In this page: Corporate Taxes | Accounting Rules | Consumption Taxes | Individual Taxes | Double Taxation Treaties | Sources of Fiscal Information
Corporate tax rate (2023) | 25% flat rate |
Small corporations realising a turnover of up to EUR 10 million | 15% on their first EUR 42,500 of taxable profits |
Surcharge | 3.3% of the taxable income; applied to large-size companies that pay over EUR 763,000 in corporate tax (bringing the marginal effective rate to 25.83% |
Branch profits are taxed at the same rate as corporate profits. Generally, branch profits are deemed to be distributed to the head office. A withholding tax is levied on French branches of non-resident, non-EU corporations at the rate of 25% (may be lower under a tax treaty) of net profits. Transfer pricing and controlled foreign company rules apply.
As with dividends, a participation exemption applies to capital gains arising from the sales of shares that form part of a substantial investment if the shares have been held for 24 months. The taxable basis is 12% of the gross amount of the capital gain realized (i.e. the gain is 88% exempt), resulting in an effective rate of 3.1%.
In general, non-resident entities are not taxable in France on capital gains derived from the disposal of French assets, unless these are part of a permanent establishment in the country (exceptions apply).
For R&D and software expenses, a business may elect to immediately deduct costs incurred in R&D or software or to amortise their cost on a straight-line basis over a maximum period of five years. The cost of acquiring software may be written off on a straight-line basis over 12 months, that of patents acquired can be amortised over a five-year period. An R&D credit is also available, at 30% of the R&D eligible expenses incurred during the year (up to EUR 100 million R&D expenses), and 5% on the part in excess of this amount.
Several taxes, including unrecoverable turnover taxes, registration duties, and the Territorial Economic Contribution, are deductible (corporate income tax is not).
For wages paid on or after 1 January 2019, the Competitiveness and Employment Tax Credit (CICE) is repealed and replaced by a permanent decrease in payroll charges paid by employers to finance the French social security system.
Social security contributions payable by the employer vary depending on the size and type of business and the location, and in some cases can exceed 50% of gross pay (around 45% on average). The annual social security ceiling (PASS) is set at EUR 43,992 in 2023, and the monthly ceiling at EUR 3,666.
Companies that do not meet the 90% VAT liability threshold for their annual turnover are required to pay payroll tax (taxe sur les salaries) on the salaries paid in the subsequent calendar year. For companies falling below the 90% threshold, the payroll tax applies to the portion of their VAT recovery ratio that is not covered by their turnover. The standard payroll tax rate is 4.25%, but for gross individual wages exceeding specific thresholds, higher rates apply (8.5% for wages ranging from EUR 8,020 to EUR 16,013 and 13.6% for wages exceeding EUR 16,013).
The sale of real property is subject to a transfer tax up to a maximum rate of 5.8%.
The transfer of shares of an SA, SAS, or SCA is subject to registration duty at a rate of 0.1% with no cap (increased to 5% if the company whose shares are transferred is a real estate company). For the sale of shares of a SARL or SNC, the transfer tax is equal to 3% of the sales price, minus a sum equal to the number of units sold x EUR 23,000/total number of the company units.
A financial transaction tax of 0.3% applies to transactions involving shares of publicly traded companies established in France whose capital exceeds EUR 1 billion.
A 3% digital services tax (DST) is levied on companies whose revenues derived from the provision of online placement of advertising, sale of collected user data and intermediation services exceeds EUR 750 million globally and EUR 25 million in France during the calendar year. For related companies, these thresholds are assessed at the group level.
Other taxes include: apprenticeship tax, company car tax, stamp duties, etc.
France | OECD | United States | Germany | |
---|---|---|---|---|
Number of Payments of Taxes per Year | 9.0 | 10.1 | 10.6 | 9.0 |
Time Taken For Administrative Formalities (Hours) | 139.0 | 163.6 | 175.0 | 218.0 |
Total Share of Taxes (% of Profit) | 60.7 | 41.6 | 36.6 | 48.8 |
Source: The World Bank - Doing Business, Latest data available.
Exports of goods outside the EU and related services; specified financial transactions and intra-Community supplies of goods are zero-rated.
