Classification of income in France
Thread poster: Conor McAuley

Conor McAuley  Identity Verified
France
Local time: 20:53
French to English
+ ...
Oct 3, 2007

Hi all,

I work as a freelancer in France under the "micro-entreprise" system.

For the past 8 months the taxman has been trying to tell me that my income constitutes "revenus industriels [!!!] et commerciaux" or some such nonsense rather than revenue resulting from "prestations de services".

So instead of getting a refund of about €500 I am facing a bill of about €300!!!

(God, this is such a no-brainer for them, I'm sure they are harassing me as revenge because I submitted my tax return late and that there is an element of racism and/or protectionism in all of this).

I do not translate books or any material that would generate royalties, my income comes mainly from translation agencies, some direct clients etc.

Can anyone help with this?

Thanks in advance,
Conor.


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nordiste  Identity Verified
France
Local time: 20:53
English to French
+ ...
translators = BNC "bénéfices non commerciaux" Oct 3, 2007

BNC is the relevant category for the income of freelance translators - also known in France as "membre d'une profession libérale non réglementée".

"BIC" would mean that you buy material (matières premières) and sell them to your clients, with or without any transformation - think shopkeepers or dealers here.

Are you a member of an AGA (association de gestion agréée ) ? It could be worth the membership fee, since 1) you get a tax discount 2) they can help with these kinds of misunderstandings 3) when you are a member the taxman must suppose that you are honest (until THEYcan prove otherwise )

Check your initial declaration of business (immatriculation) with the URSSAF and also your last "déclaration de revenus". May-be you ticked the wrong choice between BIC and BNC and it is causing the problem now.

PS I don't believe in "revenge" or "protectionism" from the tax people, but they can be very tough sometimes.


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Conor McAuley  Identity Verified
France
Local time: 20:53
French to English
+ ...
TOPIC STARTER
Thanks nordiste Oct 3, 2007

I will reply in full when I get a chance. For the moment, this:

For income in 2003, 2004, and 2006 I received the "prime pour l'emploi" (the dispute is with regard to 2005 income) - for 2006 the "prime" was about €500 and the simulation I did on a tax office website for 2005 income resulted in a "prime" for 2005 of €541.

Are freelancers/the self-employed entitled to the "prime pour l'emploi" or has Mr Taxman got it wrong as regards the years in question? (And can he correct his mistakes?)

(In the simulation I put my revenue figure in the "prestations de services" box which seemed logical.)

[Edited at 2007-10-03 12:42]


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Veronica Coquard
France
Local time: 20:53
French to English
Take a deep breath and get your papers in order Oct 3, 2007

Hello Conor,

I know where you're coming from. I've got an appointment soon with the tax guys to straighten out a few misunderstandings as well and have been reading up on the tax laws here in France.

It's important to stay calm and don't let ideas of persecution get the best of you. They don't care where you come from or what you do for a living, they just want your money. Best to stay on good terms, because if they decide to nail you...

The best thing you can do is a bit of resarch before you go see them, and have your accounts on hand along with any other papers you think might be useful. A very good site to get information is : http://www.apce.com/ (Agence Nationale pour la Création d'Entreprise).

The reason I refer you to this site is that it explains the difference between BNC microentreprise, BNC réel, and other "règimes d'imposition" (including BIC, which effectively has nothing to do with our business). This basic choice, which you had to have declared upon opening the business, depends upon the nature of your business (code NAF) but also on other factors: turnover, VAT, and possible exemptions. In my case, for example, I originally wanted to create a "microentreprise" but was obliged to change to a regular BNC to be exempt from "taxe professionnel" because I filled other requirements that allowed me to do this.

This means I have to present complete accounts at the end of the year (in a microentreprise the declaration is very simple; in my case, it's called a "declaration controllée", a term that gives me the shivers) but changes nothing as far as how my income is taxed. (In fact, for a very clear picture of how income is taxed in France - no matter what business it comes from - have a look at this page: http://www.lemoneymag.fr/v4/fiche/s_Fiche_v4/0,5382,13484,00.html )

The BNC choice also means that I can deduct a whole slew of expenses from my turnover, which is a big advantage when investing in material.

