Entries by escec

Salary Tax in France: Taxation of Individuals

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General Overview of Salary Tax in France

Foreign employees and executives relocating to France for work can benefit from a preferential tax regime under the salary tax in France framework.

Scope of Taxable Income

Individuals who establish their tax residence in France are subject to salary tax in France on their worldwide income, irrespective of nationality.

Tax is assessed based on all sources of income received by the taxpayer, their spouse, and any dependents, collectively forming the tax household. The applicable rate follows a progressive scale from 0% to 45%, calculated according to the household’s family quotient.

Several provisions allow for tax liability adjustments based on personal circumstances, including a variety of deductions, tax credits (such as for employing domestic help or childcare costs), and specific reliefs.

A French income tax simulator is available here: Tax Simulator

Additionally, specific tax regimes apply to certain categories of income, offering customized taxation benefits, as detailed below.

Key Tax Incentives for Individuals under the Salary Tax in France System

The Impatriates Regime

Foreign executives and employees who relocate to France can benefit from the salary tax in France regime, which provides partial tax exemptions for certain income sources.

Flat Tax on Investment Income

Investment income is subject to a single flat-rate tax of 30%, which includes both income tax and social contributions.

Taxation of Free Shares

The allocation of free shares by companies is treated favorably under the salary tax in France rules, offering tax advantages for employees.

Detailed Tax Incentives under Salary Tax in France

The Impatriates Regime

Foreign executives and employees relocating to France may benefit from tax exemptions on certain income elements under the salary tax in France framework:

  • Bonuses tied to their professional activities in France;

  • Income earned abroad on behalf of the French employer;

  • 50% of foreign-sourced dividends and investment income;

  • 50% of royalties or industrial/intellectual property income from foreign sources;

  • 50% of capital gains from the sale of foreign securities.

Contributions to foreign supplementary pension schemes, paid before moving to France, may also be deducted under this scheme.

Additionally, the regime provides favorable treatment regarding the French real estate wealth tax (IFI).

For more details on how to apply for the impatriates regime and eligibility requirements, see:
Home > International Individual > I am coming or returning to France > Taxation for those arriving in or returning to France > The impatriates regime

For more information on accessing your personal tax account in France, visit: Accessing Your Personal Tax Account

Investment Income: 30% Flat Tax

As of the 2018 Finance Act, a single flat-rate tax of 30% applies to investment income, including dividends, interest, and capital gains. This tax includes both income tax and social contributions:

  • For French residents: Investment earnings are taxed at 30% (12.8% income tax + 17.2% social levies).
    Taxpayers may choose to be taxed under the progressive income tax scale, allowing a 40% deduction on dividends.

  • For non-residents: Distributed income and capital gains on substantial holdings (above 25%) are taxed at a reduced rate of 12.8%.

Free Share Allocations

Mechanism

Companies, whether listed or private, can grant free shares to employees or senior managers.

The allocation must be approved by an Extraordinary General Meeting (EGM), which sets the minimum vesting period (at least one year) and may define a minimum holding period before shares can be sold. Combined, these periods must cover at least two years.

Eligible Beneficiaries

Employees or executives may receive free shares based on criteria such as seniority, performance, or company financial results.

Tax Benefits under Salary Tax in France

For Companies:

  • A contribution of 20% (reduced from 30% as of December 31, 2017) is due after shares vest.

  • Costs related to free share allocations, as well as potential capital losses from share buybacks, are deductible from taxable profits.

For Recipients:

  • Gains from the acquisition (market value at vesting) and capital gains upon sale are taxed in the year of sale.

  • For shares allocated under an EGM authorization from January 1, 2018 onwards:

    • Gains up to €300,000 are taxed under the progressive income tax scale with a 50% flat allowance.

    • Any gains above €300,000 are treated as salary income without the allowance.

Social contributions apply as follows:

  • 17.2% on acquisition gains up to €300,000;

  • 9.7% on excess gains.

Failure to meet vesting or blocking periods results in immediate taxation of acquisition gains as wages and salaries.

Capital Gains on Disposal:

  • Taxed at a flat 12.8% unless opting for progressive income tax scale taxation.

  • Special €500,000 fixed allowance available for retiring executives if shares are held for at least one year.

  • If shares were acquired before 2018, a holding-period-based allowance may apply.

All capital gains are subject to 17.2% social security contributions.
Additional social levies (15.5%) apply to asset income, with partial deductibility of the general CSG contribution. Losses from share disposals can offset the gains from free share allocations.

For further details on salary tax in France and free share allocations, see Taxation for Individuals.

How to Set Up Your Personal Tax Account as a Non-Resident in France

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If you are a non-resident in France and need to access online tax services, setting up your personal account is an essential step. This can be done easily by using specific details from your tax documents, including your tax identifying number France.

Access Online Services Using Your Tax Identifying Number France

Every member of your tax household can access online services using their unique tax identifying number France. This allows individuals to perform tasks like reporting income or reviewing their personal tax situation, regardless of the tax obligations they face.

How to Set Up Your Personal Tax Account

If you’re a non-resident and do not yet have a personal tax account, here’s how you can set it up:

If You Are Liable for Income Tax or Part of a Tax Household:

To create your personal account, use the following three key pieces of information from your tax documents:

  1. Tax Identifying Number France: This 13-digit number can be found at the top of the first page of your most recent income tax return and other relevant tax documents.

