Corporation tax

It primarily concerns the profits of certain companies and legal entities.

How the tax is determined

In principle, under the provisions of Article 209 I of the General Tax Code relating to the rules of territoriality, the place of operation of companies determines the tax on profits that are liable to corporation tax – subject to any derogations, particularly those applicable under the terms of international agreements.

The legal entity in which you earn profits is liable to corporation tax:

  • If it is a limited company. Limited companies can be of the joint-stock type (SA or SAS), limited liability companies (SARL) or partnerships limited by shares (SCA). Corporation tax also applies to professional practices with or without limited liability (SEL, SELARL),

  • Depending on the type of business activity. Some legal entities are liable for corporation tax even if they are not limited companies. This is the case for civil law companies that carry on industrial or commercial activities and non-governmental organisations that carry out operations for profit.

  • If you have opted to pay this tax. Even if your profits are normally taxed as personal income in the name of each partner (as is the case with a general partnership (SNC), for example), you can choose to have your company taxed under a corporation tax regime.

Your company is liable for corporation tax on its profits only if the company carries out transactions in France. This means that it must have a regular commercial activity there.

As a general rule, you company is thus not liable for tax on profits earned outside of France.

The amount of profit that you would declare annually is thus that which your company earned on French territory.

Standard corporation tax rate

In the absence of any specific provisions, the standard corporation tax rate is set in compliance with Article 219-I of the French General Tax Code.

The standard rate is 33 1/3 percent.

A company's corporation tax is calculated by applying this rate to taxable profits rounded off to the nearest euro, with no reduction in the tax base and no discount for low amounts owed.

Tax regime for long-term capital gains and losses

Some asset disposals may be taxed under the regime for long-term capital gains and losses.

In particular, this applies to:

  • Assignments of patents and similar elements, subject to certain conditions

  • Disposals of participating interests, as well as units or shares in certain venture-capital investment funds (FCPR), subject to certain conditions, and shares in venture-capital companies (SCR) when such units or shares have been held at least five years

  • The sale of securities of listed companies investing predominantly in property (sociétés à prépondérance immobilière, SPI) that are liable to corporation tax

  • Net income from granting licences to use patents, patentable inventions or industrial manufacturing processes

Special tax rates

  • Long-term capital gains arising from the disposal of participating interests (not including securities of SPIs) are, under certain conditions, taxable at 0%, as are units or shares in certain venture-capital investment funds or venture-capital companies. Long-term capital gains on the disposal of participating interests are exempt subject to adding back to the taxable profit a proportion of expenses and costs equal to 12% of the gross amount of the exempted capital gains on disposal.

  • Long-term capital gains resulting from the disposal of the securities of listed SPIs for financial years starting as from 31 December 2007 are taxed at 19%.

  • Other long-term capital gains are taxed at 15%.

  • Net income from granting industrial property rights is also taxable at the 15% rate.