Introduction to Corporate Tax in France

Understanding how corporate tax works in France is essential for any business looking to operate successfully within the country. France has a detailed tax framework that influences how companies manage their finances, meet legal requirements, and plan for growth. Key aspects include a standard corporate income tax rate of 25%, reduced rates for smaller companies, and clearly defined filing and payment deadlines.

Beyond these obligations, France also provides several tax reliefs and incentives, particularly for research, innovation, and sustainable investments. These can lead to significant savings, but only if businesses can access them.

This guide outlines the main components of France’s corporate tax system, covering rates, compliance procedures, available deductions, and international tax agreements. With Commenda’s support in managing registration, filing, and tax planning, businesses can stay compliant and make the most of available tax benefits.

What Is the Corporate Tax Rate in France?

Understanding the corporate tax rate in France is essential for businesses operating within the country or considering establishing a presence. France has a tiered tax system with a standard rate for most companies and reduced rates for small and medium-sized enterprises (SMEs). The system also includes various additional charges for large businesses. Here is more about the specifics of corporate tax rate in France in detail:

Standard Corporate Income Tax Rate

As of fiscal years beginning on or after 1 January 2022, the corporation tax, including the standard corporate income tax (CIT) rate in France, is 25%. This rate applies uniformly to all companies, regardless of their size or turnover, unless they qualify for a reduced rate.

Reduced Rate for SMEs

A reduced CIT rate of 15% applies to the first €42,500 of taxable profits for qualifying SMEs. 

Certain companies are eligible for reduced rates based on the nature of their operations as per the corporate income tax rate in France:

  • Annual turnover must not exceed €10 million.
  • At least 75% of the company’s capital must be owned by individuals (or qualifying holding companies).
  • The company must be subject to standard French accounting rules and pay French CIT.

Surcharges for Large Companies

Additional tax surcharges, as per the corporate tax rate in France may apply to large businesses:

  • A 3.3% social contribution applies to the portion of corporate tax liability exceeding €763,000, after an initial deduction of €763,000.
  • Temporary surtaxes introduced in 2024 target large firms:
    • Companies with turnover between €1 billion and €3 billion face a 20.6% surcharge on CIT liability.
    • Companies with a turnover exceeding €3 billion face a 41.2% surcharge.

These surcharges significantly increase the effective tax burden on the largest companies and are subject to annual review under the Finance Law.

Breakdown of Corporate Income Tax Components

Corporate tax filing in France includes several components beyond the standard income tax rate. These include national-level taxes, surcharges for large businesses, and local contributions based on company operations and premises.

Here is a detailed look at the corporation tax in France:

Corporate Income Tax (CIT)

The main tax is the Impôt sur les Sociétés (IS) or corporate income tax, levied at:

  • 25% for most companies
  • 15% on the first €42,500 for qualifying SMEs

Social Contribution on Profits

The 3.3% social contribution applies to corporate tax liabilities exceeding €763,000. It is calculated on the CIT amount after subtracting this threshold and does not apply to all businesses; it primarily affects large enterprises.

Exceptional Surcharges

In response to fiscal policy needs, France imposes temporary surcharges on companies with high turnover:

  • Companies with turnover between €1 billion and €3 billion: an additional 20.6% of the base CIT.
  • Companies with turnover exceeding €3 billion: 41.2% surcharge on the base CIT.
    These are not permanent and may be revised or withdrawn in future finance laws.

Local Business Taxes (CET)

The Contribution Économique Territoriale (CET) comprises two taxes:

  • Cotisation Foncière des Entreprises (CFE): Based on the notional rental value of business premises. Rates vary depending on the local municipality.
  • Cotisation sur la Valeur Ajoutée des Entreprises (CVAE): Based on a company’s added value. The maximum effective rate is currently 0.28%, which is gradually reduced under planned reforms to 0.09% by 2029.

Corporate Tax Filing Requirements in France

For corporate tax filing in France, companies must comply with detailed filing obligations to remain in good standing with French tax authorities. These requirements include submitting tax returns, adhering to deadlines, and using approved digital systems:

Entities Required to File

The following entities must file corporate tax returns:

  • Resident companies: Taxed on worldwide income.
  • Non-resident companies: Taxed only on income derived from French sources.

Key Tax Forms

The primary forms used for filing are:

  • Form 2065-SD: Standard corporate income tax return.
  • Form 2065-INT-SD: Additional form required for multinational enterprises subject to Country-by-Country Reporting (CbCR) or Pillar Two rules.

