France – Corporate Taxation: Other Taxes

Value-Added Tax (VAT)

In France, VAT is levied on goods sold and services provided. The standard VAT rate is 20%. Certain items, such as some medicines and passenger transport services, are subject to a reduced 10% rate. A 5.5% reduced rate applies to food products, subscriptions to gas and electricity under certain conditions, book sales, and goods or services for disabled persons. Specific sales and services, including reimbursable drugs and press publications, fall under a 2.1% VAT rate. Exports of goods and certain services provided to foreign clients are generally exempt from VAT.

For B2B (business-to-business) services, VAT is usually applied at the customer’s location rather than the supplier’s. For B2C (business-to-consumer) services, taxation generally occurs where the supplier is established.

VAT is applicable only to taxable entities, partially taxable entities, and non-taxable legal entities registered for turnover taxes.

Special VAT rules exist for leases of transport equipment; cultural, arts, and sports services; television, radio, electronic, and telecommunication services; and goods transportation.

Customs Duties

Customs duties apply when goods enter the European Union from third countries. The duties are based on the origin (preferential or non-preferential), tariff classification, and customs value. These can be ad valorem duties (percentage of the goods’ value) or specific duties (based on quantity, weight, volume, or number, rather than value).

Imports from countries with EU free trade agreements may benefit from reduced or zero customs duties.

Excise Taxes

Alcohol, tobacco, and petroleum products are subject to a specific regime with complex financial and administrative obligations. Certain authorizations must be obtained in advance for receiving, storing, and transporting these products. Traceability requirements are imposed to ensure compliance. Operators must fully comply with these regulations to avoid civil and criminal penalties.

Eco-Contributions (Extended Producer Responsibility – EPR)

Under the ‘polluter-pays principle,’ Extended Producer Responsibility (EPR) holds manufacturers and distributors accountable for waste management throughout a product’s life cycle. EPR systems transfer responsibility, costs, and waste management obligations to producers.

In France, EPR is implemented through eco-contributions for various product categories, including electrical and electronic equipment, packaging, paper, textiles, furniture, tires, tobacco, toys, and mineral oils. Compliance is challenging due to potential penalties and reputational risk.

Environmental Taxes

Environmental taxation has gained importance due to societal and political focus on sustainability. Energy excise duties are levied on certain products, formerly known as Domestic Consumption Taxes on Energy Products (TICPE), Electricity Supply (TICFE), Natural Gas (TICGN), and Coal (TICC). Environmental taxation also includes measures for natural resource protection, pollution control, and carbon emissions.

3% Real Estate Tax

All real estate in France is subject to a 3% tax based on fair market value and proportional to direct or indirect ownership. All owners in the chain are jointly liable.

Automatic exemptions apply to:

• International organizations, sovereign states, and public institutions;

• Entities holding less than 50% of their total French assets in real estate;

• Entities listed on regulated markets with actively traded shares.

Additional exemptions apply for entities based in France, the EU, or countries with a double tax treaty (DTT) with France if:

• Ownership is under EUR 100,000 or 5% of the property’s value;

• They are recognized pension funds or charities serving the public interest;

• They are non-listed French real estate funds (SPPICAV or FPI) or equivalent foreign funds.

Non-exempt entities can apply for relief by providing detailed information to the French tax authorities through an annual return. Filing is electronic, and foreign entities must register in France.

Local Non-Income Taxes

Property Tax

Property tax is levied by municipalities, which set rates annually. It is based on the rental value of buildings and land owned by companies. Permanent exemptions (e.g., agricultural buildings) and temporary exemptions (e.g., new constructions for two years) may apply. Industrial establishments are assessed based on a percentage of the building’s accounting value, while other buildings are assessed on rental value.

Territorial Economic Contribution (CET)

The CET consists of:

1. Business Property Tax (CFE): Calculated on the rental value of land and buildings used for business. Industrial establishments receive a 30% allowance. Municipalities determine the tax rate.

2. Company Value-Added Contribution (CVAE): Applies to companies with turnover over EUR 500,000. The rate is progressive for turnovers between EUR 500,000 and EUR 50 million. For turnover above EUR 50 million, the rate for 2025–2029 is:

Value added is sales plus subsidies minus expenses such as inventory purchases and external services. An additional CVAE contribution of 47.4% applies in 2025. The abolition of CVAE planned for 2027 has been postponed to 2030.

The CET is capped as a percentage of added value:

Registration Duties

Registration duties are primarily payable by the purchaser, though the seller may be liable if the purchaser fails to pay.

• Goodwill transfers: 3% for amounts EUR 23,000–200,000; 5% above EUR 200,000.

• Share transfers: 0.1%; listed shares only if recorded in a deed.

• Interest/quotas in non-share capital entities (e.g., SARL, SNC): 3%.

• Shares in non-listed real estate companies: 5%.

• Real estate transfers: 5.8%, potentially increasing to 6.3% for contracts signed on or after 1 April 2025.

Exemptions/reduced rates apply to certain transactions, including:

• Financial transaction tax-subject transfers;

• Company repurchase of shares for employee saving plans;

• Transfers between group companies;

• Mergers, contributions, spin-offs, or acquisitions by employees;

• New buildings and land purchases under VAT.

Exit Tax

For French head office or establishment transfers abroad, unrealized gains are immediately taxable. Transfers to EU or, under conditions, EEA states may allow payment in full or in five equal yearly instalments.

Payroll Tax

Companies not liable for VAT on at least 90% of turnover pay payroll tax on wages the following year. The tax base is proportional to the turnover not subject to VAT.

• Standard rate: 4.25%

• Increased rates:

  • 5% for wages EUR 8,985–17,936

  • 6% above EUR 17,936

French Social Security Contributions

The French social system includes basic social coverage, unemployment benefits, compulsory complementary retirement, death/disability coverage, and health coverage.

• Employers contribute approximately 45% of gross salary; employees contribute 22–25% in 2024.

• Contributions are capped, reducing effective rates as salaries increase.

• Mandatory collective additional medical coverage is taxable.

• Employers withhold both employer and employee shares for salaried employees in France.

Financial Transaction Tax (FTT)

FTT applies to acquisitions of equity or similar securities issued by certain French-listed companies, including instruments giving access to capital or voting rights. It applies whether transactions occur inside or outside France.

• Taxpayer: Investment service provider (ISP) executing the order or, if none, the custodian.

• The central securities depositary usually handles collection, reporting, and payment.

• Rate: 0.3% until 31 March 2025; 0.4% from 1 April 2025.

Digital Services Tax

A 3% tax applies to companies providing certain digital services in France with global revenue over EUR 750 million and French revenue over EUR 25 million.

• Covers digital interfaces enabling user interaction, targeted advertising services based on user data, and services to advertisers.