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Generic Tax Name Corporate income tax - Corporation tax
Tax name in the national language Impôt sur les sociétés
Tax name in English Corporation tax
Member State FR-France
Tax in force since 1948/01/01
If abolished, date on which the tax ceases to apply
Business version date 2015/01/01
Version date 2015/03/24
This file was last updated on

Type of tax
Direct taxes Personal income tax
Corporate income tax
Other

Indirect taxes VAT
Excise duty (EU harmonised)
Alcoholic beverages
Energy products and electricity
Manufactured tobacco
Other

Social security contribution Employers
Employees
Other
 
Legal base

Articles 205 et seq. of the General Tax Code (Code général des impôts).

 
Who sets
The tax rate is set by




The tax base is set by




The reliefs are set by




Comments
 
Beneficiary





Comments

 
Geographical Scope
 
Taxpayers
Domestic-source income of non-resident entities is Taxed
Not Taxed
Comments
 
Tax object and basis of assessment
As general rule, taxable income under corporate income tax includes also








Comments

Income considered Domestic income
Worldwide income (subject to double-tax relief)
Comments

Only profits made by enterprises operating in France are liable to corporation tax, whatever their nationality. This means that profits made by a French company in enterprises operated in other countries than France are not liable to French corporation tax; likewise, a foreign company is liable to French corporation tax only on the profit made from enterprises which operate in France.


Comments

The corporate income tax is levied on the profits of businesses operating in France. These profits comprise the difference between the value of net assets at the end of the fiscal year and their value at the beginning of the same fiscal year, plus drawings by partners or operator, less additional partners' contributions.

In practice, company's profits are determined on the basis of its annual accounts, with adjustments in the form of specific deductions and additions to take account of fiscal rules, such as:

  • the system of overseas investment aid, which enables businesses, subject to certain conditions, to deduct an amount equivalent to the sum of their productive investments, less the fraction of the cost price of these investments which is funded by means of a public subsidy, if the investments in question are made overseas in operations within certain priority sectors of the economy, particularly in tourism and industry;
  • the system of one third tax relief, whereby only two-thirds of profits earned by businesses located in French overseas departements and operating in priority sectors of the economy are taxable;
  • the non-deductibility of some costs (depreciation surpluses, entertainment expenses, certain fines and penalties, excess interest paid to shareholders, etc.);
  • exemption (dividends paid by a subsidiary to a parent company) or taxation at a reduced rate (long-term capital gain , royalties derived from patents or manufacturing licences) of definite types of income.
 
Deductions, Allowances, Credits, Exemptions
Valuation of inventory
System First-in first-out (FIFO)
Last-in first-out (LIFO)
Average cost
Specific identification (unit method)

Comments

Depreciation rules
 
Buildings
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate
 
Movable (tangible) assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate
 
Movable fixed assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate
 
Intangible assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate
 
Land (if any)
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate


Comments

Are there limits to interest deductions? Yes No
If yes:
Definition of deduction limit 75% of the amount of net interest expenses

Comments

The limitation of interest deductions was introduced in the 2013 Budget Act. The net interest expenses deduction had been limited, for companies that generate more than €3 million net interest expenses during the accounting period, to 85%, for the profits of years 2012 and 2013. From January 1st 2014, it is limited to 75%.


Is there an Allowance for Corporate Equity? Yes No
If yes:
Notional rate applied for allowance

Comments

Losses
Loss carry-forward exists? Yes No
If yes:
Time limit: Indefinite
 
Size limit:
 
Loss carry-backward exists? Yes No
If yes:
Time limit: Indefinite
1  Years  
Size limit: 1,000,000.00  EUR/Natcur
 

Comments

Size limit for loss carry-forward is equal to €1 million + 50% of taxable profit over €1 million.

Except this limitation, companies have an unlimited period to use their loss carry-forward.



