This means that all taxpayers in France are obliged to pay taxes and duties. Taxes are linked to a public service provision and are collected by an administration (for example the tax on household waste removal) while a tax is an obligatory payment without compensation to public administrations. Thus, despite its name, VAT is indeed a tax. There are also fees (revenue collected during a service rendered to a user, but the amount is proportional to the service rendered), as well as social contributions (financing of social protection). We also talk about the concept of compulsory deductions which includes certain non-fiscal state revenues.
It is useful to recall an important point concerning taxation:
It is that of the principle of legality. It is defined by article 34 of the Constitution and specifies that the rules concerning the base, the rate and the methods of recovery of “taxes of all kinds” are fixed by law and are therefore compulsorily voted by Parliament. This is complemented by the principle of annuality, necessity and finally equality. For filing business taxes this is something that you will have to consider.
To learn more about these subjects and find all the questions relating to the definition of tax in France, you can consult the public life site of the French administration.
Taxes are generally the main source of state revenue and are collected by governments. In France, this is the Directorate General of Public Finances (DGFIP) and the local authorities. These levies are used as a whole to finance public budgets, such as national education, the army, justice etc. but also to repay the public debt.
What taxes for companies?
All businesses have to pay a certain number of taxes and fees. Single entry bookkeeping and double entry bookkeeping are useful in defining the tax base. The latter is the amount used as the basis for calculating the tax. All operating income and expenses are recorded there to estimate the amount of tax. Depending on the eg height of the profit, a certain amount of income tax must be paid. However, there are other taxes that a business owner should take into account, including:
- CET (Territorial Economic Contribution)
- Import VAT and customs duties
Companies through the payment of taxes and various taxes play a non-negligible role in the annual state budget and contribute greatly to all tax revenues.
There is a distinction according to the legal status of the company: income tax (IR) for sole proprietorships and corporation tax (IS) for companies. To determine the tax base, the actual costs of the business must be deducted from the turnover.
Value added tax is an indirect tax on consumption. Each company is required to pay taxes on its sales. The amount of tax is proportional to the sales price excluding tax. Thus, in the end, VAT is paid by consumers; taxable persons therefore play the role of tax collector.