Agricultural Micro-Profit Scheme

micro-BA Tax regime Tax VAT Social contributions Tax obligations

The tax regime for micro-agricultural operations (micro-BA) is a simplified advantageous regime for small agricultural operations, but it is important to comply with accounting and tax obligations to avoid penalties.

Summary

Definition and scope

The micro-BA regime is a simplified tax regime for agricultural operations, based on receipts and not on actual profits.
It applies to operations whose average VAT-excluded receipts over the previous three years are below a certain threshold (€91,900 in 2023).
This threshold has been exceptionally increased to €120,000 for 2024 and 2025.
Eligible are individual operators, GAEC, single-member EARL and certain agricultural civil companies.
Excluded are farmers trading in livestock, those with ancillary activities taxable on an actual basis, and agricultural companies created after 1997.

Tax calculation

The micro-BA regime considers the average VAT-excluded receipts of the last three years, to which a 13% taxable base after an 87% allowance is applied.
The allowance cannot be less than €305 per year.
13% of receipts fall under the "Agricultural profits" category for income tax calculation.
The base of receipts includes amounts collected, value of products withdrawn, subsidies, VAT refunds, etc.
In case of business creation, the calculation is adapted according to years of activity.

VAT, capital gains and social contributions

The micro-BA tax regime does not affect the VAT regime. The operator can be under the simplified actual agricultural VAT regime or the flat-rate VAT refund.
Micro-BA operators benefit from exemption of professional capital gains after 5 years of activity.
The MSA social contributions base is based on receipts after an 87% allowance.

Obligations and risks

The operator must keep a daily receipts record and keep supporting documents.
They must declare their receipts on the supplementary declaration no. 2042 C Pro.
If the threshold is exceeded, the business switches to the actual tax regime.
The operator can voluntarily opt for the actual regime and benefit from a tax reduction for accounting expenses.
In case of non-compliance, the tax administration can exercise a recovery right for 3 years and apply late payment penalties.

Context

The tax regime for operations under the micro-operations regime (called "micro-agricultural profits regime" or "micro-BA" regime) is a simplified system of taxing agricultural income of an operator based on their receipts and not taking into account their expenses and actual profits.

Key figures

Micro-BA application ceiling

The micro-agricultural profits regime (called micro-BA) applies to agricultural operations whose average receipts over the previous three years are less than or equal to €91,900 excl. VAT for 2023, based on the average VAT-excluded receipts of the previous three years (i.e., 2020, 2021, and 2022) (unless opting for the simplified actual regime). In GAEC, by transparency, the threshold is multiplied by the number of partners, up to 4.

The 2024 Finance Act, adopted on 19/12/2023, exceptionally raises this threshold to €120,000 for applying the micro regime in 2024 and 2025. The next adjustment is scheduled for 2026.

In practice, the micro-BA regime would apply by right in 2024 to operators whose average VAT-excluded receipts for 2021, 2022, and 2023 do not exceed the €120,000 threshold.

Eligible for micro-BA are: individual operators, GAEC, single-member EARL (since 2017), and agricultural civil companies created before 1997 and remaining under the flat-rate regime all these years.

Exclusions from the micro-BA scope

Excluded from micro-BA are:

farmers conducting commercial operations on slaughter and charcuterie animals ("livestock traders")
the attachment as ancillary agricultural activities of commercial, artisanal or liberal activities taxable on an actual basis.
agricultural companies created after 1997, subject to income tax, such as EARL, SCEA, SARL, SAS… (other than GAEC and EARL).

Calculation of the micro-BA base

The micro-BA tax regime takes into account the average VAT-excluded receipts of years N, N-1, and N-2 to which an 87% allowance is applied. This allowance cannot be less than €305 per year. Thus, 13% of the agricultural operation's receipts fall under the Agricultural Profits category for income tax calculation of the tax household.

Receipts base = amounts collected during the calendar year within the operation

value of products withdrawn from the operation
compensation received within the framework of agricultural mutual aid
subsidies, aids, premiums and insurance indemnities (other than equipment subsidies)
flat-rate VAT refund (according to VAT regime)
interest on cooperative partner accounts
prizes obtained at contests or fairs.

Special case:

In case of business creation, the three-year average of receipts does not apply. The amount of receipts to be considered for determining taxable profit is equal to:

- for the year of creation, the receipts of that year;

- for the following year, the average of the receipts of the tax year and the previous year.

For applying these provisions, the year of creation to consider is the start year of the agricultural activity, even if no receipts occurred during that year.

(example to be inserted)

Fiscal and social aspects of micro-BA

Micro-BA and VAT

The income tax regime does not prejudge the VAT tax regime. The micro-BA operator may be under the simplified actual agricultural VAT regime or the flat-rate VAT refund.

Micro-BA and capital gains

The rule of exemption of professional capital gains on disposal of fixed assets or shares, defined by article 151 of the CGI, also applies to operators under the micro-BA regime. They must have more than 5 years of activity to be exempt from professional capital gains.

Micro-BA and forestry flat-rate

Forestry operators are always subject to the forestry flat-rate regime, except for profits from harvesting products (fruits, bark, etc.) for sale and those from operations of wood cut by the owner himself for which they are taxable under the micro-BA or actual regime.

Micro-BA and not micro-enterprise

In agriculture, there is no micro-enterprise as for artisans and traders. In the case of a very small agricultural operation, the legal regime will be an individual enterprise, the tax regime a micro-BA, and the social regime a solidarity contributor.

Micro-BA and social contributions

The MSA social contribution base for the farm manager or solidarity contributor will be based on micro-BA, i.e., on receipts after an 87% allowance.

Accounting and tax obligations

Operators under the micro-agricultural profits regime must keep a document recording the daily detail of their professional receipts, supported by invoices and all other supporting documents.

Operators under the micro-agricultural profits regime must indicate, on their supplementary declaration to their income tax return, the amount of receipts for the tax year and the two previous years, as well as capital gains realized or losses incurred during the year, on declaration no. 2042 C Pro.

Threshold exceedance

If the micro-agricultural profits regime thresholds are exceeded, the business switches to an actual tax regime from the first fiscal year following the three-year period that observes the threshold exceedance.

For business creations during the year, the receipts of the first year of activity must be adjusted pro rata temporis to assess compliance with the applicable threshold.

Non-compliance case

The right of recovery of the income tax return applies. The recovery period is three years: the tax administration can exercise it until the end of the third year following the year for which the tax is due.

In case of tax audit, you risk a recalculation under the actual regime, late payment interest penalties on the tax difference due, amounting to 0.20% of the tax due per month of delay, i.e. 2.4% over 1 year.

References

La version initiale de cet article a été rédigée par Aurélie Brunet.

Articles 64 bis and following of the CGI Official tax bulletin: Agricultural profits
BA - Tax base - Micro-operations regime - Determination of the common law taxable result BOI-BA-BASE-15-10
Francis Lefebvre Tax Memo