commerciaux or micro BNC for Benefice Non Commerciaux. You have to declare your yearly turnover in the section relating to your activity. Remember that you cannot deduct any expenses and have to declare your whole sales. Impots will apply a standard rebate for you before calculating your taxes: -34% for profession liberales, -71% for activité commerciale (and classified gites) and -50% for manual services (and non classified gites).
Micro BIC - refers to trade buy-to-resell, gites, food, e-commerce, shops, manual services, prestations de services commerciales et artisanales - 1st section on page 3.
Trade - Benefices Industriels et Commerciaux (BIC) - ventes de marchandises : cell 5KO.
- Manual services - Benefices Industriels et Commerciaux (BIC) - prestations de services et locations meublées: Cell 5KP on page 3.
- Tip: if you started or closed your business down along the year, indicate how many months you have been in business in cell 5DB.
Micro BNC - Professions liberales - 2nd section on page 5 of form 2042 C Pro
Benefice Non Commerciaux (BNC) is for profession liberales, such as consultant, teaching, content editor, webdesign, coaching, consultants.
Add your turnover in cell 5HQ on page 6. If you started or closed your business down along the year, indicate how many months you have been in business in cell 5Xi.
Don’t complete cell 5HY on page 8 “BA, BIC, BNC à imposer aux prélèvements sociaux, as this doesn’t apply to micro entrepreneur.
4 - Do you need to declare fonds de solidarite
If you received some financial help via Fonds de solidarite in 2020, you don’t have to declare this amount in your French income tax form.