Comments

Exemptions:

The bodies exempted from payment, subject to certain conditions, include regions, departments, municipalities, farmers' associations and cooperatives, housing associations, investment companies and societies whose aim is to make goods available to their members.

Specific tax credits, two most important being a tax credit for expenses in research and development (crédit d'impôt recherche) and a tax credit for competitiveness and employment (crédit d'impôt pour la compétitivité et l'emploi) :

The research tax credit (CIR) is equal to 30% of research spending at or below 100 million euros, and 5% thereafter;

The competitiveness and employment tax credit (CICE) is equal to 6% of previous year compensation of employees which are below 2.5 times the legal minimum wage.

 
Rate(s) Structure
Nominal corporate income tax rate Rate: 33.33 %

Central government surcharge Rate: 0.00 %
Regional government surcharge Rate: 0.00 %
Local government surcharge Rate: 0.00 %
Combined rate (all-in rate) Rate: 33.33 %


Comments

In order to have a complete overview of Corporate taxation in France, please see also the "Corporate income tax - Social contribution on income" and the "Corporate income tax - Minimum annual corporation tax" tax forms in the database.


Special tax rate for SMEs
Special tax rates apply to SMEs: Yes No
If yes:
Nominal corporate income tax rate Rate: 15.00 %
Central government surcharge Rate:
Regional government surcharge Rate:
Local government surcharge Rate:
Combined rate (all-in rate) Rate: 15.00 %


Comments

The reduced corporate tax rate is applicable where turnover does not exceed € 7.63 million, and on part of the profit that does not exceed € 38 120.

 
International aspects
Treaty countries Non-treaty countries
 
Repatriated profits are taxed according to the following system Exemption system Exemption system
Tax credit Tax credit
Deduction Deduction
 
Interest received is taxed Yes No Yes No
Tax rate on interest received
Outgoing dividends withholding tax
Outgoing interest payments withholding tax
 
Foreign losses can be set-off Yes No Yes No
If yes:
Minimum direct or indirect shareholding to qualify loss-offset (if applicable)
 
Loss carry-forward exists? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Loss carry-backward exists? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Controlled foreign company (CFC-)rules exist? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Threshold for capital or voting power held directly or indirectly by resident in non-resident company
CFC-rules apply if foreign tax rate is lower than
CFC-rules apply for passive income only? Yes No Yes No

Comments   Treaty countries

Comments   Non-treaty countries
 
Measures against profit shifting
 
Do Thin Capitalization (TC) rules exist? Yes No
If yes:
Date of first introduction
Introduced as Explicit TC law
Part of CIT law
Test for TC Ratio
Arm's length
If ratio
Value of numerical ratio:
Definition numerator
Definition denominator
 
Debt considered for test Internal
Internal and external
TC depends on shareholding? Yes No
Substantial shareholding threshold 50.00 %
 
Type of shareholding Direct
Indirect
Automatic remedy Yes No
Remedy Non-deductibility of interest
Reclassification as dividend
 
Rules apply to All companies
Foreign companies
Non-EU companies
Transfer pricing rules exists? Yes No
If yes:
Arm’s length principle applied? Yes No
 
Remedy Fee
Tax base increase
 
Tax due date

The corporate income tax has to be liquidated at the latest one month after the book keeping for the fiscal year has been given. For a firm ending its accounting period on December, 31th, the tax is due on May, the second open day after 1st. There are four preliminary payments during the fiscal year, due on March 15th, June 15th , September 15th and December 15th.

Firms, whose turnover exceed € 250 million (over € 500 million before 2013), € 1 billion or € 5 billion, have to pay at least 75%, 85% or 95% of their corporate income tax during the fiscal year (by a complement of their 4th preliminary payment), when their previsional taxable income has raised more than 33.33%, 17.65% ou 5.26% from previous fiscal year.

 
Tax collector

The corporate income tax has to be paid to the Tax General Directorate's accountant (comptable de la Direction Générale des Finances Publiques).

