FORM A COMPANY NOW

REQUEST
CALL BACK

FREE CASE EVALUATION

Corporate Tax in France - Legal Advice for Foreign Investors

Corporate Tax in France

Updated on Friday 26th April 2024

Rate this article

based on 4 reviews.


Corporate Tax in France

 
The standard 25% corporate tax in France has a surtax of 3.3% which leads to an effective tax of 25.8%. Moreover, at least 75% of the capital of the company must be owned by natural persons. If a group of companies is consolidated for tax purposes (a consolidated group), they are collectively responsible for paying this additional contribution if the global annual turnover of the consolidated group exceeds EUR 7.63 million. The corporate income tax is just one of the taxes companies must pay while doing business in France. Our French law firm offers complete services for French companies, including tax management and tax minimization.
 
 Quick Facts  
Scope of corporate tax in France

The corporate tax is imposed on all profits generated within France by corporations and other legal entities during the fiscal year.

Tax liability

Businesses in France or managed within France are fully responsible for paying the corporate tax.

Standard corporate tax rate

25%

Reduced corporate tax rate

- 15% for companies with an annual turnover of less than 10 million euros;

- The rate is applied to the first 42,500 euros of taxable income.

Main types of companies subject to corporate tax

- joint stock company,

- limited liability company,

- commercial partnerships,

- branches of foreign companies

Surtax based on statutory tax

- 3.3% surtax applied to corporate tax amount exceeding 763,000 euros;

- Does not apply to companies with an annual turnover under 7.63 million euros owned at least 75% by individuals or qualifying companies.

Companies not subject to corporate income tax

- sole proprietorship,

- professional non-trading companies, etc.

Corporate tax credits

- research tax credit,

- tax credit for new businesses,

- CICE tax credit,

- videogame companies tax credit

CET (Contribution Economique Territoriale)

- Must be paid by all industrial or commercial companies that conduct business activities in France;

- Its rate may vary.

Fiscal year in France Can have any 12 months-period, but may be shorter or longer in certain situations.
Paying corporate income tax

- Quarterly, but it can be paid annually in a certain condition;

- Our attorneys in France can detail this exception.

Filing tax returns

Within three months after closing the financial accounts or by the end of May of the following financial year

Penalties for not filing corporate taxes

0.4% interest rate per month and a penalty of at least 5% of the amount you owe

Other taxes in France

- VAT,

- custom duties,

- excise duties,

- environmental taxes,

- social security contributions, etc.

Assistance and additional services

Our law firm in France can assist you in tax-related matters.

We also offer support in real estate, such as when buying a house in France.

 

Types of companies subject to corporate tax in France

 

The main types of companies in France are:
 
  • the joint stock company (SA/SAS),
  • limited liability company (SARL),
  • commercial partnership (SNC)
  • branch of a foreign company.
 
The 3.3% contribution applies to the part of the corporate income tax that exceeds 763,000 EUR, resulting in an overall maximum corporate income tax of 25.8 percent.  
 
SMEs (small and medium-sized enterprises) are subject to a reduced corporate tax rate in France of 15% on annual profits up to EUR 42,500. However, any profits exceeding this threshold are subject to the standard corporate tax rate.
 
Because France operates a territorial tax system, residents and non-residents are subject to taxation based on the profits produced by a business in France or on an income generated from a French source. As such, if a company is opened in France or if a foreign company is managed and controlled in France, then it is subject to corporate tax. Below you can read an infographic with information on corporate tax rate in France:
 
5 facts about corporate tax in France
 

How does France apply the corporate tax?

 
The corporate tax in France, known as ”Impôts sur les societés”, is governed by the French company taxation system. This system makes a clear distinction between the income generated by the company and the income generated by the company owner. In the case of the owner, the income is regarded as being salary and it is taxed using the personal income tax system that is also deductible in order to calculate liability to company tax.
 
 
In regards to the company income, the rate is calculated depending on the capital structure of the business as well as on the turnover. The net taxable profit of the company is the trading income and is calculated according to the yearly financial statements of the company.
 

The deadline for paying the corporate tax

 
In France, the fiscal year is generally the same as the calendar year. However the taxpayer can choose a different end date for the year. Usually the tax year has 12 months but can be shorter or longer in some cases. The corporate tax returns in France are due until de end of May, the following financiar year or within three months of the end of the year if the fiscal year is not the same as the calendar year. Late payments in France are usually subject to a 10% penalty.  
 
 
For a better understanding of the new modifications of the Finance Law in France, you are invited to discuss one of our French lawyers. Here is a chart that explains more:
 
 
Fiscal Year Company profits - Tax rates
January 2019
Between EUR 0 – EUR 500,000 - 28%
Between EUR 500,000 and EUR 250 million - 31%
More than EUR 250 million 33.3%
January 2020 Equal or more than EUR 250 million - 28%
January 2021
Up to EUR 250 million - 26.5%
Equal or more than EUR 250 million - 27.5%
January 2022 All profits levied at a 25% rate
 
 
Below is a video presentation with details about the French corporate tax:
 

 

Modifications of the withholding tax in France

 
Payments made to resident corporations and individuals are not subject to withholding tax on corporate income in France. However, payments made to non-resident corporations and individuals are subject to withholding tax.
 