Certain executives of companies that have their registered office in France and that have French revenues in excess of EUR 250 million are deemed to exercise their professional occupations in France and, therefore, to have their tax residence in the country.
Personal income tax (IRPP) | Progressive rate up to 45% |
Up to EUR 10,777 | 0% |
Between EUR 10,778 and EUR 27,478 | 11% |
Between EUR 27,479 and EUR 78,570 | 30% |
Between EUR 78,571 and EUR 168,994 | 41% |
Above EUR 168,994 | 45% |
Exceptional contribution (above EUR 250,000 for single individuals and EUR 500,000 for married couples) | - 3% on income between EUR 250,000 and EUR 500,000 for single individuals (EUR 500,000 and EUR 1 million for married couples); - 4% on the part of income exceeding EUR 500,000 for single individuals (EUR 1 million for married couples) |
Special social security surcharges for French residents | Up to 17.2% |
Concerning personal allowances, total taxable income is divided into the number of shares ("parts") that reflect the taxpayer's marital status and the number of dependents. Children under 18 years of age and disabled children of all ages can be claimed as dependents. Children from the ages of 18 to 21, as well as children from the ages of 21 to 25 who are full-time students, can, upon request, be claimed as dependants. The tax benefit per additional half-share for dependent children is limited to a maximum of EUR 1,678 for each of the first two children and EUR 3,356 for each additional child.
Payments of alimony to an ex-spouse, and of child support to children under 18 are fully deductible expenses when made according to the provisions of a court settlement. Support payments made to parents, grandparents, children over 18, or married children qualify as a deductible expense (with a cap for children), provided that the beneficiaries are in need and that such can be demonstrated.
Taxpayers carrying out an employed or self-employed activity are entitled to a tax credit of up to 50% of childcare expenses incurred for each dependent child under seven placed at nursery school or with non-domestic help (capped at EUR 3,500 per child/per annum).
Charitable contributions to qualified organizations can be claimed as a tax reduction of up to 66% of actual contributions. A tax reduction for schooling expenses is granted to taxpayers whose dependent children study in secondary schools, as follows: EUR 61 for "collège", EUR 153 for "Lycée", and EUR 183 for university. The reduction deriving from tax deductions/credits is globally limited to EUR 10,000/year.
For non-residents, a 20% minimum rate of tax applies to income from French sources up to EUR 27,478 and 30% for any income exceeding this amount (14.4% and 20%, respectively, for income earned in France's overseas departments). A "PAYE income tax system" has been introduced, meaning tax is now deducted at source from the employee’s wage.
France has generous expatriate tax regimes to attract foreign investment, especially around health insurance, complimentary retirement pension contributions and other exemptions.
For further information, visit the dedicated page on the website of the French Tax Authority.
A Property Wealth tax (IFI - link in French only) of between 0.5% (after an allowance of EUR 800,000) to 1.5% (for net wealth in excess of EUR 10 million) applies to individuals with real estate net asset value above EUR 1.3 million, with various exemptions. Tax residents of a given year are liable to tax on their worldwide real estate properties, non-residents only on properties located in France.
The sale of real property is subject to a transfer tax at a maximum rate of 5.8%.
Inheritance and gift tax between 5% and 45% (after a rebate of EUR 100,000 when beneficiaries are direct dependents) is levied on the beneficiaries of a property transfer.
Owners are liable for a tax based on the rental value of the property, whereas occupants are liable for a dwelling tax base on the rental value of the property (rates vary). As of 1 January 2023, the dwelling tax on an individual’s main residence is abolished.
Individuals who had their tax domicile in France for six out of the previous ten years and who decide to transfer their tax domicile outside of the country are taxed on the unrealised capital gains on shares and rights held directly by tax household members when these rights represent a total value exceeding EUR 800,000 or exceed 50% of the shareholding. These capital gains or value of receivables will be subject to personal income taxation at a flat tax rate of 12.8% and social surtaxes of 17.2%.
The employee’s share of French social contributions is generally around 20-23% of the salary. The annual social security ceiling (PASS) is set at EUR 43,992 in 2023, and the monthly ceiling is at EUR 3,666.
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Latest Update: November 2023