Filing Deadlines

  • Calendar-year companies: Must file the return by the second business day following 1 May (typically around 2 May).
  • Non-calendar year companies: Must file within three months after the close of the fiscal year.

Tax Payment Requirements

  • Quarterly instalments: Companies must pay advance CIT in four equal instalments on:
    • 15 March
    • 15 June
    • 15 September
    • 15 December
  • Balance payment: Any remaining tax is due by the 15th day of the fourth month following the fiscal year-end (15 May for calendar-year companies).

SMEs with a corporate tax liability of less than €3,000 in the previous year may be exempt from advance payments and pay the full amount in one payment.

Electronic Filing and Payment

All returns and payments must be submitted electronically through the French government’s authorized platforms, such as Impots.gouv.fr. Paper submissions are generally not accepted.

Penalties and Extensions

  • Extensions may be granted in exceptional cases (e.g., force majeure), but requests must be justified.
  • Late filing incurs interest and penalties:
    • 10% penalty for late filing without formal notice.
    • Up to 40% for repeated or deliberate non-compliance.
    • Up to 80% in cases of fraud or abuse of law.

Tax Year and Payment Deadlines in France

Understanding the structure of the corporate tax year and the associated payment schedule is essential for compliance. France allows companies to select their fiscal year, but sets clear rules for filing and payment deadlines.

Standard Tax Year

Companies can adopt either:

  • The calendar year: 1 January to 31 December.
  • A fiscal year: Any consecutive 12-month period, often chosen for alignment with international group accounting.

Filing and Payment Schedule

Company Type Filing Deadline Payment of Final Tax
Calendar-year 2nd business day after 1 May 15 May
Fiscal year (non-calendar) Within 3 months after year-end 15th day of 4th month after year-end

This is as per the corporate tax payment deadlines France.

Quarterly and Monthly Instalments 

  • Companies must pay four installments during the fiscal year. Each installment is a quarter of the previous year’s tax liability unless the company is newly established.
  • From January 2024, companies with high tax liabilities may be required to make monthly prepayments equal to 1/12th of the previous year’s CIT, payable by the 15th of each month.

Withholding Taxes and Other Business Taxes in France

France imposes withholding taxes on cross-border payments such as dividends, interest, and royalties, with domestic exemptions and treaty relief. Businesses are also subject to broad indirect taxes (VAT) and capital gains tax rules. Here’s what you need to know:

Withholding Tax Rates

  • Dividends: Domestic rate is 25% for foreign corporations, 12% for non-resident individuals, and an elevated 75% for entities in non-compliant jurisdictions (NCJs). Reduced or zero rates may apply under tax treaties or the EU Parent-Subsidiary Directive (10% ownership for 2 years).
  • Interest: Exempt from withholding unless paid to a recipient in an NCJ, in which case the rate is 75%.
  • Royalties: The standard rate is 25%, which is elevated to 75% for NCJs. Under treaties or EU rules, 0–10% reductions may apply.

Other Notable Business Taxes

  • VAT: Standard VAT rate is 20%, with reduced rates (10%, 5.5%, and 2.1%) applying to specific goods and services. Non-resident entities must register: €85,000 threshold for goods and €25,000 for services rendered in France.
  • Capital Gains Tax:
    • For corporate entities, gains are taxed at the standard CIT rate (25%).
    • Long-term capital gains may benefit from partial exemptions.
    • For individuals, flat 30% (12.8% income tax + 17.2% social charges), with exemptions for holdings over 8 years and favorable schemes (e.g., PEA).

Corporate Tax Incentives, Deductions, and Exemptions

France offers an attractive package of tax incentives for R&D, innovation, green investment, charitable giving, IP licensing, training, and more. Key deductions and corporate tax incentives France include:

  • R&D Tax Credit (CIR): 30% of eligible R&D expenses up to €100 million, then 5% beyond.
  • Collaborative Research Credit: 40% credit (50% for SME) for R&D with approved research entities, capped at €6 million/year.
  • Green Industry Credit (C3IV): 20–40% credit for investments in batteries, solar panels, wind turbines, heat pumps; up to €150–350 million cap.
  • Patent Box: Income from patents and qualifying IP is taxed at 10% instead of the 25% standard.
  • Innovation Credit (CII): 30% credit on innovation expenses (cap €400,000/year).
  • JEI status: Young Innovative Companies benefit from CIT and social charge exemptions.
  • VAT Refunds: Excess VAT can be reclaimed; detailed procedures depend on the VAT regime.

