Corporate - Other taxes

Last reviewed - 16 September 2019

Turnover taxes

Turnover taxes are assessed on goods sold and services rendered in France, and operate as VAT. The normal rate is 20%. Sales of certain kinds of medicines and transports of persons are taxable at a 10% reduced rate. Food products, subscription to gas and electricity (under certain circumstances), sales of books, and products and services provided to disabled persons are taxable at a 5% reduced rate. Other specific sales and services are taxable at a 2.1% rate. Exports and certain specific services invoiced to non-French residents are zero-rated.

Business-to-business (B2B) suppliers of services are generally taxable at the location of the customer and not at the location of the supplier. For business-to-consumer (B2C) supplies of services, the place of taxation is generally where the supplier is established.

VAT applies only to taxable persons, partly taxable persons, and non-taxable legal persons that are registered for turnover taxes.

Specific VAT rules apply to leases of transportation equipment; cultural, arts, and sports services; electronic and telecommunication services; and transportations of goods.

Customs duties

Depending on their country of origin, goods may be subject to customs duties. The rules are aligned with the EU customs regulations.

Under certain circumstances, the payment of the duties can be deferred depending on the terms and conditions of the warehousing arrangements.

Excise taxes

Some specific goods are subject to excise duties, notably:

  • Alcohol and alcoholic drinks (e.g. wine, beer, ethylic alcohol).
  • Processed tobaccos (e.g. cigars, cigarettes, tobacco).
  • Oil and gas products.

Real estate tax

All properties located in France are subject to a 3% real estate tax. The tax is assessed annually on the fair market value of the real estate, in proportion to the direct or indirect interest held. All entities in the chain of ownership are jointly liable for the payment of the tax.

Automatic exemptions apply in three situations. First, to entities whose French real estate assets represent less than 50% of their total French assets. Second, to entities listed on a regulated market whose shares, units, or rights are significantly traded on a regular basis. Third, to entities having their registered office in France, in an EU member state, or in a country that has concluded a DTT with France providing for an administrative assistance or a non-discrimination clause, where:

  • their direct or indirect interest in the French real estate is less than either EUR 100,000 or 5% of the fair market value of the French real estate
  • they are pension funds or public charities recognised as fulfilling a national interest whose activities justify the need to own French real estate, or
  • they are non-listed French real estate funds (société de placement à prépondérance immobilière à capital variable [SPPICAV] or fonds de placement immobilier [FPI]) or foreign funds subject to equivalent regulations.

Where an automatic exemption does not apply, a claim may be submitted for conditional exemption.

Territorial economic contribution

The territorial economic contribution (Contribution Economique Territoriale or CET) is comprised of two different taxes: the companies’ land contribution (Cotisation Foncière des Entreprises or CFE) and the companies’ added value contribution (Cotisation sur la valeur ajoutée des entreprises or CVAE). Although they have a similar scope, the taxes are subject to very different rules.

The CFE tax is based on the rental value of assets that are subject to the real estate tax, excluding movable goods and equipment. For industrial plants, the taxable base is reduced by 30%. There is a specific rental value for each town and an upgrading ratio is set forth at the national level each year.

The CVAE is based on a company’s added value. Only taxpayers that are not exempt from the CFE and whose turnover is greater than EUR 152,500 are subject to CVAE. However, tax relief equal to the amount of the tax is provided for companies whose turnover is below EUR 500,000. The tax rate for companies whose turnover ranges from EUR 500,000 to EUR 50 million is assessed according to a progressive scale, which ranges from 0% to 1.5%.

There is an upper ceiling on the added value that applies to the CET. As a consequence, tax relief applies and is equal to the excess of the sum of CFE and CVAE over 3% of the added value of the company.

Registration duties

Registrations duties mentioned hereafter are imposed on the purchaser. However, the seller may be liable for these duties in case of non-settlement by the purchaser.

Transfer of goodwill

The transfer of goodwill is subject to a registration duty at a rate of 3% on the part of the transfer price amounting from EUR 23,000 to EUR 200,000 and at a rate of 5% on the part exceeding EUR 200,000.

Transfers of shares

The transfer of shares is subject to registration duty at a rate of 0.1% with no cap. The transfer of listed shares recorded by a deed is subject to registration duty at a rate of 0.1%.