  2. Online Access Number: This number appears on the first page of your most recent tax return. It changes every year, so ensure you use the one from your latest return.

  3. Reference Taxable Income: This figure is found in the “Vos références” box on your most recent income tax assessment notice, or in the “Informations complémentaires” section if not listed in the “Vos références” box.

If You Do Not Have These Details:

Even if you don’t have all the required details, you can still set up a personal account if:

  • You have income subject to withholding at source.

  • You possess a tax identifying number France, but are not liable for income tax (e.g., if you are liable for residence tax or property taxes).

To proceed, visit the form on the impots.gouv.fr website. You will need to provide the following information:

  • Your marital status.

  • Your postal address abroad.

  • A copy of an official ID.

Once your identity has been verified, you’ll receive an email with instructions to complete your account setup. You will need to enter your tax identifying number France and date of birth on the login page. You will then create a password and receive a confirmation link via email, which must be clicked within eight hours to finalize access to your personal account.

Note: If you are reporting income or assets in France for the first time, you cannot use the online system for this. Instead, you must submit a paper return, which can be downloaded from the search engine on the impots.gouv.frwebsite and sent by post to your local tax office.

Future Access

After your account is set up, you will need to use the password for all future logins. If you forget your tax identifying number France or password, you can retrieve them by text message, but you will need to confirm or enter your mobile phone number in your personal account.

For more detailed instructions on setting up your personal account, visit the official page here.

For additional information about taxes in France, check out this article on the household waste tax for tenants in France.

French Company: Do I Have a Tax ID? Accessing Your Personal Tax Account in France

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If you’re managing a French company or living in France and wondering “french company do I have a tax ID?“, knowing how to access your personal tax account is essential. This guide explains how to find or create your tax ID and manage your account securely online.

Why Do You Need to Log into Your French Tax Account?

Accessing your personal tax account ensures the protection of your sensitive tax data.
In France, each taxpayer — whether part of a household or an individual — has a distinct tax account linked to their tax ID. With this access, you can file taxes, view payment statuses, and update your information.

👉 Related: Learn how tenants handle local taxes in France in this guide about household waste tax for tenants.

Where to Find Your Login Information

Your Tax Number

Your tax number (Numéro fiscal) is a unique 13-digit identifier necessary for all tax-related processes in France.
It appears on your latest tax returns, tax notices, or local tax correspondence. If you cannot locate it, you can retrieve it via the impots.gouv.fr help section.

Your Online Access Number

This number appears at the top of your most recent income tax return. It is particularly important for:

  • First-time tax filers in France

  • Individuals recently detached from a parent’s tax household

  • Those whose spouse has a separate account

Since the online access number changes yearly, ensure you use the latest one.

Your Base Taxable Income

Find your base taxable income under “Vos références” on your last income tax assessment.
If you were previously listed under a family household, enter “0” when prompted.

How to Create Your Personal Tax Account

For Taxpayers and French Company Directors

If you have a tax number, online access number, and base taxable income, you can create your account directly through impots.gouv.fr.
Alternatively, you can use FranceConnect by linking an existing account from AMELI, La Poste, MobileConnect et moi, or MSA.

After submitting your email and setting a password, confirm the account creation by clicking the link sent to your email within 24 hours.

If You Have a Tax Number but Are Not Liable for Income Tax

Even if you’re not filing for income tax but pay property or residence taxes, you can still create a personal account via FranceConnect.
If you don’t have a FranceConnect partner account, you must verify your identity through your local tax office or by completing an online form.

If You Do Not Have a Tax Number

Without a tax ID, you must first confirm your identity with your local tax office. Once verified, you’ll receive instructions to create your account by entering your new tax number and your date of birth.

How to Update Your Email Address or Password

After logging in with your current credentials, you can update your email address, password, and contact preferences under “Mon profil” (“My Profile”).
When changing your email, a confirmation email will be sent to verify the new address.

Troubleshooting Login Issues

If you face problems accessing your account:

  • Incorrect login details:
    Double-check your tax number. Contact your local tax office if issues persist.

  • Proof of identity required:
    You must confirm your identity before proceeding. This can be done online or in person at your tax office.

  • Account inaccessible:
    This may mean your tax ID has been deactivated. You will need to request a new one and recreate your personal account.

Accessing Your Account via Smartphone

You can conveniently manage your tax account by downloading the impots.gouv app from the App Store or Google Play.

How to Use FranceConnect to Access Your Tax Account

FranceConnect offers a secure, unified login solution for various government services in France, including tax management.
You can use your existing credentials from AMELI, La Poste, MobileConnect et moi, or MSA to log in without creating new details.

To use FranceConnect:

  • Click on the FranceConnect icon on the login page.

  • Choose your preferred partner.

  • Enter your partner login credentials.

If you are logging into impots.gouv.fr for the first time, you must validate your email address to activate the account.

For more details on FranceConnect, visit the official FranceConnect website.

What to Do If You Encounter Errors Using FranceConnect

If you get an error after logging through FranceConnect, you should immediately contact the FranceConnect support team at 📧 support.usagers@franceconnect.gouv.fr.

In case you see:

“You cannot currently log in using FranceConnect. Please contact FranceConnect support for further information.”

It likely means your civil status information is incomplete or you do not yet have a tax number.
To resolve this, contact your local tax office or follow the process for obtaining a tax number outlined above.

