Note: This guide covers French tax law. International readers should consult local tax authorities.
1. Why prop firm taxation is a crucial topic
You're starting to receive payouts from your prop firm. The gains are landing in your account. And then the killer question: how do I declare this to the tax authorities?
The problem is that there is very little reliable content in French (or any language) on this topic. Most articles found online mix personal trading and prop firm trading, but these are completely different from a tax perspective.
In a prop firm, you don't trade with your own capital. You receive compensation based on your performance — this is a service provision, not personal trading in the tax sense. This distinction changes everything.
2. Important warning
⚠️ DISCLAIMER: This article is provided for informational purposes only and does not constitute tax, legal, or accounting advice. Taxation is a complex and constantly evolving field. The information presented here reflects our general understanding of the topic in February 2026, but every situation is unique. You must consult a chartered accountant or tax advisor for your personal situation before making any decision. Lucas Propfirm cannot be held responsible for decisions made based on this article.
3. Which legal status should you choose?
To legally receive and declare your prop firm gains in France, you need a legal status. Here are the main options:
| Status | Complexity | Ideal for | Turnover ceiling |
|---|---|---|---|
| Micro-entreprise (French micro-business) | Very simple | Starting, income < 77,700€/year | 77,700€ |
| EURL/SARL (French limited liability company) | Medium | High income, optimization | Unlimited |
| SASU/SAS (French simplified joint-stock) | Complex | Large income, dividends | Unlimited |
💡 Our recommendation: For 90% of starting prop firm traders, the micro-entreprise is the best choice. Simple to create, simple to manage, and tax-advantageous up to a certain threshold. You can always evolve to a company structure when your income justifies it. See also our step-by-step tax declaration guide.
4. The micro-entreprise for prop firm trading
How to create your micro-entreprise
- Go to guichet-entreprises.fr or autoentrepreneur.urssaf.fr
- Choose a service provision activity (BNC - Non-Commercial Profits)
- Registration is free and takes about 15 minutes
- You receive your SIRET number (French business ID) within a few days
The APE code (French business activity code)
The APE code (Activité Principale Exercée — main activity exercised) assigned to you depends on your activity description. Codes commonly used for prop firm trading include:
- 7022Z — Business and management consulting
- 6619B — Other auxiliary activities to financial services
- 6612Z — Securities and commodity brokerage
The exact choice depends on your situation — ask your chartered accountant for advice when registering.
5. How your income is classified
Income from prop firm trading is generally classified as BNC (Bénéfices Non Commerciaux — Non-Commercial Profits). Why? Because you provide an intellectual service (your trading expertise) to the prop firm, which compensates you in return.
💡 Important: This is NOT the same as personal trading. In personal trading with your own capital, gains are subject to the PFU (Prélèvement Forfaitaire Unique — flat tax) of 30%. In prop firm, it's professional activity income (BNC). The difference is fundamental.
Prop firm = service provision
Concretely, when you receive a payout from Phidias or another prop firm, it's compensation for a service provision. You provided your expertise, the firm pays you a share of the profits. It's a client-provider relationship.
6. How to declare your gains in practice
Under micro-entreprise (micro-BNC regime)
This is the simplest declaration:
- Each month or quarter: declare your turnover to URSSAF (French social security) via autoentrepreneur.urssaf.fr
- Each year (May-June): complete your income tax return (form 2042-C-PRO)
- Enter your gross turnover in the BNC box (line 5HQ or equivalent)
- The administration automatically applies the 34% flat-rate allowance
✅ Example: You received 10,000€ in payouts during the year. You declare 10,000€ of turnover as BNC. The 34% allowance is applied automatically. You are taxed on 6,600€ (10,000 - 34%). Simple.
Documents to keep
- All payout statements from your prop firm
- Invoices or payment receipts for challenges
- Corresponding bank statements
- A receipts register (mandatory under micro-entreprise)
7. Charges and contributions
URSSAF contributions (micro-entreprise)
Under micro-entreprise BNC, you pay social contributions of approximately 21.1% to 23.1% of your turnover (the exact rate may vary by year and reforms).
Income tax
You have two options:
| Option | How it works | Condition |
|---|---|---|
| Progressive scale | Turnover - 34% allowance → added to your other income → standard IR scale | None |
| Versement libératoire (flat-rate payment) | 2.2% of turnover withheld directly each month/quarter | N-2 tax income < threshold (about 27,478€ per share) |
💡 The versement libératoire is often advantageous if you have other income (salaried employment for example). You pay 2.2% of your turnover in income tax instead of adding it to your progressive scale. Total with URSSAF: about 24-25% of your turnover. Check your eligibility with your accountant.
