Γαλλία : Λογιστικά και Φορολογικά θέματα

Tax Rate For Foreign Companies

A resident company is subject to corporate income tax in France on its French-source income, while a non-resident company is subject to taxation in France only on the income attributable to French business activity or to a permanent establishment in the country, as well as on income from real estate located in France.

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.

Non-resident companies are generally not taxed in France on capital gains from French assets unless these are part of a PE, with exceptions for gains from French real estate or non-listed corporations, and gains from shares in a French company subject to CIT if the seller owned at least 25% of profit rights in the five years before the sale, unless otherwise stated by a DTT. Shares held for over two years may qualify for a special exemption, per ongoing court cases. For non-resident companies in an NCST, all gains from French assets face a 75% WHT, provided the entity’s activities are genuine and not aimed at profit-shifting.

Capital Gains Taxation

Capital gains are generally taxed as ordinary income under the standard CIT rate, regardless of asset ownership duration. However, a 10% reduced rate applies to gains from patents, patent-related processes, and software under restrictive conditions. Gains from shares in subsidiaries held for at least two years enjoy significant relief, with 88% of such gains excluded from CIT and the remaining 12% taxed at the standard rate. The French Administrative Supreme Court affirmed that the 12% taxable portion for foreign subsidiary share sales is real taxation eligible for tax credits under DTTs.
Long-term capital losses cannot offset future long-term capital gains. The long-term capital gain regime applies to shares benefiting from the parent-subsidiary regime if the seller holds at least 5% of voting rights and to shares in entities in NCSTs, provided the entity's activities are genuine and not profit-shifting.

Non-resident companies are generally not taxed in France on capital gains from French assets unless these are part of a PE, with exceptions for gains from French real estate or non-listed corporations, and gains from shares in a French company subject to CIT if the seller owned at least 25% of profit rights in the five years before the sale, unless otherwise stated by a DTT. Shares held for over two years may qualify for a special exemption, per ongoing court cases. For non-resident companies in an NCST, all gains from French assets face a 75% WHT, provided the entity’s activities are genuine and not aimed at profit-shifting.

Main Allowable Deductions and Tax Credits

Expenses are deductible for depreciation or amortisation, reserves, rents for premises and equipment, wages, interests and royalties, repairs and maintenance costs etc. Ceilings may apply to some expenses such as contributions to an employee's savings plan or write-offs of machinery and inventory. No specific rules govern the deduction of start-up expenses, except for qualified expenses incurred in establishing the company (known as 'frais d’établissement'), which can either be deducted immediately or depreciated over five years. Goodwill cannot be amortised.

Tax losses can offset the first EUR 1 million of taxable profits and 50% of any excess, provided the entity continues the same business activities. Losses can be carried back to the previous financial year up to EUR 1 million, with any surplus carried forward. The carryback election must be filed before the tax return deadline for the loss-making period. Tax losses in a French tax group, as well as pre-election losses of individual group members, follow the same rules and limits.

For R&D and software expenses, businesses can choose to immediately deduct R&D costs or amortize them over up to five years. Software acquisition costs can be written off on a straight-line basis over 12 months, while patent acquisition costs can be amortized over five years. 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.

For charitable donations made over a financial year ending on or after December 31, 2020, the tax reduction is 60% of the donation amount. If donations exceed EUR 2 million, the excess is eligible for a 40% reduction. The reduction is calculated based on the higher of EUR 20,000 or 0.5% of turnover. This reduction can be offset against the CIT liability for the year of the donation, with any excess applicable to the next five financial years.

Several taxes, including unrecoverable turnover taxes, registration duties, and the Territorial Economic Contribution, are deductible (corporate income tax is not).

The 2024 Finance Bill introduces a tax credit for green industries, covering 20% (or 25%-40% depending on the investment area) of eligible expenses, capped at EUR 150 million per company (or EUR 200 million to EUR 350 million for certain areas). Eligible expenses include investments in batteries, solar panels, wind turbines, and heat pumps. The credit applies to applications filed from September 27, 2023, and to accredited investments until December 31, 2025.

Effective January 1, 2019, the Competitiveness and Employment Tax Credit (CICE) was repealed and replaced by a permanent reduction in payroll charges that employers pay to fund the French social security system.

Other Corporate Taxes

Various local taxes are imposed by the government, like the Land tax or the Territorial Economic Contribution (CET), which comprises the Corporate Real Estate Contribution (CFE, based on the rental value of real estate) and the Contribution on Corporate Added Value (CVAE, based on turnover). The CVAE will be gradually reduced from 2024 to 2026 and will be abolished starting January 1, 2027.

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 46,368 in 2024, and the monthly ceiling at EUR 3,864.
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 8,985 to EUR 17,936 and 13.6% for wages exceeding EUR 17,936).

The sale of real property is subject to a transfer tax up to a maximum rate of 5.8%. The sale of shares in an SARL or SNC incurs a transfer tax of 3% of the sales price, minus a deduction based on the number of units sold. For SA, SAS, or SCA shares, a flat rate of 0.1% applies, increasing to 5% for real estate companies. Transfer tax for the sale of French going concerns, customer lists, leasehold rights, or certain intellectual property rights used in France is 5%.

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.

Other Domestic Resources

French Fiscal Administration web portal

Country Comparison For Corporate Taxation

Source: The World Bank - Doing Business, Latest data available.

