Tax4Business

Direct taxes

Corporation tax (IS) is a tax, payable annually, on profits generated in France by companies and other organisations. Its rate is gradually lowered to 25 % by the Finance act for 2018 by 2022. Certain businesses not liable to corporation tax (essentially sole traders or professional partnerships) are liable to personal income tax (IR).

Taxes on consumption

Value Added Tax (VAT) is a tax on consumption paid by consumers when purchasing goods or services. The standard rate is 20% and there are two reduced rates (10% and 5.5%) for certain goods and services. A specific 2.1% rate is charged in particular on press publications and medical drugs reimbursed by social security.

Taxpayers determine their total VAT liability themselves. If there is a negative difference between output VAT (from sales to consumers) and input VAT (to suppliers), the business usually offsets the surplus against future VAT payments or may, in certain circumstances, request repayment.

Indirect and similar taxes are partially harmonised at EU level. These include excise duty: taxes on spirits and alcohol, domestic tax on oil products, tobacco taxes.

A general tax on polluting activities is also levied on businesses that store and process waste, deliver or use lubricants, emit pollutants into the atmosphere, etc.

Local taxes

The Government collects local taxes on behalf of local authorities. The latter are partly responsible for deciding the rate but cannot raise it above legal limits.

Property tax on developed land is levied annually on developed land situated in France except where there is entitlement to permanent (public property, farm buildings, etc.) or temporary (new or innovative enterprises, incentives for business expansion, etc.) exemption. Property tax on undeveloped land is levied annually on owners of any undeveloped land of any nature situated in France except when there is entitlement to permanent (public property) or temporary (incentives for farming, reforestation and the conservation of environmental interest zones) exemption. As with the property tax on developed land, the tax is payable by the owner of the land at 1 January of the year of taxation.

The local economic contribution (contribution économique territoriale) comprises a business premises
contribution (cotisation foncière des entreprises) and a contribution on business value added (cotisation sur la valeur ajoutée des entreprises).

Tax rates

CORPORATE INCOME TAX (CIT)

Normal rate

Companies concerned : turnover < 7.63 M€
Profit between : Fiscal year beginning in 2018 Fiscal year beginning in 2019 Fiscal year beginning in 2020 Fiscal year beginning in 2021 Fiscal year beginning in 2022
From 0 € to 38 120€ 15 % 15 % 15 % 15 % 15 %
From 38 120 € to 500 000 € 28 % 28 % 28 % 26,5 % 25 %
More than 500 000 € 33,1/3 % 31 %

Companies concerned : turnover > 7.63 M€
Profit between : Fiscal year beginning in 2018 Fiscal year beginning in 2019 Fiscal year beginning in 2020 Fiscal year beginning in 2021 Fiscal year beginning in 2022
From 0 € to 500 000 € 28 % 28 % 28 % 26,5 % 25 %
More than 500 000 € 33,1/3 % 31 %

 

In specific cases, CIT rates get increased :

  • Social contribution : 3,3% of the CIT payable by companies whose turnover equals or exceeds € 7,63 million and whose CIT exceeds € 763,000 ;
  • Exceptional contribution : 15% payable by companies with whose turnover exceeds € 1bn and an additional contribution of 15% payable by companies with whose turnover exceeds € 3bn.

 

Reduce rates

Reduced rate / revenues from property rights 15 % Reduced rate applicable to royalties derived from the sale of property rights or licence fees, patentable inventions, improvements etc.
Capital gains on the disposal of equity securities 0 %

The following are excluded form the scope of the 0%-rate:

– long-term capital gains on disposals of equity securities of real estate companies;
– long-term capital gains on disposals of equity securities of companies located in non-cooperative jurisdictions (“black list”).

To be eligible to this rate, it is required to add a share of costs and expenses back into the benefits taxable at the normal CIT rate that amounts to 12% of the capital gains before tax.

 

VALUE-ADDED TAX (VAT)

Normal rate

20 %  

Reduced rates

10 % - 5,5 %

The 10% rate mainly applies to passenger transport, catering, housing improvements, accomodation, hotel industry. The 5.5% rate applies to food, equipments and services for disabled, gas an electricity subscription fees, school catering, books regardless of the media, live entertainment and cinema, improvements of housing ecological footprint.

 

LOCAL TAXES: LOCAL ECONOMIC CONTRIBUTION & PROPERTY TAX

Local economic contribution: Business premises contribution (CFE)

 

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

The business premises contribution applies to the rental value of premises subject to Property Tax. Equipments and revenues derived from premises are not taxed anymore.

The business premises contribution cannot be lower than a threshold which is defined according to the turnover (between 210€ and 6 500€ depending on the decision of the local authority).

Local economic contribution: contribution on business value added (CVAE)

Theoretical rate is 1,5% with  tax relief when turnover is under 500 000 €.
Effective rates vary form 0% to 1,5%

The contribution on business value added applies to business subject to the business premises contribution and whose turnover does not exceed 152 500€. All business whose turnover exceeds 152 500€ have to file a CVAE return.
Nonetheless only professionals who carry out a business activity on a regular basis and whose turnover exceeds 500 000€ net of VAT have to pay CVAE.

Property Tax

Rates decided each year by city 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 (constructions, warehouses...) or used, in specific cases, for advertising purposes.

 

MAJ le 13/03/2018