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Corporate tax rates in France

Updated: Sep 21, 2022


Establishing a business in France may result in a different taxation regime from the one applicable to your income. But how much tax will you have to pay on your French company profits?


This guide explains how to file and pay your French company tax, as well as the different corporate tax rates that may apply to your business depending on its structure and income.


The corporate tax system in France


How much corporate tax you owe in France depends on the size and kind of your business.


In recent years, the French government has taken measures to cut the taxes charged on enterprises, increasing the fiscal attractiveness of setting up shops in France. The average rate for companies with the highest turnovers used to be 33%, but this has dropped to about 25% in recent years.


Who is accountable for French corporate tax payments?


There are a variety of corporate tax regimes in France, and the one that applies to your business will depend on the nature of your firm.


The Bénéfices Industriels et Commerciaux (BIC) program is for businesses that are commercial, industrial, or manual/trades/crafts in nature.


Organizations offering expert services are eligible to participate in the Bénéfices non-Commerciaux (BNC) program.


The Bénéfices Agricole (BA) system is often used by agricultural businesses.


The BIC system, like the BNC system, is structured into subsystems. If your company's yearly sales fall below a certain threshold, you will be subject to the simplified form of the French corporation tax system known as the régime du réel simplifié rather than the standard régime du réel.


The Business Income Tax threshold for service providers and landlords is €238,000 per year, whereas the barrier for wholesalers is €789,000. When applying for BNC, an annual income of €72,600 or less is necessary.


You must file tax returns, deduct business expenditures, and pay French business tax on your net earnings if you choose to operate under one of these regimes. Losses may be carried over for a maximum of six years.


Corporate tax for sole traders


When you operate your business as an "enterprise individuelle" (EI), or sole proprietorship, you and your firm are treated as a single entity under the law. Therefore, you are immediately subject to taxation under the personal income tax system (Impôts sur le Revenu) or the conditions of the régime micro-enterprise or régime du reel.


Taxation of partnerships as corporations


For the first five years of a company's existence, those with a SARL (also known as a limited company in joint ownership) structure have the option of having their business revenue taxed as personal income. This choice is only available to extremely small businesses and certain types of family-owned enterprises. Should this not be the case, your company will be required to pay French corporate taxes.


Taxation of Limited Liability Companies


You must submit a French income tax return and pay taxes under the category that corresponds to the sort of earnings your firm generates: industrial and commercial profits (BIC) for merchants and craftsmen or non-commercial benefits (BNC) for independent professionals if you prefer to conduct your business under the EIRL (Entrepreneur of Individual Limited Liability) status, which enables you to keep your assets and personal finances separate. You may also choose to make payments toward the French company tax.


France's tax on small businesses


The régime micro-enterprise is a simplified French company tax structure that may be chosen by businesses with lesser turnovers. According to this framework, companies declare their sales, get an allowance based on that data, and pay tax on a certain percentage of their final profit.


This system is comprised of the Micro-BIC and the Micro-BNC, both of which are tailored to the needs of micro-entrepreneurs (also known as auto-entrepreneurs). Check out these important cutoffs:


The maximum annual revenue that may be earned from commercial and accommodation services, such as hotels and other tourist accommodations, is €176,200.


For those in the service industries and the liberal arts, the threshold is set at €72,600.


A tax return must be filed by June 30, and payments are due in September or October of each year. All of your financial records and metrics from the company's inception, however, must be included in your second-year statement. While startups do not have to file tax returns in their first year, they will need to start doing so the next year.


France's taxation of corporations


France has been working to reduce its business tax rate to a more competitive level in recent years. The standard rate in 2021 was 26.5%, however, firms with profits above €500,000 paid a higher rate of 27.5%.


A 25% tax rate will be applied to all company income starting in 2022. Even currently, companies with annual revenue of less than €38,120 may pay just 15% in taxes on their profits.


Corporate tax exemptions and credits in France


Corporate tax exemptions in France


Corporate tax rates in France may be lowered in several ways, including by taking advantage of available deductions. Starting up charges, R&D expenses, and software license fees are just some of the company expenses that may be deducted.


In France, there are tax breaks for scientific research.


Not only are certain interest expenses and payments to parties engaged in overseas transactions deductible, but so are donations to charitable organizations. If you need specific details about your business, you should consult experts.


Corporate tax credits in France


Companies that set up shop in France as companies can claim several tax breaks. In many cases, a company may utilize these credits to lower its tax liability. You should consult a licensed tax expert in your company's accounting division about your unique tax situation. In general, the following are only a few of the various tax breaks that may be claimed:


Research tax credits that might be claimed for spending on certain R&D projects.


New company owners might benefit from a tax credit in the beginning stages of their venture (only in certain areas, however).


