SAS tax filing: ensure your business operates tax compliantly
You are considering creating, or have already created, a SAS and would like to understand the applicable tax regulations, now we will provide you with the information you need.
You are considering creating, or have already created, a SAS and would like to understand the applicable tax regulations, now we will provide you with the information you need.
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1. What is the Tax System for SAS?
When creating an SAS, the company automatically falls under the Corporate Income Tax system (IS). This means that profits are taxed according to the corporate income tax regulations.
- Profits up to €42,500 are taxed at a rate of 15%, but several conditions must be met, and the portion exceeding this amount will be taxed at the ordinary rate of corporate income tax.
Note: The amount of taxable profits taxed at the rate of 15% is subject to an annual ceiling within each 12-month accounting period. Therefore, when the accounting year is less than 12 months (usually the case for the first accounting year), this ceiling must be prorated.
If the company meets all of the following conditions, it can choose to be taxed according to the Personal Income Tax (IR):
- Primarily engaged in commercial, craft, agricultural, or freelance activities
- Not listed
- Employing fewer than 50 employees
- Annual turnover or total assets less than €10 million
- Must not exceed five years at the time of creation
- Voting rights must be held by one or more natural persons, with at least 50% of the voting rights held by one or more of the following: Chairman, Chief Executive Officer, Board Chairman, Board Member, or Manager, as well as their family members.
2. What Taxes Might SAS Be Subject to?
SAS may need to pay several taxes, including:
- Value Added Tax (VAT)
- Corporate Property Tax (CFE)
- Corporate Value Added Tax (CVAE)
Value Added Tax (VAT)
Depending on the annual turnover and annual VAT amount of the SAS, it may be subject to different VAT regimes:
- If the SAS turnover does not exceed €36,800 (services sector) or €91,900 (commercial and accommodation sector), the VAT exemption regime applies.
- If the SAS turnover is between €36,800 and €254,000 (services sector) or €91,900 and €840,000 (commercial and accommodation sector), the simplified VAT regime applies. The annual VAT amount must be less than €15,000.
- If the SAS turnover exceeds €254,000 (services sector) or €840,000 (commercial and accommodation sector), or the annual VAT amount exceeds €15,000, the normal VAT regime applies, even if the turnover falls within the threshold of the simplified VAT regime.
Corporate Property Tax (CFE)
Newly established companies do not need to pay CFE in the founding year and can benefit from exemptions when paying taxes for the first time.
Temporary or permanent exemptions from CFE may be possible depending on the company's activities and location.
Companies meeting the following conditions are subject to CFE:
- Sales or income must exceed €5,000
- Must regularly engage in non-salaried professional activities
Companies must submit a preliminary declaration to the tax authorities of their place of registration by December 31 of the founding year.
- When the CFE amount is less than €3,000, it must be paid by December 15.
- When the CFE amount is equal to or greater than €3,000, it must be paid in two installments, each installment being 50% of the total amount:
- The first installment must be paid by June 15.
- The second installment must be paid by December 15.
Payment of CFE must be made electronically.
Corporate Value Added Tax (CVAE)
Newly established companies do not need to pay CVAE in the founding year. However, if there is a business transfer, the company must pay CVAE from the first year onwards.
Companies meeting the following conditions are subject to CVAE:
- Annual turnover exceeds €500,000 (excluding tax)
- Engage in non-salaried, profitable, and regular professional activities, as well as non-professional furniture lessors
If the company's turnover exceeds €152,500, even if CVAE payment is not necessarily required, VAT and the number of employees must be reported.
This declaration must be completed electronically within the second working day after May 1.
Payment of CVAE is divided into two installments, each installment being 50% of the outstanding amount, provided that the total amount exceeds €1,500:
- The first payment deadline is June 15 of the tax year.
- The second payment deadline is September 15 of the tax year.
Subsequently, the balance and adjustment report must be submitted within the second working day after the tax year.
What is the Tax Regime for Managers?
Company managers do not necessarily receive income. If income is received, it will be subject to tax constraints.