International Tax Treaties and Double Taxation Avoidance

France has an extensive network of double taxation treaties (DTTs) designed to prevent double taxation and allow for tax credits and exemptions. Here is more about this in detail:

  • Under these treaties, withholding taxes on dividends, interest, and royalties are often reduced or eliminated compared to domestic rates.
  • France also provides unilateral foreign tax credits for taxes paid abroad.
  • Tax-sparing clauses in some treaties allow tax credit that would have been paid abroad if domestic tax rules applied.
  • Not all treaties are in force simultaneously; confirm the status for specific countries.

How Commenda Supports Corporate Tax Compliance in France

Figuring out the tax regimes of a new country is a difficult thing to master, but do not worry! Commenda offers end-to-end corporate tax services, from setup to filing, advisory, monitoring, and incentive optimisation. Here is more about the services that we offer in detail:

  • Registration: Handles company tax and VAT registration, liaises with French tax authorities.
  • Filing and Reporting: Preparation and filing of CIT returns (Form 2065-SD/INT-SD), VAT returns, withholding tax filings, R&D and innovation credit claims, patent box, green credit.
  • Advisory Services: Guidance on tax treaties, transfer pricing, CFC rules, and cross-border compliance.
  • Compliance Monitoring: Tracks deadlines, advance and monthly tax instalments, digital submissions via Impots.gouv.fr, and alerts for changes in tax law.
  • Incentive Optimization: Identifies and maximises all available R&D, collaborative, green, patent and innovation tax credits, and charitable deduction opportunities.

Know about corporate tax compliance services France now! Book a free demo to see how Commenda helps with managing French taxes for you!

Common FAQs About Corporate Tax in France

Q. What is the current corporate tax rate in France?

France’s standard corporate income tax (CIT) rate is 25% for all companies, effective from fiscal years starting 1 January 2022. However, small and medium-sized enterprises (SMEs) benefit from a reduced 15% rate on the first €42,500 of taxable profit as per the corporate tax system in France. These are essential to know to understand what is corporate tax rate in France.

Q. How is corporate income tax calculated in France?

CIT is calculated based on the net taxable profits of the company, after deducting allowable expenses, depreciation, provisions, and losses. The standard 25% rate applies to most profits, but qualifying SMEs pay 15% on the first €42,500 as per the corporate tax system France.

Q. Are there different corporate tax rates for small businesses in France?

Yes. Small businesses that qualify as SMEs can pay a reduced 15% CIT rate on a portion of their profits (up to €42,500), with the rest taxed at 25%. To qualify, companies must have an annual turnover under €10 million, be at least 75% owned by individuals, and be subject to French corporate tax.

Q. When are corporate tax returns due in France?

For companies following the calendar year (ending 31 December), the tax return (Form 2065) must be filed by the second business day after 1 May of the following year. Companies with non-calendar fiscal years must file within three months after the fiscal year-end.

Q. What are the penalties for late corporate tax filing in France?

Late filing can result in a 10% penalty on the tax due. If a formal notice has been issued, or in the case of repeated or deliberate failure to file, penalties can increase to 40%, and up to 80% in cases of fraud or intentional misstatement. In addition, interest for late payment is charged at a statutory rate, as per company tax filing France.

Q. What incentives or deductions are available for companies in France?

France offers several generous incentives, including:

  • R&D Tax Credit (CIR) of 30% up to €100 million of eligible expenses.
  • Innovation Credit (CII) for product development.
  • Green Industry Credit for sustainable investments.
  • Patent Box Regime, which taxes eligible IP income at a reduced 15% rate.
  • Deductions for charitable donations, apprenticeships, and young innovative company (JEI) status.

Q. Is there a minimum corporate tax in France?

There is no fixed minimum corporate tax. However, companies with a prior-year CIT liability below €3,000 are not required to pay advance instalments. Nonetheless, all companies with taxable profits must pay at least the applicable corporate income tax based on their earnings.

Q. Are foreign companies taxed differently in France?

Yes. Foreign (non-resident) companies are taxed only on income sourced from France, such as permanent establishments, French real estate, or royalties from French IP. Resident companies, including French subsidiaries of foreign parents, are taxed on worldwide income.

Q. What services does Commenda provide for corporate tax compliance in France?

Commenda supports companies with:

  • Tax and VAT registration with French authorities.
  • Preparation and electronic filing of CIT, VAT, and withholding tax returns.
  • Advisory on tax-efficient structures, treaty benefits, and transfer pricing.
  • Assistance in applying for and maximising tax incentives like R&D and innovation credits.
  • Ongoing compliance monitoring to ensure deadlines, instalments, and filings are never missed.