Taxe Ordures Ménagères Location: How Household Waste Tax Works for Tenants in France

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If you’re a property owner renting out a residential property in France, you may be wondering whether you can pass on the household waste collection tax (taxe ordures ménagères location) to your tenant. This charge, part of the property tax bill (taxe foncière), is indeed recoverable by landlords under French rental law.

But how exactly does it work? Who is liable, how should it be billed, and what happens in the event of vacancy or tenant departure? Here’s a complete guide to help you understand your rights and obligations as a landlord when it comes to the taxe ordures ménagères location.

📚 For additional legal context, see this official guide from Legalstart.
🔍 For insights into French taxation and capital charges, including exit taxes, visit our internal guide.

What Is the Taxe d’Enlèvement des Ordures Ménagères (TEOM)?

The taxe ordures ménagères, also called TEOM, is a municipal tax included in the property tax bill. It is charged to help finance the local waste collection service provided to residents.

Some municipalities choose to fund this service through their general budget, and others may apply a household waste fee (redevance d’ordures ménagères) instead of the TEOM.

💡 Good to know:
The difference between the TEOM and the redevance lies in the calculation basis. The redevance is only paid by those actually using the service, and it may be based on usage or household size, rather than property value.

How Is the Waste Collection Tax Calculated?

The cost of the taxe ordures ménagères location depends on:

  • The cadastral rental value of the property (essentially, the estimated annual rent);

  • The local tax rate set by the municipality.

Local authorities may also add administrative fees, and sometimes a minimum tax amount is established, often based on the average rental value of local housing.

Who Pays the Waste Tax: Tenant or Landlord?

Legal Responsibility

By default, the occupant of the property — even for short stays — is responsible for covering the TEOM.

  • If you own and occupy the property: you must pay the TEOM.

  • If you rent your property: your tenant is liable, and the landlord can recover the tax as part of the rental agreement.

⚠️ Important: Only the actual TEOM amount is recoverable. Any added administrative fees from the municipality cannot be passed to the tenant.

💡 Even if you benefit from an exemption on property tax (due to age or low income), the TEOM must still be paid. The same applies to civil servants living in government-provided housing.

Can the TEOM Be Reduced for Unoccupied Rentals?

Yes — landlords can request a TEOM reduction in cases where their property remains vacant for at least 3 months, provided that:

  1. The vacancy is involuntary;

  2. It lasts 3+ consecutive months;

  3. It applies to all or a distinct part of the rental unit.

You must apply for the reduction before December 31 of the following year.

What’s the Difference Between TEOM and Housing Tax?

Many confuse the TEOM with the taxe d’habitation (housing tax). The TEOM strictly covers waste collection, while the housing tax supports local infrastructure (schools, roads, parks). Both may apply to tenants, depending on the type of property and occupancy status.

Who Can Be Exempt from the Waste Collection Tax?

There are only two cases of exemption from the taxe ordures ménagères location:

  1. The property is not served by a municipal waste collection service;

  2. The property is permanently exempt from property tax.

⚠️ Reminder: The TEOM cannot be deducted as an operating expense for companies such as SCI taxed under corporate income tax (IS).

When Should Landlords Request Waste Tax Payment from Tenants?

The property tax bill, including the TEOM, is issued annually in September, with payment due in October.

However, most landlords don’t charge tenants at that time. Instead, the TEOM is often included in the tenant’s monthly rental charges as part of the advance payments for utilities and services.

If there’s a difference between the actual TEOM amount and what was collected in advance, the landlord should adjust the payment during the annual service charge reconciliation.

Alternatively, the rental contract can specify that the landlord may charge the TEOM separately by showing the tax notice to the tenant.

📝 Note: Tenants do not pay the TEOM directly to the government. The landlord pays the tax and later seeks reimbursement from the tenant.

How to Bill the Taxe Ordures Ménagères to a Tenant?

There are two common methods:

  1. Integrated billing: Include the TEOM in monthly service charges with an annual adjustment;

  2. Separate annual billing: Send a yearly invoice to the tenant along with a copy of the property tax notice showing the TEOM.

Both approaches are legal and should be clearly stated in the lease.

What Happens If the Tenant Moves or the Landlord Forgets to Bill? <h3>

Tenant Moves Out Mid-Year

If a tenant leaves before the end of the year, they still owe their portion of the TEOM based on their actual occupancy.

Example: A tenant who moves out in September should pay 9/12 of the TEOM for that year.

The landlord may send a final invoice with a copy of the tax bill and a deduction of any already-paid amounts.

💡 The incoming tenant cannot be billed for TEOM owed for months before their move-in date.

What If the Landlord Forgot to Charge the Tax?

Landlords have up to 3 years to recover unpaid TEOM from tenants — even if they’ve already moved out.

Send a written request to the tenant with the corresponding tax notices attached as proof. If the tenant still occupies the unit, this is a good time to set up a clear billing method moving forward.

Exit Tax France: How the French Flat Tax Works in 2025

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As part of his economic modernization efforts, President Emmanuel Macron introduced a new taxation method for capital income called the Prélèvement Forfaitaire Unique (PFU), or Flat Tax. This tax reform, effective since January 1, 2018, plays a central role in discussions around exit tax France, especially for residents moving their financial assets abroad.

This detailed guide explains the Flat Tax system in France, who it applies to, and when it might be more favorable than the progressive income tax model. It also explores its connection to capital mobility and expatriation, offering key insights for those concerned with exit tax France regulations.

