How Can Businesses Use Their Tax Credits?

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A tax credit arises when a business is owed money by the French tax authorities. This can result from a refundable tax credit or an overpayment. But how does it work? Can it be used to settle your taxes? Here’s what you need to know.

When Does a Tax Credit Apply?

Tax credits apply to businesses that have a surplus with the tax administration. This overpayment can originate from various situations, including:

  • A VAT credit

  • An excess payment of corporate income tax or payroll tax

  • A refundable tax credit (e.g., for research, training, or loss carryback)

  • A reimbursement following a claim or tax relief decision

What Taxes Can Be Paid Using a Tax Credit?

Tax credits can be used to pay professional taxes collected by the Service des Impôts des Entreprises (SIE), the business tax office.

Some businesses are also eligible to request an immediate refund of their tax credits. This includes:

  • Innovative new companies (JEI)

  • Recently established businesses

  • SMEs as defined by EU standards

  • Businesses facing financial hardship

More details are available on the official tax website.

How to Apply Your Tax Credit to Tax Payments

To use a tax credit for paying a tax bill, you must complete form no. 3516-SD.

Then follow these steps:

  1. Attach the first section of the form to your refund or credit restitution request, and submit it at least 30 days before the tax due date.

  2. Keep the second section of the form and send it around the payment deadline. This must be submitted to your SIE via your secure professional messaging space before the payment deadline.

Once your application is processed, you’ll receive a response from the SIE:

  • If approved, your tax due is reduced by the amount of your credit.

  • If your credit exceeds the tax owed, the difference will be automatically refunded.

  • If the credit is less than the tax due, you’ll need to pay the remaining balance when submitting the second part of the form.

Important to Know

If the first section of the form isn’t submitted on time, your request may be denied. In such cases, your credit will either be refunded or carried forward for future use.