Sole proprietorship and corporate income tax

The law of February 14, 2022 to promote self-employed professional activity created a new, single status for sole traders, which came into force on May 15, 2022, as described in a previous article.

This new status, designed to replace the EIRL, offers simplified formalities and operation on the Guichet unique website, as well as protection for personal assets, which become unseizable by default.

But the major new feature of this law for sole traders is the opportunity to opt to have profits taxed not as income tax (IR), but as corporation tax (IS). How does this option work?

1. Who is eligible?

Any individual entrepreneur (craftsman or artist) can opt to have his or her profits taxed at the corporate level if he or she is subject to the "régime réel d'imposition" (actual tax regime), also known as the "régime de la déclaration contrôlée" (controlled declaration regime) for AAs.

This means that entrepreneurs under the micro regime (auto entrepreneurs or micro entrepreneurs, AAs under the special regime) must leave this regime to apply for the option to be taxed under corporation tax.

2. How do I do this?

The request to switch to corporation tax must be sent to the tax department of the place where the company has its main place of business before March 31st of the year for which the entrepreneur wishes to opt.

e.g.: before March 31, 2024 for taxation under corporate income tax on 2024 income.

On this letter, which you will not forget to sign, you will indicate :

- the company's name

- its address

- your full name

- your address.

In return, you'll receive a receipt