📌 For a visual and legal summary, check this complete guide on Legalstart.
📍 You can also explore our internal guide at ESCEC International.

What Is the Flat Tax in France?

The Flat Tax, also known as PFU or Macron Tax, applies a single fixed rate to specific types of capital income, as opposed to France’s traditional progressive tax scale.

This rate is identical regardless of the taxpayer’s total income, and no income brackets are considered. The aim of the PFU is to boost investment activity while simplifying capital-related taxation rules—an important component in exit tax France implications for entrepreneurs and investors.

Before and After the Reform

Prior to January 1, 2018:

  • Dividends and interest were taxed at the progressive income tax rate.

  • Dividends benefited from a 40% deduction.

  • Combined with social charges, top marginal tax rates could reach nearly 60%.

Since January 1, 2018:

  • Interest and dividends are taxed at a flat 30% rate (12.8% income tax + 17.2% social charges).

  • The 40% deduction on dividends no longer applies under the Flat Tax.

 

  Before Jan 1, 2018 After Jan 1, 2018 (PFU)
Interest Income tax (up to 45%) + 15.5% social charges Flat 30%
Dividends Income tax + 15.5% social charges + 40% deduction Flat 30%, deduction removed

Taxpayers can still opt for the former progressive system, recovering the 40% dividend allowance and a partial CSG deduction (6.8%).

Flat Tax Rate in 2025

The Flat Tax remains set at 30% for capital income in 2025. This applies to French tax residents.

⚠️ Discussions are ongoing about a potential increase. The rate for dividends could rise to 33% in the coming years.

How Is the Flat Tax Calculated?

The calculation is straightforward:

  • 12.8% for income tax

  • 17.2% for social charges = Total: 30%

Example:
On €10,000 of capital income, you pay €3,000 in taxes, keeping €7,000 net.

💡 Online tax simulators can help you estimate Flat Tax amounts on dividends and interest.

Who Is Subject to the Flat Tax?

The Flat Tax targets individuals receiving capital income, typically from:

  • Dividends (from SAS, SARL, SASU, EURL, etc.)

  • Interest from bank or investment accounts

  • Capital gains from selling shares or company equity

❗ Note: Real estate capital gains are not covered, as they derive from property, not financial holdings—important for anyone considering exit tax France and liquidating different types of assets.

Which Investments Fall Under the Flat Tax?

Included:

  • Dividends, fixed-income products, and interest

  • Capital gains from financial securities

  • Life insurance (in certain conditions)

  • PEL and CEL accounts (subject to opening date)

Excluded:

  • Regulated savings products such as:

    • Livret A

    • LEP (Popular Savings Account)

    • Livret Jeune

    • LDDS (Sustainable Development Accounts)

    • PEL accounts under 12 years

    • CEL accounts opened before 2018

✅ The Flat Tax is not part of the PAYE system in France.

Choosing Between Flat Tax and Progressive Income Tax

By default, capital income is taxed under the Flat Tax. However, it’s possible to opt into the progressive income taxmodel if more beneficial.

Advantages of the Flat Tax

  • Automatic application—no steps required

  • Simplicity—uniform rate simplifies budgeting

  • Efficiency—often more favorable for higher brackets

Switching to the Progressive System

To opt for the progressive scale:

  • Indicate your choice by checking box 2OP on your tax return.

  • This choice applies to all capital income—no selective application allowed.

With the progressive system:

  • You regain the 40% dividend allowance

  • CSG may be partially deductible (6.8%)

  • Long-term capital gains may qualify for additional reductions based on holding duration

🧠 Strategic tip: Taxpayers in the 0% or 14% brackets often benefit more from the progressive system.

Flat Tax vs. Progressive Income Tax: A Comparison

This decision depends on:

  • Your marginal tax rate

  • Family composition

  • Amount and type of capital income

Example:
For €10,000 in capital gains:

 

Tax Bracket Abatement 50% Abatement 65% Abatement 85% No Abatement Flat Tax
0% €1,720 €1,720 €1,720 €1,720 €3,000
14% €2,420 €2,210 €1,930 €3,120 €3,000
30% €3,220 €2,770 €2,170 €4,720 €3,000
41% €3,770 €3,155 €2,335 €5,820 €3,000
45% €3,970 €3,295 €2,395 €6,220 €3,000

🧮 If you qualify for an 85% abatement, the Flat Tax is not likely to be favorable—even in the top tax bracket.

How Is the Flat Tax Applied?

Flat Tax is automatically deducted unless you opt out during the tax declaration. The 30% includes:

  • 12.8% income tax

  • 17.2% social contributions

When Do You Pay the Flat Tax?

  • Dividends/interest: Deducted when income is paid (12.8% upfront), and the remaining due at filing

  • Capital gains: Paid upon filing

  • Life insurance: Withheld on payment (12.8% or 7.5%) depending on policy duration, with social taxes added later

How to Pay Flat Tax on Dividends

Declare dividend income in box 2DC during your annual tax return.

Use a dividend Flat Tax simulator to estimate what you owe.

Can You Avoid the Flat Tax?

Avoidance here means choosing the progressive tax model rather than evading taxation.

Taxpayers receiving dividends (even via SASU or other structures) can avoid Flat Tax by opting into the progressive system—but only if it results in a lower total tax burden.

