France
Financial Year – 1 January – 31 December
Currency – Euro (EUR)
Corporate Tax Summary
Residence – A company is resident in France if it is incorporated in France or, if not incorporated in France, it is managed and controlled in France.
Basis of Taxation – Resident companies and non-resident companies are only taxed on profits made through businesses operating in France and on French source income. The tax computation rules and rates are the same for French companies and branches of foreign companies.
| Reference | ||
| Corporate Income Tax Rate (%) | 28 % – 15% for SMEs on taxable profit up to EUR 38,120. | (a) For companies with a turnover of more than EUR 250 million, the 28% corporate tax rate applies to profits up to EUR 500,000. A rate of 31% is applied above this amount. (b) The corporate income tax rate will progressively decrease to 25% by 2022. |
| Branch Tax Rate (%) | 28 % | (a) For companies with a turnover of more than EUR 250 million, the 28% corporate tax rate applies to profits up to EUR 500,000. A rate of 31% is applied above this amount. (b) The corporate income tax rate will progressively decrease to 25% by 2022. |
| Withholding Tax Rate: | ||
| Dividends – Franked | NA | |
| Dividends – Unfranked | 28 % for dividends paid to companies – 12.8% for dividends paid to individuals | In general, this is a final withholding tax that is imposed on payments to non-residents only. However, this withholding tax may be eliminated if the non-resident company can prove to its subsidiary that it satisfies certain conditions relating essentially to the location of its effective seat of management in an EU Member State, the corporate form, the percentage of shareholding in the distributing company (10% or 5% subject to conditions). In addition, this withholding tax may be reduced or even eliminated under tax treaties entered into by France. (b) The corporate income tax rate will progressively decrease to 25% by 2022. (c) Dividends, interest and royalties paid to companies located in a non-cooperative, blacklisted country may be subject to a 75% withholding tax. |
| Dividends – Conduit Foreign Income | NA | |
| Interest | 0 % | (c) Dividends, interest and royalties paid to companies located in a non-cooperative, blacklisted country may be subject to a 75% withholding tax. |
| Royalties from Intellectual Property | 28% | This withholding tax is imposed on payments to non-residents only. However, this withholding tax may be reduced or eliminated under a tax treaty or where the royalties qualify for the benefit of the EU Interest and Royalties Directive. (b) The corporate income tax rate will progressively decrease to 25% by 2022. (c) Dividends, interest and royalties paid to companies located in a non-cooperative, blacklisted country may be subject to a 75% withholding tax. |
| Fund Payments from Managed Investment Trusts | ||
| Branch Remittance Tax | 28% | This tax is not applicable when the non-resident company has its place of effective management in an EU Member State (a country where it is subject to corporate income tax without any possibility of being exempted from tax or any option to be exempted from tax). In addition, this tax may be eliminated or reduced under a tax treaty. (b) The corporate income tax rate will progressively decrease to 25% by 2022. |
| Net Operating Losses (Years) | ||
| Carry Back | Only to the previous year’s profit, up to the lower of this profit or an amount of EUR 1 million. | |
| Carry Forward | Indefinite but the amount offsetable each fiscal year is limited to EUR 1 million plus 50% of said fiscal year’s taxable profit exceeding EUR 1 million. |
Individual Tax Summary
Residence – For tax purposes an individual is a French resident if his/her home, main place of business or professional activity, or centre of economic interest is located in France.
Basis of Taxation – Residents are taxed on worldwide income. Non-residents are taxable only on French source income.
Filing Status – Each taxpayer must file a tax return each calendar year. Married persons or those in a civil union (PACS) must file a joint tax return.
Personal Income Tax Rates
| Taxable Income | Tax Payable – Residents | Tax Payable – Non Residents |
| Up to EUR 10,064 | Nil | |
| EUR 10,064 – EUR 25,659 | 11% | |
| EUR 25,659 – EUR 73,369 | 30% | |
| EUR 73,369 – EUR 157,806 | 41% | |
| Above EUR 157,806 | 45% |
For non-residents, a withholding tax applies on salary income at a rate of 12% for income between EUR 14,988 and EUR 43,477 and 20% beyond this. The tax withheld at the rate of 12% is in full discharge of the recipient’s income tax liability. By contrast, the taxable fraction that exceeds this limit must be taken into account for the calculation of income tax (the withholding tax may be deducted from the income tax calculated with the standard tax scale). This specific withholding tax is suppressed as of 1 January 2023.
In addition to personal income tax, an exceptional contribution applies on the portion of income that exceeds EUR 250,000 for single individuals or EUR 500,000 for married couples or those in a civil union (PACS) at the rate of 3% on income between EUR 250,000 and EUR 500,000 for single individuals and between EUR 500,000 and EUR 1 million for couples and a rate of 4% on the part of income exceeding the above mentioned amounts.
Goods and Services Tax (GST)
| Rate | Standard rate: 20% Reduced rate: 2.1%/5.5 Reduced rates of 5.5% or 10% apply to most food products for human consumption and certain other items and the rate of 2.1% applies to some newspapers and medicines reimbursed by the social security system. |
| Taxable Transactions | VAT is levied on sales of goods, provisions of services, and imports. |
| Registration | An entity that carries on an enterprise subject to VAT must register with the tax authorities. |
| Filing and Payment | Filing can be monthly, quarterly or annually, depending on the type of activities and the amount of VAT due. |
Other Taxes Payable
| Tax | Reference |
| Registration Tax | Payroll tax is levied on entities that are not subject to VAT (mostly banks and financial institutions) where the amount is based on salaries, wages and benefits paid to employees. |
| Payroll Tax | The sale of real property is subject to a transfer tax at a maximum rate of 5.8% of the sale price. The rate of the transfer tax on the sale of shares varies depending on the nature of the shares. The sale of shares of an SARL or SNC is subject to 3% of the sale price (minus a sum equal to the number of units sold x EUR 23,000 / total number of the company units). The sale of shares of an SA, SAS or SCA is subject to a flat tax rate of 0.1% of the sale price. If the company whose shares are transferred is a real estate company (i.e. if more than 50% of the company’s assets is French real property or real property rights), a 5% transfer tax applies to the sale price. |
| Land Tax | Each year, a land tax (taxe foncière) is levied on owners and a dwelling tax (taxe d’habitation) is levied on the occupants. These taxes are based on the rental value of the property assessed by the French tax authorities. |
Last updated: 12.06.2020