Prélèvement Libératoire or annual real payment?


I wonder if anyone here can help me as I’ve exhausted all other avenues. The local tax office told me to do an online simulation, but that hasn’t helped!
When I became an auto-entrepreneur just over 3 years ago I opted for prélèvement libératoire. At the time I was partly employed as well as accepting self-employed work as a teacher. My partner is retired and receives a pension from the UK, and we have a flat in London which we rent out. Our tax reference for last year was 40600€ down slightly from previous years, but not by much. Of that 14500€ was self-employed income on which I paid 2.2% (I think) with my quarterly declarations. I don’t know how to work out whether I’d be better off not paying the prélèvement libératoire - can anyone help?


If you’ve done an online simulation and it’s told you the total amount of income tax you would pay using prélèvement forfaitaire libératoire and the total amount of income tax you would pay not using prélèvement forfaitaire libératoire, isn’t it simply a case of looking at the two figures and seeing which is lowest ???

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Hi Anna
I didn’t really understand the simulation, perhaps because we have so many different income sources. What I did was to put in the figures from last year firstly as they had been declared and than I tried to do a second simulation with my ‘libérale’ income in a different box, but they both came out as no tax due, although the figures in the second case were significantly lower.
When I started my local tax officer explained it to me, but when I went back for more advice she had left and I couldn’t get anyone else to talk to me. Can you perhaps direct me to an easy simulator? I speak French but the subtleties of the fiscal system are really beyond me - I also did our UK tax returns and found them much more straightforward.

In simple terms, if I earn (and declare!) roughly 12 - 15000€ as a freelancer a) is this sum included in the Revenu Fiscal de Référence? and b) if so, all household income totals 35 - 40000€ after all the additions and subtractions, or c) if not, household income is apparently 50 - 55000€ - am I better off paying PL or bundling it into my tax return payments?

One more wrinkle this year - I have been doing some teaching for which I am paid with Chèques Service Emploi - are they easy to declare? Will I have tax deducted at source from these payments next year? I have received paperwork each month.

I’ll try to explain how to work it out but I’m not going to attempt the calculation because I’m crap at sums

If you’re working as a prof lib on micro, then 66% of your turnover is classed as taxable income (or possibly 64% - being innumerate I keep forgetting which it is so you’d better check. The autoentrepreneur website will tell you). The other 34% (or possibly 36%) of turnover is your “flat rate” allowance for overheads/expenses and is not counted as taxable income. So say your micro earned 10k, your total household RFR will include 6,600 taxable income from your micro. If you have been paying tax at the forfait no further income tax will be payable on that 6,6k, because you’ve already paid tax on it. Therefore in that case your annual income tax bill will have been calculated on your RFR minus 6.6k.

BUT if you hadn’t been paying income tax at the forfait, then your annual tax bill would have been calculated on the total RFR. So your annual tax bill would normally be slightly higher. Suppose it comes out at 100€ higher, what you need to work out is, is that 100€ more, or less, than the tax you would have already paid if you’d opted to pay at the forfait.

So the two different calculations you need to do are:
1/ Take your total RFR, ie 66% of your micro income plus all the other revenue streams that you pay income tax on. Then simply apply the tax barème to calculate how much tax you would pay. Call the result ‘n’. That’s the easy one.

So if your micro earns 10k and you have 40k other taxable income, you would add 6,6k to the 40k = 46,6k and calculate the tax payable on that.

2/ Keep your micro income separate. Work out your RFR not including your micro income, and apply the barème to calculate how much tax you’d pay on that. Call the answer ‘x’. Then work out how much tax you pay on your micro income if it’s taxed at the forfait (2.2% of turnover or whatever the percentage is). Call the answer ‘y’.
Then add x and y together.

Then compare the total of x+y with n to see which is most beneficial.

Hope this helps. Also I believe that if you want to opt out of the forfait next year, you have to do it by a certain cut off date, 31 Dec at the latest but could be sooner.

No idea how you declare chèque emploi income because I’ve never done it, but AFAIK there is no system for deducting tax at source on that. I imagine there is a specific box on the form where you enter it, and it will get added in to your RFR with everything else.