⚖️ Consult a tax advisor to evaluate your personal situation, especially in cross-border or exit tax Francescenarios where capital mobility is involved.

Tax flat in France: How It Works in 2025

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Since January 1, 2018, France has implemented a simplified taxation system for capital income called the Prélèvement Forfaitaire Unique (PFU). This measure, introduced under President Emmanuel Macron, aims to encourage investment and simplify tax procedures on financial income.

What Is the Tax flat?

The Flat Tax is a fixed-rate taxation system that applies to certain types of capital income, regardless of the taxpayer’s overall income level. Unlike the progressive income tax brackets, this system imposes a single, uniform tax rate of 30%, which includes:

  • 12.8% income tax

  • 17.2% social contributions

This rate applies regardless of the taxpayer’s total taxable income. It eliminates the former system where capital income was taxed at progressive rates, with specific deductions (e.g., 40% on dividends). Since its introduction, the Flat Tax has simplified the tax process for many investors.

Learn more about the flat tax on Legalstart.fr

What Types of Income Are Affected by the Tax Flat?

The Flat Tax applies to most financial income, including:

  • Dividends from shares in companies (e.g., SAS, SASU, SARL, EURL)

  • Interest from savings or investment accounts

  • Capital gains from selling shares or securities

  • Income from life insurance contracts (under certain conditions)

  • Earnings from PEL and CEL savings accounts (depending on the subscription date)

Not included under the Flat Tax:

  • Real estate capital gains

  • Regulated savings products like the Livret A, LEP, LDDS, and PEL/CEL opened before 2018

Who Pays the Tax flat?

Anyone residing in France who earns capital income may be subject to it. This includes:

  • Shareholders receiving dividends

  • Individuals earning interest on investments

  • Taxpayers realizing capital gains on the sale of financial securities

Note: Real estate gains are not subject to it as they fall under a different asset category.

How Is the Tax flat Calculated?

The calculation is straightforward. If you earn €10,000 in dividends:

  • You’ll pay €3,000 in Flat Tax (30%)

  • You’ll keep €7,000 after tax

Online simulators are available to help estimate your liability under this system.

What Is the Tax flat Rate in 2025?

In 2025, it remains set at 30%. This includes:

  • 17.2% for social contributions

  • 12.8% for income tax

There have been discussions about increasing the Flat Tax to 33%, but no changes have been confirmed yet.

Which Financial Products Are Subject to it?

It is applies to:

  • Dividends and interest from corporate shares or financial investments

  • Fixed-income investments

  • Life insurance income

  • PEL and CEL interest (depending on date of account opening)

  • Capital gains from the sale of financial securities

Which Investments Are Exempt from it?

Certain regulated savings accounts are not subject to itx. These include:

  • Livret A

  • LEP (Livret d’épargne populaire)

  • LDDS (Livret de développement durable et solidaire)

  • Youth Savings Account

  • PEL under 12 years old

  • CEL opened before 2018

It is vs Progressive Income Tax: Which Is Better?

By default, capital income is taxed under it. However, you may opt to be taxed according to the progressive income tax scale by checking box 2OP on your annual tax return.

Benefits of it

  • Simplicity: One unified rate makes planning easier

  • Often more favorable for high-income households

  • Automatically applied unless you request otherwise

When to Choose the Progressive Scale

Choosing the progressive tax scale can be more advantageous when:

  • Your overall taxable income is low

  • You can benefit from the 40% dividend allowance

  • You have significant deductible expenses

Note: Even under the progressive scale, social contributions (17.2%) remain due.

Comparison Example: For a €10,000 capital gain:

Tax Bracket Progressive Tax + Social Charges (with allowances) Flat Tax (30%)
0% €1,720 €3,000
14% €1,930–€2,420 €3,000
30%+ €3,000–€6,220 €3,000

In general:

  • If you are non-taxable or in a low bracket (0%-14%), the progressive scale is usually more beneficial

  • If you fall in the 30%+ brackets, the Flat Tax is more advantageous in most cases

When and How Is it Applied?

It’s rate of 30% (12.8% income tax + 17.2% social charges) applies automatically unless you opt for the progressive scale.

Timing of Payment:

  • Dividends & interest: 12.8% is withheld as an advance during the year. The balance is adjusted when filing your annual tax return.

  • Capital gains: Tax is calculated and paid when declaring income.

  • Life insurance: Tax is withheld at payout (12.8% if contract <8 years, 7.5% otherwise), followed by the flat rate and social charges.

How to Pay it on Dividends

To declare dividends:

  • Use box 2DC on your French income tax return

  • The Flat Tax is applied automatically unless you opt for progressive taxation (box 2OP)

Online tools are available to help estimate the Flat Tax owed on dividends.

Can You Avoid it?

You can avoid it by opting for progressive taxation. However, this doesn’t mean exemption from taxes. The choice should be made carefully, ideally with expert advice.

Each situation is unique, and the decision to choose one regime over the other should consider:

  • Your income bracket

  • Your family structure

  • The type and amount of your capital income

You can learn more about optimizing tax structures for companies and investments in our guide on holding companies and taxation.

How ESCEC International Can Help

At ESCEC International, we assist entrepreneurs, investors, and international residents in navigating the complexities of tax systems in France. From understanding whether the Flat Tax is right for you to structuring your dividends and capital gains optimally, our experts offer tailored, strategic advice.

📧 Need help with your tax planning or capital income reporting? Contact us for a personalized consultation.

