Direct taxation

Corporate tax (IS) is an annual tax on the profits generated in France by companies and other organisations. The tax rate is gradually being lowered to 25% by 2022 as per the Finance Act of 2018. Some companies not subject to corporate income tax (mainly sole proprietorships or professional non-trading companies) are liable to personal income tax (IR).

Taxes on consumption

Value Added Tax (VAT) is a tax on consumption that the consumer pays when purchasing a product or service. The standard rate is 20% and there are two reduced rates (10% and 5.5%) for certain products and services. A special rate of 2.1% is applied to press publications and medicines reimbursed by social security. Since October 15, 2020, COVID-2019 vaccines and tests, as well as closely related services, benefit from a zero rate.

The overall amount of VAT payable is calculated by the taxable entity. If the difference between the VAT collected (on sales to consumers) and the VAT paid (to suppliers) is negative, the company normally offsets the excess with its next tax payments or may, under certain conditions, claim a refund.

Indirect and similar taxes are partially harmonised at EU level such as excise duties: taxes on spirits and alcohol, domestic tax on petroleum products, taxes on tobacco.

A general tax on polluting activities is also applicable to companies carrying out certain operations such as the storage and treatment of waste, the supply or use of lubricants, the emission of polluting substances into the atmosphere, etc.

Local taxation

The Government collects local taxes on behalf of local authorities. They partly define the rate, but cannot vary it beyond legal limits.

Property tax on developed land is levied annually on developed land located in France except where there is a right to permanent exemption (public property, agricultural buildings, etc.) or temporary exemption (new or innovative companies, development incentives, etc.).

Property tax on undeveloped land is levied annually on owners of undeveloped land of any kind located in France except where there is a right to permanent exemption (public property) or temporary exemption (incentives for agriculture, reforestation and conservation of environmental protection areas). Like the property tax on developed land, the tax is due by the owner of the land on the 1st of January of the year of taxation.

The territorial economic contribution is composed of a business premises contribution and a contribution on the added value of companies calculated on the basis of the added value generated by a company.

Current tax rates


Normal rate

The corporate tax rate is gradually being reduced to :


Fiscal year beginning 01/01/2021

Fiscal year beginning 01/01/2022

Companies with a turnover of less than €250m

26,5 % 25%

Companies with a turnover of more than €205m

27 %

For companies with a turnover of less than €10 million, profits of less than €38,120 are taxed at a rate of 15%.

In some cases, the corporate tax (IS) is increased:

  • Social contribution: 3.3% of the corporate tax due for companies with a turnover of at least €7.63 million and a corporate tax liability of more than €763,000;

Reduce rates

Reduced rate / net industrial property result

10 %

Reduced rate applicable to net profits from the sale, concession of license, or sub-concession of certain industrial property rights.

Capital gains on the sale of equity investments

0 %

Are excluded from the scope of the 0%-rate:

  • long-term capital gains on the sale of real estate company shares;
  • long-term capital gains on the sale of shares in companies established in an uncooperative state or territory ("black list").

The benefit of the 0 rate is subject to the reintegration of a share of costs and expenses (in the result taxable at the normal rate of corporation tax) equal to 12% of the gross amount of capital gains.



Normal rate 20 %  
Reduced rates 10 % - 5,5 %

The 10% rate applies in particular to passenger transport, catering, home improvement, accommodation and hotels.

The 5.5% rate applies in particular to foodstuffs, equipment and services for the disabled, gas and electricity subscriptions, the supply of meals in school canteens, books on any medium, ticket sales for live performances and films, and work to improve the energy quality of housing.


Territorial economic contribution: business property tax (CFE) 

Rates decided each year by city/town councils (or inter-municipal councils)

The business property tax is based solely on the rental value of the property subject to the property tax. Equipment and movable property as well as revenues are no longer taxed.

The CFE may not be lower than a minimum contribution which depends on the amount of turnover (between €210 and €6,500, depending on the decision of the local authorities).

Territorial economic contribution: contribution on the value added of companies (CVAE)

Theoretical rate of 0.75% from 2021 with rebates when turnover is below €50m

The value added tax (CVAE) applies to companies that fall within the scope of the business property tax and whose turnover exceeds €152,500. All companies whose turnover exceeds €152,500 are subject to a reporting obligation.

However, only persons who usually carry out a self-employed professional activity and whose turnover exceeds €500,000 excluding VAT must pay the CVAE.

Property Tax

Rates decided each year by city/town councils (or inter-municipal councils), by “departments” and by regions

Property tax on developed land applies to the following :

  • industrial or commercial plants (sheds, workshops, tanks...);

  • lands used for commercial or industrial purposes (building sites, warehouses...) or used, in specific cases, for advertising purposes.


Updated in July 2021