3. What Tax Benefits Might SAS Enjoy?
If you create an SAS, you may be eligible for tax exemptions and tax credits.
There are various tax reductions, which may depend on your activities, your place of registration, or the actions you will take:
- Tax reductions related to the place of registration:
- Tax exemptions for Priority Urban Areas (QPV)
- Tax exemptions for Areas of Revitalization and Employment (BER)
- Tax exemptions for Urban Renewal Areas (BUD)
- Tax reductions related to activities:
- Tax credits for the arts industry
- Tax reductions related to employing staff:
- Tax reductions for competitiveness and employment
- Tax reductions for the Sustainable Mobility Package
- Tax reductions related to actions you take:
- Family tax credits
- Innovation Tax Credits (CII)
- Research Tax Credits (CIR)
- Tax credits for energy renovation projects conducted by companies
- Tax credits for purchasing artwork
- Tax credits for Young Innovative Companies or University Enterprises (JEI-JEU)
- Tax reductions for donations to non-profit organizations
Note: When creating a company, you can benefit from tax exemptions in the short term. This applies to taxes such as Corporate Property Tax (CFE).
Useful Vocabulary
When dealing with tax-related procedures, you'll encounter some tax-related terms and concepts.
We've provided you with a list of vocabulary and concepts you might come across, along with their definitions:
- Exemption: A fixed or proportional exemption from the tax base (income, property value, etc.).
- Taxation: The compulsory payment of a fee (e.g., corporate income tax due).
- Turnover: The total amount of goods sold or services provided by a business in an accounting year.
- Tax Credit: A partial or complete reduction in tax owed.
- Dividend: Money or stock dividends paid by a company to its shareholders.
- Accounting Year: The period during which a business records every economic fact in its operations. Typically, an accounting year lasts for 12 months.
- Exempt: Not subject to paying a particular tax.
- Personal Income Tax: Tax calculated and withheld based on income, profits, and capital gains.
- Corporate Income Tax: Tax calculated and withheld based on the annual performance of a company.
- Tax Payment: The act of paying taxes.
- Value Added Tax (VAT): A tax not directly collected by the government. This tax is added to the price of all applicable products.
More terms related to filing taxes for businesses:
- Assets: All property and rights that constitute a company's property (machinery, cash, inventory, etc.).
- Depreciation: The decrease in value of
company property due to wear and tear and the passage of time.
- Agricultural Profits (BA): Income derived from agricultural operations. Agricultural profits are subject to personal income tax.
- Industrial and Commercial Profits (BIC): Profits realized by individuals engaged in commercial, industrial, or craft activities.
- Non-Commercial Profits (BNC): Profits realized by individuals engaged in non-commercial professions (freelancers, copyright holders, etc.).
- Controlled Declaration: A system for declaring non-commercial profits with a value exceeding €70,000 (tax-exempt) Euros.
- VAT Exemption Base: A special regime exempting companies from declaring and paying VAT on services or sales they provide.
- Fixed Assets: They are divided into three types (tangible fixed assets, intangible fixed assets, and financial fixed assets) and constitute the persistent property held by a company. Examples include commercial assets, patents, office equipment, long-term financial securities, etc.
- Tax Union Declaration: A collection of tax returns (balance sheet, income statement, additional documents) submitted by a company.
- Liabilities: Comprise capital (non-current liabilities) and debts (current liabilities).
- Capital Gain/Loss: The positive or negative difference between the purchase price and the selling price of real or movable property.
- Micro-Taxation Regime: A special tax regime applicable to self-employed individuals whose turnover does not exceed a certain threshold.
- Normal Real Taxation Regime: A tax regime applicable to profits and VAT. Applicable to companies whose turnover (excluding tax) exceeds a certain threshold.
- Simplified Real Taxation Regime: A tax regime applicable to profits and VAT. Applicable to companies whose turnover (excluding tax) falls between two thresholds.
- Mobile Capital Income: Income derived from movable capital (shares, stocks, bonds, etc.).
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