Several micro-entrepreneurs, independents or furnished rental companies were not fully eligible for the white year. So they paid tax when the tax was canceled. The text provided that those concerned could finally be reimbursed for this tax the following year under certain conditions. We take stock of this particular tax niche and the interaction in the 2020 tax return.
The principle is quite complicated
We must come back to the 2019-2020 income statement made last year. It was the white year and taxation was canceled. The tax authorities created a CIMR “modernization recovery” tax credit which reduced the tax to € 0. Despite everything, some income remained taxed and did not then benefit from this famous CIMR.
Indeed, to avoid windfall effects, the tax authorities refunded the tax for companies only if the turnover of 2018 was less than or equal to those of the last 3 years! The objective was to prevent some from taking advantage of the white year to cash everything. The system mainly impacted micro-enterprises, the liberal professions and non-professional furnished rental companies. Use the tax refund calculator is important there.
Many companies did not fully benefit from the white year and had to pay taxes last year. In order not to penalize expanding companies, the tax authorities added a clarification: if the turnover of 2018 is higher than the average of the last three years, the taxpayer cannot have the blank year but the tax taken may be returned to him if he proves that his turnover continues to increase the following year=.
We had explained the principle in detail here:
The self-employed will be able to recover the white year tax in 2020.
Furnished rental: tax canceled if the rents are lower than those of the last 3 years
Increase in the self-employed person’s income in 2019: the tax authorities then accept the blank year retroactively.
The text therefore informed us that taxpayers could still benefit from the blank year if they could prove that this increased income over 2018 was in fact not exceptional. The only valid reason for the tax department would be that it continues in time in 2019. It then promises a refund of the tax.
Example
The tax authorities authorized the white year only on the first 25,000 euros following the rule of the average of the last 3 years.
- The CIMR did not reimburse all of the tax. The paid tax and social security contributions during the blank year calculated on 30,000 – 25,000 or 5,000 €.
- The tax authorities will refund this tax if and only if the 2019 rents reach at least € 30,000 again.
Note also that if there is an increase in 2019 compared to the average for 2015/2017 but less than 2018, the tax authorities will also reimburse a part. For example if the 2019 rent is € 28,000 above, the tax authorities will still reimburse the part of the white year tax wrongly taken in 2018 on the part of income between € 25,000 and € 28,000.
Conclusion
The system is intended to be very complex. Already, we must identify whether we are concerned or not! You can look at your 2019 tax notice on 2018 income. You must then check whether the line “modernization recovery tax credit” corresponds to the tax paid (idem for social security contributions), otherwise, it means that you have suffered taxation on the white year. Then, it remains to know how to obtain the restitution!
