After briefly defining the economic activities concerned by agricultural taxation, we will discuss the following points:
- The various tax systems in agriculture,
- Agricultural VAT systems,
- Turnover tax and property tax.
I – Activities concerned by agricultural taxation
Carry out an activity of an agricultural nature, the rural property operators (farmers, share-croppers, owner-operators themselves), who obtain products during the production cycle of plants or animals.
Are subject to the taxation on agricultural profits the individual farmers, associates of certain civil societies or members of a group whose revenues come from:
- The cultivation and breeding of all types of animals;
- The sale of standing grass or projections;
- Forest production;
- The exploitation of mushroom farms and salt marshes;
- Marine farming activities;
- Processing of products intended for human or animal consumption;
- Research and acquisition of new varieties of plants (intellectual property products);
- Equestrian activities (except shows).
The farm profit category also includes the income of owners who themselves exploit their property.
Finally, other ancillary activities of a farm (photovoltaic or wind energy production, farm tourism, for example) also fall into this category.
The farmer can operate under different possible legal statuses, as:
- Individual operator: it is taxed on all the profits made;
- Member of a company or a group not subject to corporation tax (agricultural civil society, agricultural land group, etc.): it is taxed on the share of profit which is due to him after distribution among the members.
II – Agricultural tax regimes
Regardless of the tax regime of the operator, he must declare each year the taxable and exempt income earned by his activity, in a complementary declaration of the self-employed professions of income No. 2042-C-PRO, to which must be attached a specific declaration to the tax system.
MICRO B.A. Regime
Are concerned by the micro-BA scheme:
- The farmer whose average revenue, for all farms, is € 82,800 excluding tax (2017) maximum over 3 years;
- The associated farmer of an agricultural civil society that he controls and whose average revenue does not exceed the limit of application of the micro-BA scheme;
- Agricultural civil societies, even in the case of receipts relating to non-commercial ancillary operations, exceeding 30% of agricultural sales;
- Limited liability agricultural holdings (EARL) where the sole shareholder is a natural person running the holding (multi-personal and corporate taxable EARLs are not concerned).
An operator engaged in a non-agricultural activity elsewhere is excluded from this scheme.
The revenue to be taken into account in calculating the taxable profit is the operating revenue collected during the calendar year.
Taxable profit is equal to the three-year average of the last three years (N-1, N-2 and N-3), less a reduction of 87%. The amount of this reduction cannot be less than 305 € per year.
Accounting requirements: Farmers covered by the micro-agricultural benefit scheme must keep a document recording the daily details of their professional income, with invoices and any other supporting documents.
The farmer under the micro-BA scheme may voluntarily opt for a real tax regime.
Simplified real scheme
Are concerned by the simplified real scheme:
- Operators who report an average revenue between € 82,800 and € 350,000 made in the last 2 consecutive years;
- Those who chose the real scheme while also qualifying for the “MICRO” scheme;
- Or those who trade in butchery animals and do not exceed € 352,000 in recipes.
The accounting and tax obligations are as follows: In addition to reporting the household income, the farmers must complete the declaration N° 2139, which must be accompanied by a simplified balance sheet and profit and loss account.
The accounting result is determined by the difference between:
- Products: sales, inventory changes, operating subsidies, financial products and exceptional products;
- The expenses: purchases of small equipment and supplies of raw materials (including animal purchases), maintenance and repair costs, rents, fees, insurance, miscellaneous expenses (travel, telephone …), personal and advertising, taxes, depreciation and interests.
Normal real scheme
Are subject to the normal real scheme, the operators:
- Reporting an average of more than € 352,000 in revenue over the last 2 years;
- Or under one of the other plans but choosing to remain 2 years minimum in normal regime.
Accounting and tax requirements: Operators must complete Declaration N° 2143 in addition to the statement of household income. It must also be accompanied by the balance sheet, income statement, depreciation schedule, capital gains, etc.
The result is determined in a manner comparable to the simplified real outcome method.
Clarification concerning the two real regimes (normal and simplified):
Revenues from photovoltaic or wind power generation or from other ancillary activities such as on-farm tourism (sale of products from the farm and products purchased) are considered agricultural profits only when operator is subject to a real regime and when the average annual miscellaneous income for the last 3 calendar years does not exceed (both conditions are cumulative):
- 50% of the average revenue from agricultural activity;
- 100 000 €.
III – Agricultural VAT
A farmer is compulsorily subject to VAT since the average amount of income from his farm, calculated over the previous two consecutive calendar years, exceeds € 46,000. VAT liability takes effect from 1 January of the following year. For GAEC, this threshold is equal to:
- € 92,000 if GAEC has 2 partners,
- € 138 000 if the GAEC has 3.4 or 5 partners,
- 60% of the limit for farm operators multiplied by the number of partners if the GAEC has 6 or more partners.
The flat-rate agricultural VAT refund scheme
This scheme is intended for farmers who are not subject to VAT.
Flat-rate reimbursement rate: The flat-rate reimbursement consists of a payment calculated by applying a percentage to the amount of sales made by the operator in the year.
This rate differs according to the nature of the products:
- 5.59% for milk, barnyard animals, eggs, meat and meat products, and grains, oilseeds and protein crops;
- 4.43% for other products.
Tax obligations: In order to obtain the flat-rate reimbursement, farmers must send the tax office an annual declaration summarizing the receipts of the previous year, entitling them to reimbursement.
VAT: the simplified system of agriculture
Under this system, VAT is payable on receipts, therefore from the moment when the farmer obtains payment of his invoices and possible installments. It is nevertheless possible to opt for the VAT on the debits.
In principle, the farmer must pay quarterly installments of not less than 20% of the tax due for the preceding year or the last closed fiscal year, except where the amount of the tax due for that period is less than 1,000 euros.
The farmer is required to file an annual VAT return showing the details of the taxable transactions and the VAT liquidation elements for the cases carried out during the past year.
VAT: the normal system
The farmer can opt for this scheme. In this case there is no specificity in agricultural matters.
IV – Miscellaneous taxes
Turnover tax for farmers
This tax is payable by all farmers, with the exception of those under the flat-rate farming refund scheme, for their agricultural activities.
- A fixed part fixed at 90 €;
- ariable portion fixed per slice of turnover excluding VAT at 0.19% up to 370 000 € and at 0.05% above 370 000 €.
The turnover tax (fixed part and variable part) is due when filing the VAT declaration indicating the elements relating to the year or the previous financial year N-1.
Regarding this tax, we suggest you to consult our article entitled The essential elements to understand the “Taxe Foncière” and the “Taxe d’habitation” on our website.
There are, in the matter, a large number of abatements or exemptions.
You can of course contact us for any question about this article and, in this case, we will put you in touch with a member of our unit specialized in agricultural taxation.
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