DOING BUSINESS IN FRANCE

Posted By Romain Ponsot on Oct 6, 1907 in Doing Business


Date de publication : 06-10-1907

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The following information are for the sole purpose  of providing a general overview of  the local taxation of the Corporate tax aspects of the country. In any case, it can not replace a tax advice, or be considered as an official information.

 

Yes we tax in France

 

Flash News

New tax reform: Official report suggests to reduce corporate income tax rate to 25%.

New tax treaties:

  • Tax treaty between France and Norway is under negotiation.
  • Tax treaty between France and Botswana is signed.

Local tax advisors

Antoine GouinKramer levin naftalis & frankel

Mr. Gouin assists French and international businesses in international tax matters, transfer pricing, group restructuring, project financing, tax planning, litigation and tax audits.

@: agouin@kramerlevin.com

Local tax administration

Website Ministry of Finance: Click here

Website tax administration: Click here

Website Tax administration guidelines: Click here

Overview of the French tax system: Click here

VAT identification number within EU:

Permanent Establishment

Resident companies are taxed on their French income.

Entities are considered to be resident for tax purposes in France if their place of management & control is in France.

However, the place of residence is subject to the relevant provisions of any applicable double tax treaty, if any.

Corporate Income Tax

The general CIT tax rate is 33,1/3%.

Note: Such rate will progressively be reduced to 25% by 2022.

Small companies are taxed under a 15% CIT tax rate on the first 38kEUR portion of their revenues.

Non-taxable income includes the following:

  • Dividends: participation exemption up to 95% (99% within a tax group)
  • Certain capital gains: exemption up to 88%

Non-deductible expenses includes the following:

  • Dividends
  • Fines and penalties of any kind
  • CIT and similar taxes (social surcharge on CIT, exceptional surcharge on CIT, contribution on distributed dividends, …)
  • Late interest penalties related to payment of taxes

Carry forward: Yes indefinitely, but some restrictions may apply

Carry back: Yes, 3 years

Companies should submit the tax return annually before the 1st April for the period ending on 31 December of the preceding calendar year. In practice tax authorities allow extra period for filing tax returns.

Annual tax returns are established by the company on a self-assessment system.

Companies shall pay 4 advance payments of CIT.

Whithholding Taxes (payment to foreign companies)

The local tax rates in France are the following, subject to the provisions of an applicable double tax treaty, if any.

Note: any income paid a non-cooperative jurisdiction is subject to a 75% WHT.

There is 30% WHT on the profits paid from a branch to its foreign head office

Note: any amount paid a non-cooperative jurisdiction is subject to a 75% WHT.

The general rate of WHT on dividends is 30%.

Note: any amount paid a non-cooperative jurisdiction is subject to a 75% WHT.

The general rate of WHT on interest is 0%.

Note: any amount paid a non-cooperative jurisdiction is subject to a 75% WHT.

The general rate of WHT on Royalties is 33,33%.

Note: any amount paid a non-cooperative jurisdiction is subject to a 75% WHT.

The general rate of WHT on management fees is 33,33%.

Note: any amount paid a non-cooperative jurisdiction is subject to a 75% WHT.

The general rate of WHT on technical services is 33,33%.

Note: any amount paid a non-cooperative jurisdiction is subject to a 75% WHT.

Capital gains

Short term capital gains (less than 2 years) are taxed as general income under the regular CIT.

Long term capital gains (longer than 2 years) are taxed under separate tax rates (among other: 12% for participation shares, 19% for certain real estat,… )

VAT

Standard VAT tax rate is 20%

Reduced tax rates are:

  • 10% (among others, supply of transport, books, copyrights, restaurants,…);
  • 5% for basic necessities (among others, food, services to disabled persons,…);

Exempt services and goods:

  • Financial services (except for financial lease)
  • Banking and Insurance services;
  • Training and education Medical supplies
  • exports of goods and services;
  • Export and intra-Community supplies;

Certain non-resident companies (which are not required to register and incur France  VAT in the course of their business activities in France) may apply for a refund.

EU taxable companies may claim a VAT refund to their own tax authorities through on the basis of the 13th EU Directive.

No other specific information of VAT in France.

Miscellaneous

The general statute of limitation is the end of the third calendar year following the time where the tax is due.

Statute of limitation could be extended to 10 years in certain cases.

There is no penalizations for accumulation of foreign offshore income. However, there are some rules on the control of profits.

There are thin capitalization rules in France. The interests derived from loans between related parties may not be deductible in case where interest exceeds some ratios.

 

 

 

Do not hesitate to share your experience in France with us in the comments below. Any comments are welcome !

 

Romain Ponsot

Romain est conseiller en fiscalité au sein d’un leader mondial du shipping. Grâce à son expertise tant en matière de TVA, fiscalité internationale, problématiques intragroupe qu’en matière de fiscalité des particuliers, Romain vous guidera au travers d’articles professionnels et humoristiques. 

Romain, poète dans l’âme, aime particulièrement le couscous et passe beaucoup de temps à glacer ses souliers. Profil LinkedIn
Romain Ponsot

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