A coffee robot is judged first on its margin. What you really keep, however, also depends on taxation: the chosen legal status, VAT, depreciation of the machine, local taxes. These choices count in a coffee robot's net profitability almost as much as the location. Here are the points to study with your accountant before investing.
This article describes the French framework. In another European Union country, the same questions arise (status, VAT, depreciation, local taxes), but the answers are those of your tax system. It does not replace personalised advice. The rules depend on your situation, your status and how they change. It helps you arrive at the meeting with the right questions.
Margin, result, net profitability: three different figures
Three figures are often confused.
- The margin: what the machine earns once the products sold have been paid for (coffee, milk, cups, syrups).
- The result: the margin minus fixed costs (fee to the host venue, electricity, insurance, upkeep) and the depreciation of the machine.
- Net profitability: what is left after tax and social contributions, in other words what the investment really earns you.
Taxation plays out between the last two. Two people running the same machine in the same place can get very different net profitability depending on their choices. For the method to calculate the margin and the break-even point, read our article on coffee robot profitability.
The chosen status changes how the margin is taxed
Choosing a status means choosing how the profit will be calculated and then taxed. In France, three main options are to be compared.
The micro-enterprise
Taxable profit is not calculated from your real expenses. A flat-rate allowance is applied to revenue. Management is simple, but there are two limits for a coffee robot.
First, the purchase of the machine is not deductible. Real expenses do not count: you are taxed the same way, whether you have invested a lot or a little. Next, this regime has revenue ceilings. A good location can exceed them.
Taxation on actual results
Profit is calculated from your real income and your real expenses. Consumables, the fee, electricity, insurance and the depreciation of the machine reduce the taxable result. The accounting is heavier, but it suits an activity that starts with a large investment better.
A company subject to corporation tax
The company pays tax on its profit. You are then taxed on what you take out of it: salary or dividends. This formula separates your personal assets from those of the activity. It also makes it possible to leave part of the gains in the company, for example to finance a second machine. It has a management cost to compare with what it brings.
No status is the best in every case. It all depends on your other income, the expected revenue and your plans: one machine or several, coffee alone or coffee and an ice cream robot.
VAT: a separate flow, which weighs on cash flow
The price shown on the robot's screen includes VAT. If you are liable for VAT, part of each sale does not belong to you: you pay it over to the State. In return, you deduct the VAT paid on your purchases, including on the machine.
It is a point to study early, for three reasons.
- The applicable rate depends on the product sold and how it is consumed. Have your accountant confirm it for your drinks, and for ice cream if you sell it.
- The VAT franchise threshold exempts you from charging it. In exchange, you do not recover the VAT paid on your purchases, including on the machine. For an activity that starts with a large purchase, this needs to be calculated.
- Cash flow: the VAT collected must remain available until it is declared. Counting it as income is a common mistake at the start.
Always reason excluding VAT to judge profitability. That is also what our investment page does.
Depreciation: the machine is deducted over several years
Under actual results, the purchase of the robot is not an expense like the others. The machine is a fixed asset: its cost is spread over its useful life, and each year a share is deducted from the result. That is depreciation.
Two consequences for the investor:
- The accounting result of the first years is reduced by depreciation, even if the machine sells well. The initial tax is lightened accordingly.
- Cash flow and the result do not tell the same story. You pay for the machine at purchase or at the pace of your financing, but you deduct it over several years. Follow both, not only the profit.
The depreciation period and the calculation method are chosen with your accountant, according to the planned useful life.
The deductible expenses not to forget
Under actual results, everything that serves the activity reduces taxable profit. For a coffee robot, these are mainly:
- consumables: coffee, milk, sugar, syrups, cups, lids;
- the fee paid to the venue hosting the machine, if you pay one, as fixed rent or a share of sales;
- the machine's electricity, water and connection;
- insurance for the machine and your activity;
- upkeep, cleaning, parts;
- bank charges, loan interest and accounting fees;
- your travel for restocking and upkeep, if justified.
Keep all invoices from day one. An expense you cannot justify cannot be deducted.
The CFE and other local taxes
In France, the business property contribution (CFE) applies in principle to any professional activity. It is not due in the year the business is created. Even without premises of your own, a minimum contribution set by the municipality may apply afterwards. The amount varies from one municipality to another: ask your accountant for an estimate.
The questions to ask your accountant
To make the meeting useful, come with your project in figures (price of the machine, intended location, selling price, planned fee) and ask these questions:
- Which status best suits my other income and the expected revenue?
- Is it in my interest to be liable for VAT from the start?
- Which VAT rate applies to my drinks, and to my ice creams if relevant?
- Over how many years should the machine be depreciated?
- What local business tax should I expect in my municipality after the first year?
- If I add a second machine, will my status still work?
Key takeaways
A coffee robot's profitability is built first on the location and the menu. To choose them, read our articles on choosing the location and on the menu to offer. Taxation does not create margin, but a poor choice can eat into a good part of it, whereas a suitable status leaves more gains in your hands. It also depends on your situation: no gain is guaranteed, and the figures have to be redone for each project.
Prices, estimated margins and scenarios by location are on our investment page. To compare them with other ways of investing in coffee, read our comparison of coffee robot, vending machine and franchise.
If you would like to discuss your project and prepare your figures before seeing your accountant, contact ROBOKAFÉ: we will be happy to answer your questions.