Taxation Holding: What Is a Holding Company and How Is It Taxed?

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Creating a holding company is much more than a way to consolidate ownership of various subsidiaries under one umbrella. It is a strategic tool that enables centralized, optimized management of a corporate group while offering numerous significant taxation holding advantages. This article explores in detail the fiscal framework applicable to holding companies, focusing on dividend taxation, tax consolidation, and other available tax benefits. Whether you’re leading a growing small business or an established conglomerate, you’ll find the keys to unlocking the full potential of your holding company.

What Is a Holding Company?

A holding company is a business entity whose main purpose is to own equity in one or several other companies, known as subsidiaries. This setup allows the centralization of ownership—and often management—of these subsidiaries within a single entity. A holding company may be established for various reasons, including but not limited to centralized business control, taxation holding optimization, estate planning, and asset protection.

Holding companies can be:

  • Passive, focusing primarily on owning shares without getting involved in the day-to-day management or operations of subsidiaries;

  • Active (also referred to as holding animatrice), which take an active role in managing and strategically guiding their subsidiaries, often offering management, financing, and strategic support services.

Benefits of Creating a Holding Company

  • Optimize tax liabilities within a group structure

  • Simplify business succession

  • Centralize decision-making processes

  • Enhance investment management and risk control

Taxation of Holding Companies: Personal Income Tax (IR) or Corporate Income Tax (IS)?

The taxation holding framework is a crucial element when structuring and planning a corporate group’s financial strategy. A holding company may be subject to either corporate income tax (IS) or personal income tax (IR), depending on its legal structure and the tax options chosen by its management.

Corporate Income Tax (IS)

This applies to capital companies such as SARL, SAS, SASU, and SA. Under IS, the company itself is taxed on its profits, facilitating reinvestment and business growth. IS also offers access to beneficial tax regimes such as the parent-subsidiary regime and tax consolidation, which help optimize dividend and capital gains taxation within a corporate group.

Personal Income Tax (IR)

This regime is typically applied to partnerships, such as SCI, EURL, SCS, and SNC. In this case, profits are taxed directly at the level of the partners or shareholders according to their personal tax rates. This can be particularly advantageous for smaller businesses or family-owned holding structures, offering more transparent and direct taxation.

The law provides flexibility to choose between these two regimes under specific conditions. For example:

  • A SAS may opt for IR at the time of creation or during a change in status, provided it is at least 50% owned by individuals, and for a non-renewable period of five years;

  • A SCI may elect IS, provided all shareholders agree and the articles of association allow it.

📝 Note: Since the 2019 Finance Act, the IS option is no longer irreversible, offering increased flexibility for managing taxation holding strategies.

The decision between IR and IS should be carefully considered, factoring in capital structure, long-term objectives, and dividend distribution plans. While IS is generally preferred for holding companies due to its tax benefits—especially in terms of reinvestment and taxation holding optimization—each situation is unique and should be thoroughly assessed. Consulting a tax advisor or certified accountant is strongly recommended to make an informed, strategic decision for your holding and its group.

Tax Regimes Available for Holding Companies

The taxation holding structure can be further optimized through specific tax regimes. These enable companies to manage dividends and financial results more efficiently across a corporate group. Below, we explore two principal options: the parent-subsidiary regime and tax consolidation.

Parent-Subsidiary Regime

This favorable tax regime is designed to reduce double taxation on dividends within a group. When a holding company receives dividends from its subsidiaries, these are virtually exempt from taxation, except for a 5% flat-rate share intended to cover operational expenses. This effectively reduces the tax burden on cash flows such as dividends and liquidation bonuses that flow up into the holding.

Eligibility Criteria:

  • The holding company and its subsidiaries must be subject to corporate income tax, either by default or by election;

  • The holding must hold at least 5% of its subsidiaries’ capital, fully and directly;

  • Shares must be held by the holding for a minimum of two years;

  • The company must formally opt into the parent-subsidiary regime.

This regime is an essential tool for minimizing taxation holding impacts on intercompany financial transfers.

Tax Consolidation

Tax consolidation allows a group of companies to merge their tax results, effectively becoming a single taxpayer in the eyes of the French tax administration. The key benefit is the ability to offset the profits of one entity against the losses of another, resulting in more accurate and equitable taxation across the group.

Eligibility Criteria:

  • All group entities, including the holding, must be subject to corporate tax, either automatically or by option;

  • The holding must own at least 95% of each subsidiary’s capital, directly or indirectly;

  • The holding must not itself be more than 95% owned by another legal entity;

  • All entities in the group must synchronize their financial year-end dates.

Additional Benefits:

  • Elimination of intra-group transactions (e.g., debt waivers, dividend distributions) in the consolidated tax calculation;

  • The holding company can offset losses in one subsidiary with the profits of another, thereby reducing the total tax liability of the group.

☝️ Good to Know: Annual finance laws may revise the rules or benefits of these tax regimes. Staying informed of legislative changes is essential. Choosing between these regimes requires a thorough financial analysis and long-term planning strategy tailored to your corporate group’s needs.

Final Insight: Strategic Use of Taxation Holding

The decision between IR, IS, or one of the dedicated tax regimes should align with the group’s overall financial goals, ownership structure, and dividend strategy. IS remains a popular choice due to the efficiency it brings to taxation holding, especially when combined with tax integration and the parent-subsidiary regime.

