Welcome to our Banqup website! We and third parties use cookies on our websites. We use them to improve site navigation, to analyze site usage, and to assist us in our marketing efforts. You can read more about our cookies and change your preferences by clicking on "I want to change my individual settings". By clicking "I accept all cookies", you agree to the use of all cookies as described in our Cookie Privacy Policy.

Micro-enterprise income tax vs. corporate tax in 2023

June 27, 2023
reading minutes

In 2023, new conditions were introduced for the application of a micro-enterprise tax. Otherwise, instead of the 3% income tax, a 16% corporation tax will apply.

What is the microbusiness income tax?

This is a fixed tax, calculated on the basis of the company's turnover and must be declared and paid quarterly. It is declared using form 100.

In 2022, the tax rate was as follows:

  • 1% of total revenue for firms with at least one employee;
  • 3% of total income for firms without employees.

However, from 1 January 2023, the 3% turnover tax has been abolished and the changes look like this:

  • companies with at least one employee will continue to pay the 1% income tax;
  • companies without employees will automatically switch to paying a 16% corporate tax.

What conditions have to be met for a micro-enterprise tax to apply?

In order to benefit from this scheme, the following conditions must be considered:

  • the income earned must not exceed the ceiling of 500.000 Euro;
  • consultancy and management income must not exceed 20% of total income;
  • it is mandatory to have at least one full-time employee;
  • the company must have partners who own shares in at least 3 micro-enterprises, in the case of partnerships/shareholders with more than 25% ownership.

Which activities can no longer use the micro-enterprise tax?

To be eligible for a microenterprise tax, the company must not be engaged in the following activities:

  • banking activities;
  • insurance and reinsurance or capital market activities, including intermediation in these fields;
  • gambling activities;
  • activities related to the exploration, development and exploitation of oil and gas fields.

What is corporate tax?

It is the difference between a company's total income and its total expenses, excluding non-deductible expenses. Corporation tax is 16% of a company's total profit.

A corporation tax is paid and declared quarterly. The declaration is made by means of form 100 for the first 3 quarters and by means of declaration 101 for the fourth quarter, accompanied by the other three quarterly declarations.

What should you know about the two systems?

  • Tax rate: the micro-enterprise tax has a rate of 1%, while the corporate tax has a rate of 16%.
  • Employees: for a micro-enterprise tax to apply, it is mandatory to have at least one full-time employee, whereas there is no requirement for the corporate tax to have employees.
  • Income ceiling: a company can only be considered a micro-enterprise if the ceiling does not exceed €500,000. However, there is no set ceiling for being taxed on profits.
  • Compulsory expenditure: in the case of micro-enterprises, there are certain compulsory expenditure that must be taken into account, such as the micro-enterprise expense, the employee's gross salary and the labour insurance contribution (CAM) paid by the employer, and the expenditure on accounting services (internal or external). In the case of a corporation tax, compulsory expenditure includes the expenditure on corporation tax and the expenditure on accounting services (internal or external).

If you need a solution to simplify and automate your invoicing and financial document management process, you can use the Banqup platform!

Banqup gives you the ability to create, send, receive, pay and archive financial documents directly from your favourite device. This way, you'll benefit from efficient document management and keep track of all your financial documents in one place.

Start with Banqup

Start seeing the benefits of digitally managed business with Banqup.

Activate Banqup