Corporate Taxation in France: What Is the Standard Real Tax Regime?

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The standard real tax regime (“régime réel normal”) is a system that governs how businesses in France are taxed on both their profits and VAT. But which companies fall under this regime? How does it operate, and can you switch to a different one if needed? Here’s a clear breakdown.

Who Is Subject to the Standard Real Tax Regime?

This regime applies to businesses that are liable for either personal income tax (IR) or corporation tax (IS).

It is the default tax regime for businesses whose annual revenue before tax exceeds:

  • €840,000 for commercial activities involving the sale of goods, food and drink services (takeaway or on-site), and accommodation services (excluding furnished rentals, tourist accommodation, rural gîtes, and bed & breakfasts),

  • €254,000 for service-based businesses.

These thresholds apply from 2023 to 2025.

Note:
Businesses that report non-commercial profits (BNC) are subject to a separate regime called the controlled declaration regime.

Can a Business Opt for the Standard Real Regime?

Yes. Even if your company generates revenue below the thresholds and qualifies for either the simplified real regimeor the micro-enterprise regime, you may choose to adopt the standard real regime voluntarily.

This choice is valid for one year and is automatically renewed each year unless changed. Thanks to the reform of Article 267 of the French General Tax Code, businesses may now make this choice up until the deadline for filing their annual tax return.

What Are the Accounting Requirements Under the Standard Real Regime?

Companies under this regime must follow stricter accounting rules compared to those under the simplified regime:

  • All transactions must be supported by documented proof.

  • Companies must maintain a chronological record of all transactions impacting their assets.

  • A physical inventory must be conducted at least once every 12 months.

  • Annual financial statements must be prepared, including a balance sheet, profit and loss account, and notes to the accounts.

  • A journal ledger and general ledger must be kept.

Additionally, companies are required to electronically submit a full financial statement (forms 2050 and following) along with form 2031 (for income tax) or 2065 (for corporation tax) via the tax authorities’ online portal.

How Does This Regime Affect VAT?

Businesses automatically subject to the standard real tax regime are also placed under the standard VAT regime.

This means they must:

  • File monthly VAT returns using form 3310 CA3,

  • Pay VAT online via their professional account on impots.gouv.fr.

If a business owes less than €4,000 in VAT annually, it can opt for quarterly declarations and payments instead.