Engaging a professional advisor ensures your holding company is structured to take full advantage of every available benefit and avoids costly missteps.

👉 Explore more in-depth analysis of holding company taxation.

📘 Interested in other specialized tax regimes in France? Check out our full guide on the Taxe ADAR – Everything You Need to Know.

Taxe ADAR: Everything You Need to Know About

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If you’re an agricultural professional in France, chances are you’re subject to the taxe ADAR. This mandatory levy supports innovation and research in the agricultural sector and is reported alongside VAT. In this guide, we’ll explain exactly who is liable, how to calculate it, how to declare it, and when to pay it.

What Is the Taxe ADAR?

It is (taxe de l’Agence de développement agricole et rural), also known as the Turnover Tax for Agricultural Holdings (TCA), is a financial contribution imposed on most farmers in France. The amount is based on the turnover generated in the previous year.

This tax helps to fund:

  • 85% for agricultural research and development

  • 15% for the Ministry of Agriculture’s operating budget

📝 Note: The tax is collected by the Agence de développement agricole et rural, which gives the tax its name.

Who Is Subject to it?

The majority of agricultural operators must pay the taxe ADAR, but some exceptions apply. The following are exempt:

  • Freshwater fishermen

  • Shellfish and oyster farmers

  • Forestry professionals

  • Retired farmers, even if they own a subsistence plot

  • Farmers under the lump-sum VAT refund regime

  • Newly established agricultural businesses

  • Entities not directly involved in farming, such as:

    • Livestock traders

    • Agricultural cooperatives

    • Artificial insemination cooperatives (CIA)

    • Shared farm equipment cooperatives (CUMA)

☝️ Important: Farmers known as “landless breeders”—those who buy and sell animals fattened by third-party operations—are also exempt from the taxe ADAR.

How It Is Calculated?

The taxe ADAR is based on the turnover (chiffre d’affaires) from the previous year. For example, the 2024 tax is calculated using revenue from 2023.

There are two components to the contribution:

  • A fixed fee of €90 per farm, except for GAECs (joint farming groups), where the fee is applied per individual member.

  • A variable percentage based on turnover:

    • 0.19% for revenue up to €370,000

    • 0.05% for revenue above €370,000

📌 For those under the simplified tax regime, the taxe ADAR may be prorated based on the period of activity during the year.

💡 Tip: Need help estimating your contribution? It’s best to contact your accountant or tax advisor for an accurate simulation.

How to Declare the Taxe ADAR

The taxe ADAR is declared at the same time as your VAT filing. To do this, you must fill out the Cerfa Form No. 10968 (3517-AGR-SD). Submission is electronic and can be done in one of two ways:

  • Via the official tax website, using the EFI (Échange de Formulaire Informatisé) mode

  • Through an authorized EDI (Electronic Data Interchange) partner using the EDI-TDFC system

When Should You Pay the Taxe ADAR?

The payment of the taxe ADAR depends on the taxpayer’s preference. It can be paid:

  • Monthly

  • Quarterly

  • Or Annually

If opting for annual payment, the deadline is the second day after May 1st.

⚠️ Important: Late payments can result in penalties or surcharges. Make sure to submit your payment on time to avoid any extra costs.

Learn More About Taxation in France

If you’re navigating the French tax system as an agricultural professional, understanding other tax obligations can also be helpful. We recommend checking out our in-depth guide on income tax brackets in France for further insight into taxation en France.

For additional details on the taxe ADAR, you can also visit the Legalstart official guide.

Understanding the Income Tax Scale in France (Taxation en France)

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When it comes to taxation en France, income tax is calculated using a progressive tax scale. This system divides your taxable income into brackets, with each bracket taxed at a different rate ranging from 0% to 45%.

How the Progressive Tax Scale Works

To apply the tax scale, you must first calculate your family quotient, which is determined by the number of parts (or shares) in your household. These parts reflect your marital status and the number of dependents. Your taxable income is divided by the number of shares, and the tax is calculated per share before being multiplied by the total number of shares.

ℹ️ Note: The income tax scale is updated annually through the Finance Law. For instance, the 2025 tax scale applies to income earned in 2024.

2025 Tax Scale for 2024 Income

Taxable Income per Share Tax Rate
Up to €11,497 0%
€11,498 – €29,315 11%
€29,316 – €83,823 30%
€83,824 – €180,294 41%
Over €180,294 45%

  • The marginal tax rate (TMI) is the rate applied to the highest portion of your income.

  • The average tax rate is your total tax divided by your total income, indicating what proportion of your income goes to taxes.

🔍 To better understand corporate taxes, see our guide to the C3S tax for businesses in France.

The Impact of the Family Quotient and Its Cap

The family quotient significantly affects your final tax bill. However, the tax benefit for dependents is capped, which means there’s a limit to how much your tax can be reduced based on family size.

Tax Calculation Examples

Below are several concrete examples of how taxation en France is applied based on different family scenarios and income levels.

