Discover in detail the business provider commissions, their definition, and the different types of commissions. We will discuss applicable tax rules and VAT, as well as the accounting treatment of commissions, including cases of accounting at the end of the fiscal year. The differences between the commissions of intermediaries and those of employed salespeople are explained.
Business broker commissions are remuneration paid to intermediaries who facilitate or conclude sales of goods or services. These commissions play a crucial role in many sectors, including trade, services, and real estate. This article introduces tax rules and the accounting treatment of commercial commissions.
What is a commission?
Definition of the business provider commission
The commission is a fee paid to an intermediary for connecting a buyer and a seller. This intermediary can be a business provider, a broker, or a sales representative. The commission is often calculated as a percentage of the amount of the transaction completed.
The different types of commercial commissions
There are several types of commissions:
- Business contributor : The business provider connects a potential customer with the company. He receives a commission on sales made through his services.
- Brokerage : A broker receives a commission for negotiating or concluding transactions as an intermediary between two parties.
Tax regime applicable to commercial commissions
Tax treatment of commissions for business suppliers
Commercial commissions received by business suppliers are subject to income tax, or corporate tax if it is a company. These commissions are integrated into the commission agent's turnover and subject to the general tax rules applicable to commercial income.
VAT rules for business introducer commissions
In principle, commissions are subject to VAT. If the commission agent is subject to VAT, he must charge tax on the commissions received. The applicable VAT rate is the standard rate of 20%, with some exceptions (such as in the case of services provided internationally, where exemptions may apply).
Possible tax exemptions for certain types of commissions
In some cases, certain commissions may benefit from an exemption from VAT, for example in the provision of services located abroad or certain specific real estate transactions. In addition, if the business provider operates under the micro-enterprise regime, his commissions may be exempt from VAT according to his turnover.
Accounting treatment of business contributor fees
Accounting for commissions paid
Commissions paid to intermediaries are recorded in accounting as an expense. They are debited to the account 6222 “Commissions and brokerages”. If the commission is subject to VAT, VAT must be recorded separately.
Accounting for commissions received
Commissions received by the company are recorded as products. They are credited to the account 706 “Services” or 7082 “Commissions and brokerages”, depending on the nature of the company's activity.
Accounting at the end of the fiscal year (invoices to be prepared and invoices not received)
At the end of the fiscal year, it is common for some commissions to be due but not yet invoiced. In this case, the company should account for these commissions as invoices to be drawn up or Invoices not received, in order to comply with the principle of accruals accounting. These entries make it possible to recognize the associated expenses or income in the current fiscal year.
Declaration and legal obligations
Declaration of commissions to the tax authorities
Commercial commissions must be declared to the tax authorities as part of the declaration of income or profits. Commissions paid to intermediaries may, in some cases, be subject to withholding tax, in particular when the beneficiary is established abroad.
Withholding taxes and other obligations
Depending on the contracts and the location of the beneficiary of the commissions, withholding tax may apply. Commissions paid to business suppliers or brokers located abroad may thus be subject to withholding tax, in accordance with the legislation in force.
Practical cases and detailed examples
Example 1: Accounting for a business provider's commission
Take the example of a company that pays a commission to a business provider for helping to close a major sale. This commission, for example €1,200, includes 20% VAT, which means that the commission excluding tax is €1,000, and the VAT is €200.
Accounting steps:
- Accounting for the commission paid :some text
- Debit the account 6222 “Commissions and brokerages” for €1,000, which represents the net amount excluding taxes of the commission.
- Debit the account 44566 “Deductible VAT” for €200, because the company can recover this VAT.
- Credit the account 401 “Suppliers” for €1,200, i.e. the total commission to be paid.
- Commission payment : Once the company pays the business provider's bill, it records the payment by debiting the account 401 “Suppliers” (€1,200) and by credit the account 512 “Bank” (€1,200).
Accounting summary:
- When the bill is registered :some text
- Debit 6222 “Commissions and brokerages”: €1,000
- Debit 44566 “Deductible VAT”: 200€
- 401 “Suppliers” credit: €1,200
- Upon receipt of payment :some text
- Debit 401 “Suppliers”: €1,200
- 512 “Bank” credit: €1,200
This process allows the commission to be recorded as a charge for the business while recovering VAT on the expense.
Example 2: Accounting for commissions received by a company
Now let's imagine that a service company receives a commission of €3,000 excluding taxes for an intermediation service carried out in a commercial transaction. The commission is subject to 20% VAT, bringing the total amount invoiced to €3,600.
Accounting steps:
- Commission registration :some text
- Credit the account 706 “Services” for €3,000, representing the commission excluding taxes.
- Credit the account 44571 “VAT collected” for €600, corresponding to the VAT invoiced.
- Debit the account 411 “Customers” for €3,600, representing the total amount of the invoice (commission + VAT).
- Receiving payment : Once the customer pays the bill, the company records the payment by debiting the account 512 “Bank” for €3,600 and by credit the account 411 “Customers” for the same amount.
Accounting summary:
- When the bill is registered :some text
- Debit 411 “Customers”: €3,600
- Credit 706 “Services”: 3,000€
- Credit 44571 “VAT collected”: 600€
- Upon receipt of payment :some text
- Debit 512 “Bank”: €3,600
- 411 “Customers” credit: €3,600
This method allows the company to count the commission as income, while remitting VAT to the tax authority.
Difference with the commissions of employed salespeople:
Les Commissions paid to employed salespeople are considered to be a Wage supplement. They are subject to income tax and social security contributions, like any other salary. From an accounting point of view, they are recorded in the account 641 “Staff remuneration”, and not in commission accounts like the 6222 “Commissions and brokerages” used for external intermediaries.
In summary :
- Business Inporters' Commissions : Paid to external intermediaries, they are recorded as external service expenses and subject to VAT.
- Salaried sales representatives commissions : Considered as elements of salary, they are subject to the same rules as payroll (social security contributions, income tax) and recorded in remuneration accounts.
This avoids any confusion between commissions relating to the provision of services and those related to internal remuneration of the company.
Improve commission management with Maslo.app
If you have a large number of commissions to calculate or if you simply want to save time, the Maslo.app application allows you to digitize the management of your employees' commissions.
Thanks to its simple interface and its numerous digitalization and gamification functionalities, the application will allow your sales representatives to monitor the amount of their variable remuneration directly while being motivated to make more sales by participating in challenges.
Conclusion
The management of commercial commissions, whether in terms of their accounting treatment or taxation, is a key aspect for any company working with intermediaries or business suppliers. A good understanding of tax rules, in particular with regard to VAT and withholding tax, as well as the correct accounting of commissions paid or received, makes it possible to avoid costly mistakes and to ensure sound management in accordance with current legislation. By applying these principles, businesses ensure good accounting while complying with their tax obligations, which contributes to the sustainability of their business relationships and to their long-term financial success.
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