In any case, only the tax guys can really tell you which choice is adapted to your situation, but it's up to you to present the situation as clearly (and calmly) as possible. Maybe, after all, you will end up getting some cash back. Let's hope so!


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Conor McAuley  Identity Verified
France
Local time: 20:53
French to English
+ ...
TOPIC STARTER
Thanks verslanglais Oct 3, 2007

To be honest I'm a bit hopeless with all of the admin side, after about 5 mins thinking about it, my brain begins to fuzz.

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French Foodie  Identity Verified
Local time: 20:53
French to English
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yes to prime Oct 3, 2007

Sorry this is brief Conor, as I'm in the middle of a project, but I just wanted to assure you that yes indeed you can get the "prime pour l'emploi" as a freelancer, at least I did several years ago.

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N.M. Eklund  Identity Verified
France
Local time: 20:53
Member (2005)
French to English
+ ...
BNC Oct 4, 2007

Hi Conor,
Your income is BNC.
The prime pour l'emploi can be given for the 'faibles revenus' and has nothing to do with the income classification.

The problem may come from your Insee classification code number. Check that it is correct, becasue typically the tax authorities base it on that.

You will have to write them an official letter stating these facts, and you may have to have some reassessments for previous year income. So, yes, the tax man can and will correct his mistakes.

If your eyes have started clouding over, I suggest contacting an accounting firm who can handle it all for you.
I can give you a name if you wish.

Good luck!


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Conor McAuley  Identity Verified
France
Local time: 20:53
French to English
+ ...
TOPIC STARTER
Thanks Oct 4, 2007

Thanks Ms Eklund, much appreciated.

I think that's the problem resolved - they got it wrong the others but got it right as regards 2005.

My understanding of the issue was awry simply because the tax people didn't simply tell me they got it wrong the other years.

I have just sent them a cheque.

I hope they start getting it wrong again and don't re-do the other years!

[Edited at 2007-10-04 13:03]


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Conor McAuley  Identity Verified
France
Local time: 20:53
French to English
+ ...
TOPIC STARTER
Mind you Oct 4, 2007

(Mind you, I'm still in the dark as to why there is a "prestations de services" box on the tax return form where you fill in your income figure...probably a "one-size-fits-all" form).

Oh for the halcyon days of PAYE! Most payments (retirement fund, social charges) are based on income figures from two years ago, so I'm sure I've got a few headaches in the post, to mix metaphors.

Anyway, back to translating lovely French fire regulations (only 90 pages to go...).


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xxxNMR
France
Local time: 20:53
French to Dutch
+ ...
... Oct 4, 2007

The whole problem is that translations are intellectual services, that's why independent translators are BNC, just as doctors, lawyers, etc., whereas selling goods and other services (secretarial work, DTP, IT) is considered as commercial services (BIC). When I was starting, I was BIC because more than 50% of my work was DTP.

Note that a BIC can easily be transformed in a SARL (that is what I did), whereas a BNC will have difficulties in changing an intellectual activity into a commercial one.


[Edited at 2007-10-04 14:50]


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Conor McAuley  Identity Verified
France
Local time: 20:53
French to English
+ ...
TOPIC STARTER
Thanks NMR Oct 4, 2007

Thanks for the info!

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N.M. Eklund  Identity Verified
France
Local time: 20:53
Member (2005)
French to English
+ ...
Just a suggestion Oct 5, 2007

As verlanglais said, if you haven't signed up with an AGA, I highly recommend you do it now. Starting this year, if you are not signed up, the tax authorities will factor in an increase your earnings and use this as a base for your tax calculations instead of your acutal net income. I don't remember exactly how much it was, but the increase is a lot.

An AGA will cost you about 260 a year and it will make sure your tax declarations are done right.


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