8. VAT and prop firms
Under micro-entreprise, you benefit from the VAT base franchise as long as your turnover does not exceed the threshold applicable to service provision:
- Franchise threshold: 36,800€ / year (indicative 2026 threshold, to be verified)
- Increased threshold: 39,100€ / year
Concretely, as long as your prop firm income remains below this threshold, you do not charge VAT and do not recover it either. It is transparent for you.
⚠️ Warning: If you exceed the increased threshold, you become liable for VAT from the 1st day of the month of exceedance. This is a significant change that impacts your accounting. Monitor your income and anticipate this threshold. Additionally, since prop firms are often based abroad, intra-community VAT rules may apply — ask your accountant for advice.
9. Legal tax optimization
Here are some perfectly legal optimization avenues to explore with your chartered accountant:
Timing of withdrawals
You are not obligated to withdraw all your gains immediately. If you are approaching the micro-entreprise threshold at year-end, it may be wise to defer a payout to January to smooth your income over two fiscal years.
Deductible expenses (under real regime)
If you switch to the real regime (instead of micro), you can deduct your actual professional expenses:
- Cost of challenges and prop firm subscriptions
- Computer equipment (computer, screens)
- Subscriptions to data feeds (Rithmic, CQG)
- Trading training
- Software subscriptions (TradingView, Sierra Chart...)
- Percentage of rent if dedicated home office
💡 Tip: The real regime becomes interesting when your professional expenses exceed 34% of your turnover (the flat-rate micro allowance). If you spend 5,000€/year on challenges, equipment and training for a turnover of 12,000€, your expenses represent 42% — the real regime would be more advantageous. Calculate with your accountant.
10. Tax mistakes to avoid
⚠️ Mistake #1: Not declaring at all. International transfers are monitored. If you receive regular transfers from a foreign company without declaring them, you risk a tax adjustment with penalties. Always declare your income.
- Confusing personal trading with prop firm: these are not the same tax categories. The 30% PFU does not apply to prop firm income.
- Forgetting URSSAF contributions: even if your turnover is low, you must declare every month or quarter, even at 0€.
- Exceeding micro thresholds without anticipating: if you approach 77,700€ in turnover, prepare your transition to another status.
- Not keeping supporting documents: keep all your payout statements, challenge receipts and bank statements for a minimum of 6 years.
- Declaring gains as capital gains: prop firm income is not capital gains. It is BNC.
11. Concrete calculation examples
Here are simulations to give you an idea of net income after charges and taxes, under micro-entreprise with versement libératoire:
| Annual turnover (payouts) | URSSAF (~22%) | Flat-rate IR (2.2%) | Total charges | Net income |
|---|---|---|---|---|
| 6,000€ | 1,320€ | 132€ | 1,452€ | 4,548€ |
| 12,000€ | 2,640€ | 264€ | 2,904€ | 9,096€ |
| 24,000€ | 5,280€ | 528€ | 5,808€ | 18,192€ |
| 48,000€ | 10,560€ | 1,056€ | 11,616€ | 36,384€ |
| 72,000€ | 15,840€ | 1,584€ | 17,424€ | 54,576€ |
⚠️ Reminder: These figures are simplified estimates for indicative purposes. Exact rates may vary. If you are not eligible for the versement libératoire, income tax will be calculated via the progressive scale (potentially higher). Consult a chartered accountant for a precise calculation adapted to your situation.
✅ The positive point: Under micro-entreprise with versement libératoire, you keep approximately 75% of your gains. This is much more advantageous than the 30% PFU on personal trading, and infinitely better than the high brackets of the IR scale for an employee.
12. Summary and action plan
Here is your tax checklist to start well:
- ✅ Create your micro-entreprise on autoentrepreneur.urssaf.fr (free, 15 min)
- ✅ Opt for versement libératoire if eligible (ask your accountant)
- ✅ Declare your income each month or quarter to URSSAF
- ✅ Keep all your supporting documents (payouts, invoices, bank statements)
- ✅ Maintain an updated receipts register
- ✅ Consult a chartered accountant at least once to validate your tax setup
- ✅ Monitor thresholds (micro-entreprise and VAT) throughout the year
- ✅ Complete your annual declaration (2042-C-PRO) in spring
💡 Final advice: Taxation is not a barrier — it's a normal step in the professionalization of your trading activity. Well managed, it allows you to keep the vast majority of your gains legally. Don't be afraid to consult a professional: a specialized chartered accountant costs between 50€ and 150€ for an initial meeting, and can save you thousands of euros in mistakes.
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