Accounting System

Accounting Standards

The French accounting system is based on French GAAP. As a member of the EU, French law is in accordance with European Commission (EC) Regulation No. 1606/2002, which requires the application of IFRS in the preparation of consolidated financial statements of listed companies.

Accounting Regulation Bodies

ANC, French Accounting Norms Authority

Accounting Law

The main source of accounting regulations in France is the accountancy law (Act 83-353 of 30 April 1983), which was integrated into the Code of Commerce (articles 8 to 17, become articles L 123-12 to L123-28 in the new Code of Commerce) and followed up by the decree 2002-312 of 26 February 2002 relative to the simplification of accounting obligations for small companies. The accountancy law has incorporated the recommendations of the 4th Community Directive at the national level.

The second major source of French accountancy law is the Act 85-11 of 3/01/1985, which incorporates into national law the provisions of the 7th Community Directive for groups of companies (directive 83/349/EEC of the Council concerning consolidated accounts).

Difference Between National and International Standards (IAS/IFRS)

IFRS Standards are required for all domestic public companies and listings by foreign companies (except in the case of a foreign company whose home jurisdiction’s standards are deemed by the EU to be equivalent to the IFRS Standards. IFRSs are not required for SMEs.

Accounting Practices

Tax Year

Calendar year unless the taxpayer opts for a different end date or a different tax period.

Accounting Reports

All SAs must publish annual financial data and deposit two copies of the approved balance sheet and profit and loss (P&L) statement with the local commercial court within seven months of the end of the financial year and within one month of approval of the accounts.

A listed SA must publish its annual balance sheet, P&L statement, quarterly sales figures for each branch of activity and a semi-annual provisional balance sheet. Subsidiaries of these companies with a balance sheet of EUR 3 million or more, or portfolios of EUR 300,000 or more, are individually subject to these disclosure requirements.

The statement of source and application of funds is compulsory for large companies.

Publication Requirements

There are three levels of reporting: the basic system (normal), an abridged system (for small companies) and a developed system. They depend on the legal form and size of the companies (defined in relation to the total of the balance sheet, the turnover and the number of employees).

The reporting is annual, except for listed companies for whom reporting is quarterly.

Accountancy Profession

Accountants

The comptable (accountant) is responsible for the legal obligations of the company in regards to accounting.

The expert-comptable (chartered accountant) certifies company accounts.

The commissaire aux comptes (auditor) certifies the accounts carried out by the chartered accountant (for companies with more than 50 employees, joint-stock companies and public limited companies).

Professional Accountancy Bodies

OEC, The Higher Council of the Order of Chartered Accountants
CNCC, The National Company of Auditors
IFAC, International Federation of Accountants

Member of the International Federation of Accountants (IFAC)

CNCC and OEC member.

Member of Other Federation of Accountants

Accountancy Europe

Audit Bodies

Companies have to seek a statutory auditor to conduct an annual audit of the financial health of their organisation. You can contact an external auditor: KPMG, Ernest & Young, PricewaterhouseCoopers.

Allowable Deductions and Tax Credits

Salaries and related benefits are taxed after subtracting mandatory social security contributions, except CRDS and a portion of CSG, and a standard allowance for professional expenses equivalent to 10% of taxable employment income (capped at EUR 14,171 in 2024). Alternatively, an employee can choose to deduct actual professional expenses incurred, in which case all expenses reimbursed by the employer must be added back to the taxable salary. Qualifying professional expenses include certain commuting costs, meals while away from home, and professional materials. It is advisable to seek professional advice before opting for actual expense deduction, as specific conditions must be met to ensure deductibility.

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. Households with married or civil partnership children or dependents may receive an annual tax-free allowance of EUR 6,674 (2024). Similarly, when providing ongoing financial support (food allowance) to a child over 18, the same amount is granted as a tax deduction.

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.

A taxpayer who hires housekeeping assistance can receive a tax credit equal to 50% of the expenses, capped at EUR 12,000 per year, resulting in a maximum tax credit of EUR 6,000. However, for the first year of employment, this limit increases to EUR 15,000, with an additional EUR 1,500 for each dependent child or dependant over 65 years old, but not exceeding EUR 15,000 (or EUR 18,000 for the initial year of employment). Special provisions exist for taxpayers with disabilities.

The reduction of Personal Income Tax (PIT) through deductions and credits is generally subject to an overall limit (except in specific circumstances), set at EUR 10,000 annually.

Special Expatriate Tax Regime

Individuals with their tax domicile in France are generally taxed on their worldwide income, whereas non-residents are subject to tax only on their income arising in France.

For non-residents, a 20% minimum rate of tax applies to income from French sources up to EUR 28,797 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.

Capital Tax Rate

Capital gains from the sale of movable assets like securities and bonds are subject to a 30% tax rate, comprising 12.8% income tax and a 17.2% social contribution. On the other hand, gains from the sale of immovable property incur a special flat rate of 19%, plus a 17.2% social contribution, with certain exemptions applicable, such as for a principal residence or after a specific holding period. Additionally, an extra tax is levied on real estate sales, excluding building land, for net taxable gains exceeding EUR 50,000, ranging from 2% to 6% based on the level of the net taxable gain.

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 46,368 in 2024, and the monthly ceiling is at EUR 3,864.