Right tax Calculation Options for the New Business Start Ups

An individual entrepreneur can benefit from the auto-entrepreneur regime provided that he respects a maximum annual turnover limit (ceilings of the micro-enterprise regime).

Exceeding the turnover thresholds over two consecutive years results in exiting the micro-enterprise regime from the following year. From now on, the micro-enterprise regime has replaced the auto-entrepreneur regime. It is therefore more appropriate to no longer use the term “auto-entrepreneur” and replace it with “micro-entrepreneur”.

Exceeding turnover thresholds by a self-employed person

Self-entrepreneur status turnover thresholds

For the income tax for 2020, 2021 and 2022, the income thresholds for the micro-enterprise regime are set at:

  • 176,200 euros  for the sale of goods, objects, supplies and food to take away or to consume on site, or the provision of accommodation (hotels, guest rooms, furnished tourist accommodation),
  • 72,500 euros for other service provision activities relating to industrial and commercial profits (BIC) and liberal professionals relating to non-commercial profits (BNC).
  • In the case of mixed activities, the total amount of income must not exceed the limit of 176,200 euros, and the amount of income relating to the provision of services must not exceed the limit of 72,500 euros.

The thresholds for the micro-enterprise regime are no longer aligned with those for the VAT-based franchise. The consequences are therefore assessed separately. A micro-entrepreneur may be subject to VAT. The tax calculator is a good option in this matter.

Exceeding the thresholds by the auto-entrepreneur

For the taxation of income 2020, 2021 and 2022, the micro-enterprise regime continues to apply when the amount of tax-free revenue for the two preceding calendar years does not exceed the thresholds of the micro-enterprise regime, namely:

  • € 176,200 for trade and housing supply activities (hotels, guest rooms, rural lodgings classified as tourist accommodation, tourist accommodation);
  • € 72,500 for the provision of services and liberal professions falling under BNC or BIC.
  • If thresholds are exceeded over two consecutive calendar years, the entrepreneur out of the micro-enterprise regime as from 1 st January following the two years exceeded.

To assess whether the limits of the micro-enterprise regime are exceeded during the year of creation, the thresholds must be adjusted in proportion to the time of operation of the enterprise or exercise of the activity during the year of creation. Exceeds the thresholds under the first calendar year of operation does not cause the output of the micro-enterprise regime as from 1st January of the following calendar year, because the output comes after exceeding two consecutive calendar years.

Example: an entrepreneur within the BNC starts operations on 1st of July. The threshold to be taken into account to note an overrun corresponds to the threshold of the micro-enterprise regime divided by two.

The auto-entrepreneur exceeds the thresholds for the first time

The auto-entrepreneur who exceeds the thresholds of the micro-enterprise scheme for the first time remains in the micro-enterprise scheme for the following calendar year. Exceeding therefore has no consequences for the self-employed person.

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