If you become a freelancer in France or start a French business, you will be liable to pay French income taxes under the personal tax system (Impôts sur le Revenu, IR) and need to be aware of the corporate tax rate in France (Impôts sur les Societiés, IS).
Considering French corporate tax rates, some smaller companies may opt for taxation under the personal system rather than the French corporate tax system.
This guide explains which French corporate tax rates apply depending on your business structure and turnover, as well as the conditions for paying corporate tax in France. This guide to corporate taxes in France and French corporate tax rates covers:
- The corporate tax system in France
- Who pays corporate tax in France?
- Business tax for micro-enterprises in France
- Corporate tax rates in France
- Corporate tax exemptions and corporate tax credits in France
- VAT in France
- Cross-border VAT in France
- Corporate tax year in France
- How to file your corporate tax return in France
- Other types of business tax in France
- French corporate tax advice
- French tax authority and information
The corporate tax system in France
Similar to elsewhere, corporate tax in France is separate to the French taxes applicable to income from the business paid as salary. The amount of French corporate tax you pay depends on the turnover of your business and the capital structure.
France recently introduced a new bill that reduces the standard France corporate tax rate, marking the first reduction since 1993. The bill states that the French corporate tax rate for large companies will drop from 33.33% to 25% over a five year period (28% in 2020).
Who pays corporate tax in France?
There are different French corporate tax regimes, depending on your type of business in France:
- 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 Agricole (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 French corporate tax system (régime du réel simplifié) instead of the régime du réel normal. The BIC threshold is less than €238,000 per year, and is for those providing services and accommodation (€789,000 per year for re-sellers). The BNC threshold is less than €70,000 per year.
With these regimes you need to provide information on income, deduct expenditures and apply French business tax to the company’s net profit. You can carry losses over up to a maximum of six years.
Corporate tax for sole traders
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.
Corporate tax for partnerships
If your company is a SARL (limited company in joint ownership) 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 French corporate taxation.
Corporate tax for limited companies
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 French 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 opt to pay French corporate tax.
Business tax for micro-enterprises in France
Businesses with smaller turnovers can be taxed under a simpler French corporate tax system called régime micro-entreprise, where you state your turnover and are allocated a fixed allowance and taxed on fixed profit.
This system typically applies to micro-entrepreneurs (formerly known as auto-entrepreneurs) and is split into Micro-BIC and Micro-BNC.
Changes to turnover thresholds
Before 2018, Micro-BIC applied to re-sellers of goods with a turnover of less than €82,800 and manual/trades/crafts with less than €33,100. In 2018, however, the maximum turnover thresholds were more than doubled, and they are now as follows:
- In a service-based business, or a professional activity, and for unclassified accommodation the turnover cannot exceed €70,000 per year.
- Those whose main activity is sales-based (such as a café, restaurant, hotel) have a turnover limit of €170,000 per year.
You have to file a return by May/June each year, and typically pay by September/October. 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.
Find more information via L’ Agence France Entrepreneurs (AFE) (in French).
Corporate tax rates in France
France recently introduced a new bill that reduces the standard France corporate tax rate, marking the first reduction since 1993. The bill states that the French corporate tax rate for large companies will drop from 33.33% to 25% over a five year period. In 2020, the standard Corporate Income Tax rate for all companies will be 28% on taxable income. Corporations with a revenue higher than 250 million will have a tax rate of 33.33%.
Corporate tax exemptions and corporate tax credits in France
Corporate tax exemptions in France
There are a number of ways you can lower the cost of corporate taxes in France, including through appropriate deductions. Depending on your company, you may be able to deduct some start up expenses or research and development and software expenses.
Charitable donations are also deductible, as are some interest expenses and some payments to foreign-related parties. For more information specific to your business, seek professional advice.
Corporate tax credits in France
France offers various tax credits to businesses that pay corporate taxes in France and these credits can often be used to offset corporate taxes paid. A qualified tax professional in your accounting department will be able to advise you about your business’s specific situation but, generally, here are just a few of the tax credits available:
- Research tax credit, for specific investment in research and development
- New business tax credit, to provide some relief in the initial stages of a company (only in certain areas)
- CICE tax credit, to lower cost of companies that hire employees (abroad) who make less then French minimum wage.
- Video game tax credit, for companies involved in creating video games
VAT in France
As of 1 January 2019, the France VAT turnover threshold is €33,200 for serviced-based businesses and €82,800 for commercial activities, bars, restaurants and accommodation, at which point you must register to pay French 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 French VAT/TVA, then your invoices must state that TVA is not applicable – ‘TVA non-applicable, art 293B due CGI’. French VAT is set at 20%.
Charging and paying VAT
If VAT is applicable, you will be allocated a French 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 your French VAT number on all your invoices.
The TVA declaration must be submitted and paid between the 15th and 24th of the month following the reporting period. For foreign non-established businesses, the deadline is the 19th of the following month. You can make French VAT declarations and pay online.
Cross-border VAT in France
If you are thinking of buying or selling goods or providing services to customers in other countries – in and outside of the EU – there are special rules regarding cross-border VAT. For example, you don’t charge French 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.
VAT for selling goods
When you’re selling goods to businesses in other EU countries, you also do not charge VAT. However, when you’re selling goods to consumers in another country within the EU you have to register with the relevant VAT authorities in that country and charge VAT at their rate, except in cases when the total value of annual sales falls below the limit set by the country.
VAT for providing services
If you’re providing services to businesses within the EU you don’t normally charge VAT; however, for services to consumers within the EU you charge the French VAT rate. Exemptions apply to telecommunications, broadcasting and electronic services, which are always taxed in the country where the customer belongs.
For detailed information, see the European Commission’s cross-border VAT rules.
Corporate tax year in France
The corporate tax year generally matches the calendar year, though do keep in mind that certain elements (for example, VAT) may be filed for each fiscal quarter. Normal losses can be carried forward but can be offset against the taxable profit of a particular year up to € 1 million in addition to 50% of the taxable result above and beyond that fiscal year’s amount. In some circumstance, losses up to €1 million can be carried back a year.
Be sure to discuss with your accountant the deadlines your company is liable for, so you can stay up to date.
Companies have to file a French tax return within three months of close of accounts or by 30 April. French corporate tax is payable quarterly on 15 March, 15 June, 15 September, and 15 December. Exemptions apply if you’re a new company or paid less than €3,000 in the previous year, in which case you can pay French corporate tax on a yearly basis.
How to file your corporate tax return in France
Corporate tax filing is done almost completely online, either through an Electronic Data Interchange (EDI) partner or from its subscriber area. Generally, your accounting department will be handling your taxes but, for some general context, check out this link for information from the French government (French only).
Other types of business tax in France
CET French corporate tax rates
The Contribution Economique Territoriale (CET) is a French corporate tax that 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 on the rateable value of the business property
- The Cotisation sur la Valeur Ajoutée des Entreprises (CVAE), based on the ‘value added’ each year by the business
New businesses get 100% tax relief in the first year of trading and 50% in the second. The CET French corporate tax is payable in December of each year, or can be arranged in two instalments.
French corporate tax advice
An accountant (expert comptable) can advise on French corporate taxation, social security charges, tax law and any available French tax refunds for example. You can find an accountant through the French accountants’ professional body, l’Ordre des Expert-Comptables, or the local Chamber of Commerce, or consider using an affiliated accounting center.
The information given here provides a general overview only; it is always advised to get professional advice from a French accountant or financial expert when starting a business in France.
French tax authority and information
- French tax authority
- APCE or 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 or Institut National de la Propriété Industrielle: which deals with trademarks, patents, designs and company names.
- A guide to self-employment and freelancing in France.