Are you considering taking your business to France? If so, you must become familiar with the corporate tax rates that apply in France.
To whom does the corporate tax rates apply?
Corporate tax rates are yearly set by the French government and allow to set the corporation income tax applicable to corporations operating in France. Firstly, they are applicable to stock corporations. This includes limited liability corporations (“sociétés à responsabilité limitée”), the “société anonyme”, limited stock partnerships (“société en commandite par actions”), the “société par actions simplifiée” (which translates as “simplified stock company”), and the limited liability corporations formed by persons carrying on a professional activity (“société d’exercice libéral à responsabilité limitée” ou “société d’exercice libéral”).
In addition to stock corporations, some organizations might be subject to the corporate tax rates when carrying out certain types of activity. This is the case of civil organizations (i.e. non-governmental and non-profit organizations) conducting commercial activities.
Finally, it is possible, in some cases, to decide to be subjected to the corporate tax, even if not de facto required. For instance, some partnerships may decide to so, instead of having every partner be individually taxed on their revenue.
It should be noted that a corporation may only be subject to the French corporate tax rates if it carries out its activities in France, through a regular commercial activity. Thus, the corporation will not be subject in France to income tax on profits generated outside of France; the only profits that are concerned are those made on the French territory.
What are the corporate tax rates?
The corporation tax rates will vary depending on the start date of a corporation’s fiscal year and on the declared profit for that year. The corporate tax rates have been lowered over the course of the past years, and they are as follows for the fiscal year starting on or after January 1, 2022:
- Annual revenue of 0 € to 38 120 € (i.e., approximately USD 40,246): 15 %
- Annual revenue of 38120 € to 500 000 € (i.e., approximately USD 527, 897): 25 %
- Annual revenue greater than 500 000 € (i.e., approximately USD 527 897): 25 %
Additional contributions
In addition to the corporate tax, corporations in France might be under the obligation to pay some additional contributions. These include the following:
- A social contribution representing 3.3 % of the corporate tax applicable to businesses having an annual revenue of 7,63 million € (i.e., approximately USD 8,055,715) and whose due corporate tax is greater than 763 000 €.
- The exceptional contribution (“contribution exceptionnelle”) representing 15 % of the corporate tax rate for enterprises having an annual revenue of more than 1 billion € (i.e., approximately USD 1,056,501,000), plus an additional contribution of 15 % of the corporate tax rate for businesses having an annual revenue of more than 3 billion € (i.e., approximately USD 3,169,404,000).
Are you looking to take your business to France? Admitted as lawyers in both North America and Europe, with particular expertise in French corporate matters, we are ideally positioned to help you take your business abroad. Contact us today!