Legal Tax Optimization for Independents

The first optimization is not to forget anything. Many independents underestimate their deductible expenses.

100% deductible expenses:

Equipment and material • Computer, screen, keyboard, mouse • Phone and accessories • Office furniture • Software and SaaS subscriptions

Operating costs • Office rent / coworking • Electricity, internet, phone (professional share) • Office supplies • Postage and shipping

Professional services • Accountant • Lawyer • Professional insurance (liability, disability) • Bank (business account fees)

Training and development • Professional training • Books and professional subscriptions • Conferences and events • Professional coaching

Travel • Transport (train, plane, metro) • Mileage allowances • Professional accommodation • Business meals (away from home)

Partially deductible expenses:

| Expense | Deductible share | |---------|------------------| | Home rent (if dedicated office) | Pro area / Total area | | Home internet | 50% to 80% depending on use | | Phone | Actual professional use | | Vehicle | Pro km / Total km |

Tip: Keep ALL your receipts. In case of audit, no receipt = no deduction.

The choice of tax regime can represent several thousand euros in savings.

Micro-enterprise:

| Activity | Flat-rate deduction | |----------|---------------------| | Sales | 71% | | Services BIC | 50% | | Services BNC | 34% |

Interesting if your actual expenses < flat-rate deduction.

Actual regime:

Deduction of actual expenses. Interesting if your actual expenses > flat-rate deduction.

Comparative example (consultant, €60K revenue):

| | Micro (34% ded.) | Actual (40% expenses) | |--|------------------|----------------------| | Revenue | €60,000 | €60,000 | | Taxable base | €39,600 | €36,000 | | IT (30%) | €11,880 | €10,800 | | Savings | • | €1,080 |

Corporate Tax vs Income Tax (for EURL/SASU):

Income Tax (IR) • Profit taxed at your marginal rate (0% to 45%) • Interesting if marginal rate < 25% • No double taxation

Corporate Tax (IS) • 15% up to €42,500, 25% above • Interesting if marginal rate > 25% • Allows salary/dividend arbitrage

IR → IS switch threshold: Generally advantageous to switch to IS when profit exceeds €40-50K.

In a company under IS, you can arbitrate between salary and dividends.

Salary: • Deductible from company result • Subject to social charges • Generates social rights (retirement, etc.)

Dividends: • Not deductible (taken from profit after IS) • 30% flat tax (or progressive scale + 17.2% social levies) • No social charges (except EURL/SARL > 10% capital)

Optimal strategy:

1. Minimum salary for: • Validating 4 retirement quarters (~€6,990/year in 2025) • Having basic social coverage • Banking credibility (pay slips)

2. The rest in dividends: • 30% flat tax vs 45%+ social charges • Substantial savings

Example (€100K result before compensation):

| Strategy | 100% Salary | Optimal mix | |----------|-------------|-------------| | Gross salary | €100,000 | €15,000 | | Social charges | ~€45,000 | ~€6,750 | | Net salary | ~€55,000 | ~€8,250 | | Company profit | €0 | €85,000 | | IS (15%/25%) | €0 | ~€17,875 | | Gross dividends | €0 | ~€67,125 | | Flat tax (30%) | €0 | ~€20,137 | | Total net | ~€55,000 | ~€55,238 |

*Note: Simplified calculation, consult an accountant.*

Warning EURL/SARL: Dividends > 10% of capital = social charges on excess (~45%).

Several schemes allow you to directly reduce your tax.

PER (Retirement Savings Plan):

• Contributions deductible from taxable income • Ceiling: 10% of income (min €4,399, max €35,194) • Savings = contribution × marginal rate

Example: €10,000 contributed × 30% marginal rate = €3,000 savings

Madelin (for self-employed):

• Deductible supplementary retirement • Deductible disability insurance • Deductible health insurance

Investment in SME capital:

• 25% income tax reduction on amount invested • Ceiling: €50,000 (single) / €100,000 (couple) • Family holding company possible

FCPI / FIP:

• 18% to 25% income tax reduction • Ceiling: €12,000 (single) / €24,000 (couple) • 5-10 year lock-up

Charitable donations:

• 66% income tax reduction (general interest) or 75% (aid to people) • Ceiling: 20% of taxable income

Home employment:

• 50% tax credit • Ceiling: €12,000 to €20,000 depending on situation • Childcare, cleaning, gardening, tutoring

Recommended strategy:

1. Maximize PER (immediate savings + retirement) 2. Use schemes according to your situation 3. Avoid complex schemes (Pinel, etc.) unless expert

The holding company is a powerful wealth optimization tool. But beware of complexity.

What is a holding company?

A company that holds shares in other companies.

Typical structure: • Holding (you are shareholder) • → Owns 100% of your operating company

Advantages:

Parent-subsidiary regime: • Dividends passed up quasi-exempt (95% exemption) • No flat tax as long as money stays in the holding

Reinvestment: • Available cash to invest • Real estate, investments, other activities • Without going through your personal taxation

Transmission: • Donation of holding shares • Deductions and Dutreil pact possible • Estate optimization

Optimized cash out: • Sale of securities via the holding • Tax deferral (contribution-sale 150-0 B ter)

Disadvantages:

❌ Complex creation and management ❌ Fixed costs (accounting ×2) ❌ Beware of abuse of rights ❌ Requires expert support

When to create a holding?

✅ Profit > €100K/year ✅ Desire to reinvest (real estate, investments) ✅ Medium-term sale project ✅ Estate transmission to prepare

❌ Not to simply "pay less taxes" ❌ Not if you need everything as compensation

Tip: Never create a holding without support from an accountant and tax lawyer.

Optimization has its limits. Here are the red lines not to cross.

Illegal practices (fraud):

❌ False invoices ❌ Undeclared work ❌ Undeclared income ❌ Undeclared foreign bank accounts ❌ Artificial schemes without economic substance

Risks incurred: • Tax reassessment (tax + 40-80% penalties) • Late interest (0.2%/month) • Criminal prosecution (up to 5 years in prison) • Management ban

Risky practices (gray area):

⚠️ Abnormally low compensation (SASU president at €0) ⚠️ Personal expenses passed as professional ⚠️ Complex schemes without economic justification ⚠️ Holding without real substance

Abuse of rights:

The administration can reclassify a scheme if: • Exclusively tax purpose • No real economic substance • Contrary to legislator's intent

Good reflexes:

✅ Document your choices (why this scheme) ✅ Ensure economic substance ✅ Have it validated by a professional ✅ Declare everything, even if optimized ✅ Keep your receipts for at least 6 years

The "newspaper headline" test:

If your tax scheme made the newspaper headline, would you be comfortable explaining it?

If not, it's probably a line not to cross.