Corporate Tax in France: Rates, Benefits, and Payment Procedures in 2024

Foreign citizens in France can get income in many ways: renting out real estate, earning interest on bank deposits, starting a business, or working as an employee. All these income sources are subject to corporate tax payable to the French administration.

Personal income tax in France

Personal income tax (Impôt sur le revenu, IR) applies to all employees and certain small companies consisting of one or several individuals, provided their annual turnover does not exceed a specific threshold.

Companies subject to personal income tax include:

• self-employed (auto-entrepreneur);
• limited liability sole proprietorship (EIRL);
• single-member limited liability company (EURL);
• non-commercial partnerships (société civile, SCI);
• general partnership (SNC).

EIRL and EURL micro-enterprises have the right to apply for corporate tax (IS) as their tax regime.

There are two personal income tax regimes: the micro-enterprise regime and the standard regime (régime réel).

Micro-enterprise regime

• applicable to self-employed individuals (auto-entrepreneur) and single-member limited liability companies (EURL);
• annual turnover does not exceed €78,000 for services and €189,000 for sales or short-term rental of furnished properties;
• no accounting records are required;
• actual expenses cannot be deducted from the tax base;
• a standard tax deduction is provided: 71% for sales, 50% for services.

Rates are 13.8% for sales and 24% for services, including all mandatory social contributions. The entrepreneur can choose to pay the tax in general terms or make monthly payments as part of a free payment (versement libératoire).

Standard regime (régime réel)

• applicable to limited liability sole proprietorships (EIRL), non-commercial partnerships (SCI), and general partnerships (SNC);
• annual turnover does not exceed €254,000 for services and €840,000 for sales under the simplified regime (turnover may exceed these amounts under the standard regime);
• accounting records are required;
• actual expenses can be deducted from the taxable base.

After deducting expenses, income is taxed at the following rates:

Source: economie.gouv.fr

Additionally, social contributions are required.

Corporate tax rates in France

Companies subject to corporate tax (Impôt sur les sociétés, IS) include:

• public limited companies (SAS, SA, SCA, SASU);
• limited liability companies (SARL);
• companies opting for this regime as an alternative to IR (EURL, EIRL, SCI).

Corporate tax rates are as follows:

1. 15% for annual turnover below €10 million, provided at least 75% of capital is held by individuals. This rate applies to profits up to €42,500.
2. 25% for all other companies, except for those earning income from real estate (24%) and securities (10%).

Dividend tax in France

After corporate tax (IS) is paid, a company can allocate part of the remaining amount to the company balance and distribute part as dividends among shareholders.

Companies allowed to distribute dividends include:

• public limited companies (SAS, SA, SCA);
• limited liability companies (SARL);
• partnerships (SNC) that have opted for IS;
• non-commercial partnerships (SCI) that have opted for IS;
• single-member limited liability companies (EURL) that have opted for IS.

Dividends are subject to a fixed tax rate (PFU) of 30% (with 12.8% as income tax and 17.2% as social contributions).

In some cases, a progressive tax rate option is available.

Employee salary tax in France

The salary tax (impôt sur les salaires) in France must be paid by certain types of companies exempt from VAT, such as public, banking, financial, and educational institutions. In all other cases, this tax is not mandatory.

Each employee’s income is also subject to the standard progressive income tax, which is paid by the employer before the salary is issued to the employee.

Insurance and social contributions

Insurance and social contributions are an essential part of profit-related payments in France, providing social protection in case of illness, unemployment, or retirement.

Social contributions are required when working as an employee (deducted by the employer) and for all income types except for the micro-enterprise regime (contributions are included in the tax rate).

The calculation basis can be part or all of the employee’s remuneration for the work performed, with each contribution having a legally defined rate.

Professional tax in France

In 2010, the professional tax (la taxe professionnelle) was replaced by the territorial economic contribution CET, which consists of two taxes: CFE and CVAE.

1. CFE, or land contribution to the company, must be paid by all individuals and legal entities earning income, including self-employed individuals without specialised premises working from home.

The tax base is the rental value of the premises occupied by the entrepreneur or company throughout the year. If there are no premises, a minimum set amount (€243) is charged.

A tax relief is available for the first year of company activity and for all companies with an annual turnover below €5,000.

2. CVAE, or contribution to the added value of the company, is planned to be fully abolished in 2027. It must be paid by companies with an annual revenue exceeding €500,000 before tax.

CVAE rate in 2024:

Source: entreprendre.service-public.fr

Tranio’s team of experts and professional lawyers will help with the preparation of documents and tax returns for real estate investments in France.

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Author: Polina Fedotova