Married or Civil Union Couple Without Children

  • Net taxable income: €90,000

  • Number of parts: 2

  • Income per share: €90,000 ÷ 2 = €45,000

Tax per share:

  • Up to €11,497: €0

  • €11,498 – €29,315: €17,818 × 11% = €1,959.98

  • €29,316 – €45,000: €15,685 × 30% = €4,705.50

  • Total per share: €6,665.48

  • Total tax: €6,665.48 × 2 = €13,330.96

  • TMI: 30%

Single Person Without Children

  • Net taxable income: €30,000

  • Number of parts: 1

  • Income per share: €30,000

Tax calculation:

  • Up to €11,497: €0

  • €11,498 – €29,315: €17,818 × 11% = €1,959.98

  • €29,316 – €30,000: €685 × 30% = €205.50

  • Total tax: €2,165.48

  • TMI: 30%

Married or Civil Union Couple with One Child

  • Net taxable income: €90,000

  • Number of parts: 2.5 (1 per adult + 0.5 for one child)

  • Income per share: €90,000 ÷ 2.5 = €36,000

Tax per share:

  • Up to €11,497: €0

  • €11,498 – €29,315: €17,818 × 11% = €1,959.98

  • €29,316 – €36,000: €6,685 × 30% = €2,005.50

  • Total per share: €3,965.48

  • Total tax (before adjustments): €3,965.48 × 2.5 = €9,913.70

Comparison with same couple without child:

  • Tax without child: €13,330.96

  • Tax with child: €9,913.70

  • Difference: €3,417.26

Family quotient cap impact:

  • Maximum allowed benefit: €1,791

  • Final tax owed: €9,913.70 + (€3,417.26 – €1,791) = €11,539.96

  • TMI: 30%

Single Parent with One Child

  • Net taxable income: €30,000

  • Number of parts: 2 (1 for the parent, 0.5 for the child, 0.5 for single parent status)

  • Income per share: €30,000 ÷ 2 = €15,000

Tax per share:

  • Up to €11,497: €0

  • €11,498 – €15,000: €3,503 × 11% = €385.33

  • Total tax: €385.33 × 2 = €770.66

Comparison with single person without child:

  • Tax without child: €2,165.48

  • Tax with child: €770.66

  • Difference: €1,394.82

  • Maximum allowed benefit: €4,224 → Not exceeded

  • Final tax owed: €770.66

  • TMI: 11%

Learn More About Taxation en France

For additional details on how income tax works in France, including family quotient rules and annual adjustments, visit the official French government portal on income tax.

Understanding the C3S Taxe: A Complete 2025 Guide for Companies

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What Is the C3S Taxe?

The Contribution Sociale de Solidarité des Sociétés (C3S taxe) is a corporate social solidarity contribution applied to businesses in France whose annual turnover exceeds €19 million (excluding VAT). Collected and monitored by Urssaf Provence-Alpes-Côte d’Azur, this employer-funded tax plays a key role in financing the French retirement insurance system.

To learn more about related tax obligations, read our complete guide to the taxe PUMA.

Explore official Urssaf information on C3S taxe

Which Companies Must Pay the C3S Taxe?

You are liable for it if:

  • Your business or company is active as of January 1 of the year for which the contribution is due.

  • Your turnover exceeds €19 million (excluding VAT).

If your business does not meet both criteria, you are exempt and do not need to declare the contribution. The tax authorities provide your turnover information to the C3S managing body, which may contact you for additional details if necessary.

Certain companies may be exempt and must submit relevant supporting documents, including the exemption case number and copies of their statutes.

To see the full list of companies liable or exempt from it, consult the official notice.

How the C3S Taxe Is Calculated

The base for calculating it includes turnover that falls under the scope of VAT, whether subject to it or exempt.

This figure is determined exclusive of VAT and similar taxes. Amounts covered under the French General Tax Code (Book I, Part 1, Title II and Part 2, Title III, Chapter I bis) are excluded from this calculation.

The rate of it is fixed at 0.16%.

For in-depth calculation rules, consult the official notice.

C3S Taxe Declaration Process

If your company’s annual turnover (excluding VAT) exceeds €19 million, you must declare and pay the C3S taxe in the year following that threshold being reached.

All declarations and payments must be completed online via net-entreprises.fr no later than May 15.

If you haven’t registered yet on net-entreprises.fr, do so promptly to access the declaration portal. Already registered? Double-check and update your submitted data as needed.

For 2025, the C3S taxe e-declaration service opened in early March.

Important

If your business undergoes changes (e.g., merger, legal status changes, liquidation), specific declaration procedures apply. Consult the official notice for more details.

C3S Taxe Payment Instructions

Payment must be made exclusively by SEPA direct debit (télérèglement).

Manage your company’s bank details and mandates via your dashboard on net-entreprises.fr under “Vos coordonnées bancaires.”

⚠️ A mandate is considered void if unused for 36 months from the date of the last SEPA transaction.

Note

Mandate validation alone doesn’t confirm payment. You must explicitly initiate the payment via télérèglement.

After submitting your declaration, you may complete the payment immediately or return later via the dashboard.

The direct debit will be processed on the official due date of the C3S taxe.

For help with registration, payment setup, navigation, or technical issues on net-entreprises.fr, contact their support line: 0 806 800 700 (toll-free + call cost).

Failure to Declare or Pay

If you fail to declare your turnover, the C3S management body may estimate it based on available public data or annual accounts.

Failure to meet all declaration and payment requirements may result in penalties.

The Declaration and Control System of the C3S Taxe

The C3S taxe relies on a self-declaration system based on mutual trust. In return, Urssaf Provence-Alpes-Côte d’Azur, as the managing body, may conduct audits to verify the accuracy of your declarations.

These audits are conducted remotely through electronic and postal communication.

To learn more about C3S audits, refer to the official control charter document.