Corporate taxes and social security for businesses in France
How your business will be taxed depends on the legal structure of the business and your turnover as a self-employed worker in France.
When you are running your own company in France, you may be taxed under the personal income tax system (Impôts sur le Revenu, IR) or company taxation system (Impôts sur les Societiés, IS).
The information given here provides a general overview only; you should always get professional advice from a French accountant or financial expert when setting up your own business.
Personal income tax in France
Income tax is calculated on your earnings, whether that’s as an employee or self-employed. You can reduce your taxable income through a centre de gestation (affiliated accounting centre).
You can deduct certain things before calculating tax, which include a 10 percent deduction for work-related expenses, social security contributions, interest on certain business loans, and pension contributions.
The French government recently announced that the lowest rate of income tax would be abolished and the other thresholds increased by 0.5 percent in 2015. This would mean that the 2015 rates of income tax in France would be:
- Up to EUR 9,690 EUR – 0 percent tax.
- EUR 9,691–26,564 – 14 percent.
- EUR 27,765–71,754 – 30 percent.
- EUR 71,755–151,956 – 41 percent.
- EUR 151,956 – 45 percent.
(Note: the rates apply to each part of income over the thresholds, not the total income. For example, if you earn EUR 30,000 you pay 0 percent on the first EUR 9,690; 14 percent on the next EUR 16,874 and 30 percent on the final EUR 3,436.)
Company taxes in France
With company taxation, your income from the business as salary is taxed separately from the company through personal taxation. The amount of company tax you then pay depends on the turnover of your business and the capital structure (if you and other owners put in capital and 75 percent is held by individuals then you pay 15 percent on profits up to EUR 38,120 per year and 33 percent on profits over this). You have to file a tax return within three months of close of accounts or by April 30. You have to pay tax quarterly on March 15, June 15, September 15 and December 15 unless you’re a new company or paid less than EUR 3,000 in the previous year, when you can pay yearly.
Taxes for sole traders in France
If you are a sole trader (enterprise individuelle or EI) then you and your business are one legal entity and you will be automatically taxed under the personal income tax system (Impôts sur le Revenu) or under the rules of the régime micro-entrepris or régime du reel (see below).
If you take on the status of EIRL (Entrepreneur of Individual Limited Liability), where you and your assets are separate, you pay tax through your personal income tax return in the category for your business: industrial and commercial profits (BIC) for traders and artisans, or Non Commercial Benefits (BNC) for independent professionals – or you can choose to pay corporate tax.
Paying taxes as a limited company
If you are setting up an EURL (limited company under sole ownership), you may choose to be taxed under the personal income tax system under the régime du reel or through company taxation.
Taxes for joint-ownership companies
If your company is a SARL (limited company in joint ownership) then you can choose to be taxed under the personal income tax system for the first five years of business if the business is small, or is a certain type of family business – otherwise you will be taxed through company taxation.
Tax regimes in France
There are also different tax regimes, depending on your type of business:
- Commercial, industrial or manual/trades/crafts businesses are taxed under the Bénéfices Industriels et Commerciaux (BIC) system.
- Professional businesses are taxed under the Bénéfices non Commerciaux (BNC) system.
- Agricultural businesses are taxed using the Bénéfices Acricole (BA) system.
There are divisions within the BIC and BNC systems. If your turnover falls below a certain threshold you will be taxed under a simplified system (régime du réel simplifié) instead of the régime du réel normal. The BIC threshold is less than EUR 230,000 per year for those providing services and accommodation; EUR 763,000 per year for re-sellers. The BNC threshold is under EUR 76,300 per year. With these regimes you need to provide information on income, deduct expenditure and are taxed on the net profit. You can carry losses over up to a maximum of six years.
Taxes for micro-enterprise
Businesses with even smaller turnovers can be taxed under an even simpler tax system called régime micro-entreprise, where you state your turnover and are allocated a fixed allowance and taxed on fixed ‘profit’. This system is split into Micro-BIC and Micro-BNC. Micro-BIC applies to re-sellers of goods with a turnover of less than EUR 80,000 and manual/trades/crafts with less than EUR 32,000. Micro BNC applies to professionals with annual turnovers of less than EUR 32,000. There’s a similar simplified procedure for paying social charges.