 
Special features

Territoriality of CIT :

Only profits made by enterprises operated in France are liable to corporation tax, whatever their nationality. This means that profits made by a French company in enterprises operated in countries other than France are not liable to French corporation tax.

However, Controlled foreign company-rules apply for foreign entities, directly or indirectly held by a French entity that benefit from a privileged tax regime (subject to a tax rate at least 50% lower than the French CIT). Foreign profits will be treated as a deemed distribution paid to the French entity in proportion to its share, interest, voting rights or financial rights held in the foreign entity.

Non‑residents:

These companies pay tax on profits made in France

 

Losses:

In 2011, the carry-back of losses was reduced from three to one year and the carry-forward of losses limited to 60% over €1 million taxable profit. Starting from fiscal year 2012, the carry-forward of losses is reduced from 60% to 50% (with the same application's rules).

Companies liable to tax in France may not deduct losses made by enterprises they operate in other countries from their taxable profit.

 

Special features:

  • Consolidated group liability: subject to certain conditions, when a parent company holds at least 95% of the dividends and voting rights of subsidiary companies, the parent may assume sole liability for the corporation tax payable by those subsidiaries. From 2015, a consolidated group can also be created by domestic sister companies, holded by a foreign parent company.
  • Parent-subsidiaries regime: French companies directly or indirectly holding at least 5% of the capital of companies benefit from an optional special regime for parent companies and subsidiaries: income received from a subsidiary may be deducted from the net profits of the parent company (except a fixed proportion of 5%). From 2015, exempt subsidiary's dividends (wherever it is located) are excluded from the parent-subsidiaries regime, in order to avoid double exemption.
  • Payments by a French company to non-resident are subject to a withholding tax, except for dividends paid by a French subsidiary to European parent company. Specific rules target transactions involving a non-cooperative jurisdiction. Under these rules most of payments – including dividends and interest – made to companies located in a non-cooperative jurisdiction are subject to a 75% withholding tax.

  • The determination of the share for fees and expenses applied to long-term gains on participation has been modified, starting from fiscal year 2012 on. This share is no more applied to net income on capital gain, but to gross capital gains, with a 12% rate.
  • Abolition in 2011 of the consolidated global profit tax system (Bénéfice Mondial Consolidé), which was a combination of an extended profits' consolidation and a worldwide profits' consolidation
  • Measures against thin capitalization: the deduction of interest is capped at a statutory rate determined by reference to the annual average rate applied by credit institutions for variable interest rate loans. In addition, the deduction of interest paid by a French company to related parties is limited to the highest of the following amounts,

      • 1.5*amount of equity,
      • 25% of the current income before tax and deduction of related-party interest, depreciation and amortization, and certain lease payments,
      • The amount of interest received from related parties.
  • The temporary corporate income tax surcharge of 5% instituted in 2011 for two fiscal years (end of fiscal year between 2011/12/31 and 2013/12/30) has been extended for two more fiscal years (end of fiscal year until 2015/12/30), with a 10.7% rate. This surcharge applies to the standard corporate income tax liability for large companies with a turnover exceeding €250 million. Finally, the surcharge has been extended for one more year (end of fiscal year until 2016/12/30).
  • Companies which make certain investments from April 2015 to April 2016 will be able to deduce a 40% additional depreciation on the duration of the use of the good. 

 

 
Economic function







Comments

 
Environmental taxes



Comments
 
Tax revenue
ESA95 code D51BD

Year
Annual tax revenue (millions)
Currency
Tax revenue as % of GDP
Tax revenue as % of total tax revenue
2012 EUR
2011 EUR
2010 EUR
2009 EUR
2008 47,793.00 EUR 2.40
2007 49,782.00 EUR 2.56
2006 46,686.00 EUR 2.52
2005 39,939.00 EUR 2.25
2004 39,003.00 EUR 2.28
2003 34,406.00 EUR 2.10
2002 37,438.00 EUR 2.35
2001 42,768.00 EUR 2.77
2000 38,407.00 EUR 2.59

Comments