Credit for Income and Corporate Expenditures (CICE) is designed to help companies who hire workers in other countries for wages below the French minimum wage offset some of those costs.


Businesses making video games should be eligible for a tax rebate.


VAT in France


There is a standard value-added tax rate of 20% in France. Additional discounts of 10% or 5.55% may be available on some items and services. The French word for value-added tax is "taxe sur la valeur ajoutée," or "VAT" for short.


For service businesses, the threshold is €34,400 per year in income, while for commercial enterprises like restaurants, bars, and hotels, it is €85,800.


You must state on your invoices "TVA non-applicable, art 293B payable CGI" if your turnover is low enough to exclude you from charging French VAT.


Charging and paying TVA


A French TVA number, or numéro de TVA intracommunautaire, will be issued to you if you are obligated to pay TVA and you reside in France. The letters "FR," a two-digit data processing code, and your SIREN number will make up the remaining 13 characters. Your French TVA number must appear on all of your invoices.


The TVA declaration and payment are due between the 15th and 24th of the month following the reporting period. Non-domestic businesses have until the 19th of the next month to incorporate. The website may be used to submit and pay for French VAT declarations.


Cross-border VAT in France


You must be aware of the rules governing cross-border VAT if you want to buy or sell goods or give services to customers in countries outside the European Union. For example, if you are based in France but your customers are in another EU country, you do not have to collect VAT when selling or providing services to them, but you may get a refund on any VAT you had paid for related costs.


VAT for selling items


When selling items to other businesses inside the EU, you may skip charging VAT. However, if your total yearly sales are below the threshold set by the nation, you are excused from having to register with the appropriate VAT authorities in that country and charge VAT at their rate. An exception to this regulation would be if your yearly sales volume was less than the threshold set by the nation.


Value-added tax on services


You do not have to charge value-added tax (VAT) on services rendered to EU-based businesses. However, the services you provide to European Union (EU) consumers are taxed at the TVA rate in France. Telecommunications, broadcasting, and electronic services are free from certain countries' VAT but are always liable to VAT in the country where the customer lives.


For additional information, see the European Commission's published guidelines for VAT collection and remittance across borders.


The corporate tax year in France


Since the tax year for businesses generally corresponds with the calendar year, it is crucial to remember that some components (like value-added tax, for example) may be recorded for each fiscal quarter.


Deadlines


Businesses in France must file their tax returns by the end of April, which is three months after the end of the fiscal year. French companies have quarterly tax payment deadlines on the 15th of March, June, September, and December. You may pay French company tax on an annual basis if you meet the exemption criteria, such as being a new firm or having yearly revenues of less than €3,000.


Avoid missing the deadline for paying your taxes by talking with your accountant about the responsibilities your company has in this regard.


How to submit your annual tax return for your company in France


Corporate tax returns may now be completed almost completely electronically, either directly or via an EDI-enabled partner.


Nonetheless, the French government's advice page is a good place to start if you want a wide overview. Your company's accounting team is responsible for filing your taxes.


France's other forms of corporate taxation


Business taxes in France as of midnight CET


In France, businesses pay a local tax known as the Contribution Economique Territoriale (CET) which supports the country's business associations and other organizations.


The CET consists of two components:


The business's share of the Cotisation Foncière des Entreprises (CFE) is determined by the market value of the real estate on which it operates.


Cotisation sur la Valeur Ajoutée des Entreprises (CVAE) is an annual tax levied on companies based on the value they provide to society.


Businesses do not have to pay any taxes in their first year, and just half that amount in the second. The CET, the French corporate tax, is normally payable on December 31st but may be split into two equal installments if required.


Corporate tax fines in France


Companies face a 10% minimum penalty and 0.4% per month in interest charges if their tax returns are submitted late. If you are late with a payment, you will have to pay a penalty of at least 5%, plus interest at a rate of 0.4% per month.


The maximum penalties increase by forty percent in situations of bad faith and by eighty percent in cases of fraud.


Corporate tax advice in France


Expert-comptables, or accountants, may advise on a wide variety of financial matters, such as French corporate taxation, social security expenditures, tax laws, and tax refunds.


If you need the services of an accountant in France, you may try searching for one via l'Ordre des Expert-Comptables, the French accounting profession's licensing board, or the local Chamber of Commerce.


Always seek out the advice of a professional, such as a French accountant or financial expert, while launching a business in France. This is only a high-level summary of the issue, and the details presented are not meant to be exhaustive.


Useful resources


● French tax authority

● French entrepreneurs have a national organization to help them get started called Accueil Professionnels et Entreprises (APCE).

● The CFE, or Center for the Formalities of Businesses, is the French government organization in charge of overseeing company registrations throughout the nation. There is a dedicated department for each distinct kind of business.


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