You have to file a return by April 30 each year. New businesses are exempt from declaring tax for the first year but when you make the declaration on the second year you must include all your accounts and figures since the business began.
For more on this, see this information (in French) from APCE.
If your turnover is over EUR 32,600 per year for a serviced-based business or EUR 81,500 per year for commercial activities, bars, restaurants and accommodation you must register to pay VAT or TVA (Taxe sur la Valeur Ajoutée) and you are obliged to charge it. If your turnover is less and you don’t have to charge TVA then your invoices must state that TVA is not applicable – 'TVA non-applicable, art 293B due CGI'. VAT is 20 percent.
Micro-entreprises cannot charge or claim VAT.
If you are eligible for VAT, you will be allocated a VAT number (numéro de TVA intracommunautaire) made up of 13 characters: FR (for France), a two digit data processing code and your SIREN number. You must write this number on all your invoices.
The TVA declaration is made by April 30 or within three months of close of accounts if your accounting year is not the calendar year. You can make the declaration and pay online.
If you are thinking of buying or selling goods or providing services to customers in other countries – in and outside of the EU – you’ll need to find out about VAT as there are special rules regarding cross-border VAT. For example, you don’t charge VAT when you’re selling goods or providing services to customers outside the EU, although you can deduct the VAT you have paid on related expenses. When you’re selling goods to consumers to another country within the EU you have to register with the relevant VAT authorities in that country and charge VAT at their rate. If you’re providing services to businesses within the EU you don’t normally charge VAT but if you’re selling to consumers in another EU country you charge VAT at the rate in France. For detailed information, see the European Commission’s cross-border VAT rules and guidelines for VAT in the European Community.
Social security contributions
Everyone in France must pay social charges in order to access the French welfare system. When you are running a business you usually have to pay these in advance. The amount will be based on your estimated profit for the first two years and then recalculated after you have submitted your first tax declaration. You have to pay the charges at specific times and there are penalties for missing the deadlines.
How much you pay is complex, depending on your company structure, whether you have chosen to pay tax through personal or company taxation, and your type of business. As a guide, if you are paying tax under the régime du reel you can expect to pay just under 50 percent of your profits on social charges but remember that these will be considered a tax deductible business cost. If you are paying yourself dividends, you pay less social security charges – this is one factor that may influence your choice of company structure (see above).
For information about social charges for micro-entreprise, see Expatica's guide on how to set up a small business or become self-employed in France.
The Contribution Economique Territoriale (CET) is a local tax on businesses, which helps to pay for the Chambers of Commerce and other services. It’s made up of two elements:
- The Cotisation Foncière des Entreprises (CFE), based the rateable value of the business property;
- The Cotisation sur la Valeur Ajoutée des Entreprises (CVAE), a based on the ‘value added’ each year by the business.
How much you pay depends on turnover. For example, in 2015, if your turnover is less than EUR 10,000 you will be taxed EUR 210–500; a turnover between EUR 10,000 and EUR 32,600 will incur up to EUR 1,000 and a turnover of between EUR 32,600 and EUR 100,000 you could pay up to EUR 2,100 EUR. New businesses get 100 percent relief in the first year of trading and 50 percent in the second. The tax is payable in December of each year or in two instalments.
Getting professional advice
An accountant (expert comptable) can advise on taxation, charges, the law and any available rebates for example. Find an accountant through the French accountants’ professional body the ‘l’Ordre des Expert-Comptables or local Chamber of Commerce, or consider using an affiliated accounting centre.
- www.impots.gouv.fr is the official website for the French tax authority.
APCE – Accueil Professionnels et Entreprises – the national organisation for start-ups in France.
- Centre de Formalités des Entreprises or CFE, the organisation responsible for handling business registration throughout France. There are different offices for each type of business.
- Direccte (Directions régionales des entreprises, de la concurrence, de la consommation, du travail et de l'emploi).
- INPI – the Institut National de la Propriété Industrielle, which deals with trademarks, patents, designs and company names.
For more information
- If you want to be self-employed or set up a business as a sole trader or as a freelance, see Expatica's article How to set up a small business or become self-employed in France.
- Get ahead of the game as a freelancer in France by reading the Expatica article 10 steps to becoming a successful freelancer in France.
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