France

France is defined as metropolitan France (i.e. the continental France, Corsica, the overseas departments [ i.e. French Guyana, Guadeloupe, Martinique, Reunion, and Mayotte] and the continental shelf). The ‘overseas territories’ (i.e. New Caledonia, French Polynesia, Wallis and Futuna, Saint Pierre et Miquelon and French southern and Antarctic lands) have autonomous tax regimes and are therefore treated as foreign territories for the purposes of the territoriality rules applicable to CIT.

As a general rule, a resident company in France is a company that is incorporated under French commercial laws.

Permanent establishment (PE)

The notion of PE is not defined by the French Tax Code and has been specified by case law from the Administrative Courts. It refers to an enterprise conducted in France that can be materialised in one of the three following situations:

• Business activity conducted through an establishment (i.e. a fixed business installation operating with some degree of autonomy [e.g. a branch, sales office]).
• Business conducted in France by a dependent agent.
• Existence of a complete commercial cycle in France.

In case of a tax treaty, this concept must also be analysed based on the PE definition of this tax treaty.

In case of an agent, it should be noted that the French Administrative Supreme Court tends to adopt a substance over form analysis. It notably ruled that a French company should be regarded as a dependent agent in France of an Irish Company even if it did not formally conclude contracts in the name of Irish company since it decided on transactions that the Irish company merely and routinely approved and, as such, became legally binding to the Irish Company. Consequently, the Court considered that the Irish Company constituted a PE for CIT and VAT purposes (CE, 11 December 2020, n°420174, Sté Conversant Int. Ltd)

A ruling request can be submitted to the French tax authorities to get confirmation as to whether the presence in France of a foreign corporation is a PE.