In this case, the rates vary depending on the recipient's residency and if the recipient is the parent company or non-parent company. Our lawyers in France will explain the rates briefly:
 
  • For individuals and non-parent companies the withholding tax rate ranges from 12.8% to 25%;
  • For parent companies the withholding tax rate is 25%.
Withholding tax may be reduced or eliminated through applicable tax treaties or directives of the European Union. Please note that a higher withholding tax rate of 75% is imposed on dividends, interest, or royalties paid to a beneficiary or an account located in a non-cooperative state or territory.
 
All the details you need about the taxation in France and particularly about the modifications of the corporate income tax in France can be solicited from our team of lawyers in France.
 

Tax minimization in France

 
Company owners in France should consider the implementation of different tax minimization tools to cut the amount of taxes in their firm. These tax strategies must comply with the French Taxation Law and the obligations imposed. There are different business expenses that can be deducted, such as, the fees of directors in France, office supplies, employee bonuses, or airline tickets. Also, the participation exemption is applicable to capital gains that are derived from the share sale part of substantial investment in the firm. Charities are also tax minimization methods that can be implemented, but for a better understanding of the tax minimization instruments available in France, feel free to talk to our specialists.
 

Tax exemptions in France

 
There are cases in which companies are exempt from paying the corporate tax, but only if certain conditions are fulfilled. For example, regions, departments, municipalities, investment companies, housing or farmers associations, that have as the main scope making goods available to their members, fit into the tax exemption category.
 
France has an extensive tax treaty network comprising approximately 130 double tax treaties. These treaties and tax arrangements can significantly impact corporate tax liabilities in France. The treaties cover various taxes, including corporate tax, individual income tax, gift and/or inheritance tax, and other taxes. One of the primary purposes of tax treaties is to prevent double taxation of income earned by multinational corporations operating in multiple jurisdictions.
 
Our French lawyers can provide more details about the tax exemptions.
 

Branch remittance tax in France – What you need to know

 
Normally, the tax on remittance of the branch is not applicable if the foreign company has its business and administration place in a member country of the European Union and more precisely in a country where that company is subject to corporate tax, without any possibility to be exempt from tax or any option in this regard.
 
This is mentioned by the amendments to the 2020 legislation. However, there are refund choices if the company can prove that the beneficiaries of these distributions have their tax residence in France and that the amounts corresponding to the withholding tax have been transferred to them. More information on these issues can be detailed by our lawyers in France.
 

Other taxes related to corporate activities in France

 
There are other taxes related to corporate activities in France that contribute to the overall tax obligations of companies. All companies engaging in selling goods and services in France must register to VAT. As of 2024, the standard VAT rate in France is 20%. Sales of certain medicines and transportation services are taxed at 10%. Food products, subscriptions to gas and electricity, and other specific goods and services have a reduced rate of 5.5%. Additionally, a reduced rate of 2.1% VAT might apply to specific goods and services.
 
VAT exemption applies to supplies of goods outside France and other specific services invoiced to foreign clients.
 
Other taxes related to corporate activities in France are: customs duties, excise duties (for alcohol, tobacco, oil products, etc.), and environmental taxes. The Territorial Economic Contribution (CET) includes taxes on land and added value.
 
Our attorneys in France can help with more details on taxes.
 
 

Frequently Asked Questions

 
We often get questions about the tax system in France, and foreign entrepreneurs who want to set up business in this country can find out the answers below. We remind you that everything you need to know about corporate tax in France can be discussed with our specialists in the field.
 
 
1. What corporate tax rate will be applied starting with 2024?
According to the latest changes in legislation, the corporate tax rate in France will be 25.8% for all types of profit. But it is important to discuss with our lawyers in France and to find out in detail what the new tax regime in this country entails.
 
2. Is there a lower corporate tax rate in France?
Of course, a corporate tax rate of 15% applies to small companies, for the first EUR 42,500. And this is a change to the legislation on taxes to be paid in France in 2021.
 
3. Is it possible to reduce the cumulation of taxes payable for a company established in France?
Of course, tax minimization tools are valid for companies in France. Thus, expenses related to bonuses, office supplies, or fees of managers can be deducted. We emphasize that you can benefit from the support of our team of specialists if you want extra details about tax minimization for a company based in France.
 

Working with our lawyers in France

 
What is important to know before collaborating with our specialists is that our clients can benefit from complete guidance for the problems they bring to our attention. Professionalism, experience, efficiency, and trust are important things for us and we rely on them when we offer strategies and solutions to our client's problems.
 
Our law firm in France can assist with corporate income tax matters, providing strategic guidance, support, and representation in tax-related issues. Our team includes tax specialists who possess in-depth knowledge of tax laws on corporate income tax in France and will provide assistance personalized to each business’s specific needs.
 
A correct communication will be established from the very beginning so that you can enjoy the right results. So, if you want support for registering a company, for paying taxes, or for obtaining the right licenses for the business you own, do not hesitate to talk to us and find out how we can help you.
 

Statisti​cs about tax revenue in France

 

If you wish to learn more about the country's finances and overall economic status, here are some statistics about the tax revenues in France. These statistics were provided by the OECD for the year 2021:
 
  • The total tax revenue in France was over 1 trillion euros;
  • 300,197 million euros were collected from income, profits, and capital gains taxes;
  • Corporate income taxes in Frances valued at 63,313 million euros in the total tax revenue from income, profits, and capital gains;
  • 306,212 million euros were collected from VAT.
 
Among our other services, we can also help interested individuals to buy a house in France. If  you want to open a company in France, feel free to contact our French lawyers and they will provide the necessary information.