Can a foreign company be liable for corporation tax in France ?

In principle, under the provisions of Article 209 I of the General Tax Code, the place of operation of companies determines the tax on profits that are liable to corporation tax – subject to any derogations, particularly those applicable under the terms of international agreements.

Accordingly, profits earned in firms operated abroad by companies with their registered office in France are not liable for French taxes, even if the accounting for these operations is centralised in France.

On the other hand, companies whose registered office is located outside of France, regardless of their nationality, are taxable in France on the profits earned on their operations in France.

The concept of "place of operation", within the meaning of Article 209 I of the French General Tax Code, includes the customary exercise of a business activity that is:

  • Carried out within an autonomous establishment

  • In the absence of an establishment, carried out via representatives with no independent professional status

  • the result of transactions that are part of a complete business cycle

Subject to the provisions of international agreements, foreign companies are liable for taxes in France if:

  • Without owning an establishment in France, they make use of representatives that do not have a professional status separate from theirs. These intermediaries are considered to be genuine agents carrying out a business activity in France on behalf of the foreign company

  • Without having either an establishment or a qualified representative in France, they carry out transactions that are part of a complete business cycle

Conversely, French companies may not be liable for corporation tax, not only on profits earned from an establishment based outside France, but also:

  • When the transactions that they normally carry out abroad are done so with the help of intermediaries with no independent professional status or

  • When these transactions are part of a complete business cycle and are separate from the company's other transactions

Updated DINR PRO