Transfer of interest or quotas in legal entities whose capital is not divided into shares

The transfer of interests or quotas in legal entities whose capital is not divided into shares (e.g. Société à responsabilité limitée [SARLs] or Société en nom collectif [SNCs], which are a form of private limited liability corporate entity) is subject to a registration duty of 3% with no cap.

Transfer of shares in non-quoted real estate companies

The transfer of shares in non-quoted companies whose assets consist principally of immovable property is subject to a registration duty of 5% with no cap. In case of disposal of shares held in real estate companies, the taxable basis for transfer tax purposes is equal to the fair market value of the real estate assets or rights reduced by the debt contracted for the acquisition of such assets or rights. Other kinds of debts are not taken into account to compute the taxable basis of the transfer tax.

Transfer of real estate

The sale of land and buildings is subject to registration duty at a rate of 5.09% on the transfer price, including expenses.


Several exemptions are added to the list of the transactions that are not subject to transfer duties:

  • Transactions subject to the FTT.
  • Repurchase by companies of their own shares intended to be sold to the subscribers of a company employee saving plan, with some exceptions.
  • Transactions between companies in the same group within the meaning of Article L233-3 of the French Commercial Code.
  • Transfer of ownership resulting from a merger, a contribution, or a spin-off made under the provisions of Article 210 A and 210 B of the FTC and acquisition shares of a company by its employees.

Exit tax rules in case of transfer of French head office or establishment

In the case of a transfer of assets outside France as part of a transfer of a head office or an establishment, unrealised gains are immediately taxable. However, in the case of a transfer to an EU member state or, under certain conditions, to a European Economic Area (EEA) member state, taxpayers are able to either pay the full amount of tax immediately or pay it over five years in five equal instalments.

Payroll tax

Companies that are not liable for VAT on at least 90% of their annual turnover are subject to payroll tax (taxe sur les salaries) regarding salaries paid during the following calendar year. Companies below the 90% threshold trigger are liable for the payroll tax on the complement of their VAT recovery ratio, called the counter VAT recovery ratio.

The standard rate of the payroll tax is 4.25%, but increased rates apply to gross individual wages that exceed certain thresholds. Those increased rates are:

  • 8.5% for wages ranging from EUR 7,924 to EUR 15,822.
  • 13.6% for wages in excess of EUR 15,822.

French social security contributions

The French social security system is composed of various schemes providing a wide range of benefits. This system includes social security basic coverage, unemployment benefits, compulsory complementary retirement plans, complementary death/disability coverage, and complementary health coverage.

The contributions are shared between employer and employee; on average the employer's share of contributions represents 45% of the gross salary. For 2019, the employee’s share of French social contributions represents approximately 20% to 23% of the remuneration. However, since the contributions are assessed using various ceilings, the average rate will decrease as the gross salary increases.

Employers' contributions made to additional medical coverage schemes (which are mandatory and collective) are taxable.

Generally, for any employee who carries out a salaried activity in France, the employer withholds the employer's and employee's share of French social security charges.

Systemic risk tax

A bank tax known as a systemic risk tax has been implemented to prevent excessive risk behaviour. This tax is due by certain financial institutions (including credit institutions).

It should be noted that ‘fund’ entities (e.g. hedge funds or securitisation vehicles) are outside the scope of the tax.

French banks are subject to the bank tax on their worldwide business activities. The equity requirements that are used as the taxable basis for the calculation of the bank tax are calculated on a consolidated basis. Therefore, institutions that fall within the scope of the tax and that belong to a consolidated group are not subject to the tax on an individual basis. Where they are not part of such a group, institutions pay a contribution calculated on their individual position. The taxable basis is made up of the minimum equity required of the institution, as set out by the Prudential Control Authority to meet reserve ratio requirements in accordance with Basel II standards and specified during the previous calendar year.

The rate of the bank tax amounts to 0.141% of the taxable basis in FY18, and any amounts paid in that respect will be deductible for CIT purposes.

A tax return must be filed by 30 June every year, and the tax due must be settled at the same time.

Subject to the principle of reciprocity, it should be noted that taxpayers for which the registered office or the group parent company is located in a country that has enforced a similar tax on systemic risk can benefit from a tax credit. This tax credit can be used to settle the tax due or can be reimbursed.

This tax is not deductible from CIT.

Financial transaction tax (FTT)

FTT applies to acquisitions for consideration of equity securities or similar securities in the meaning of the French Monetary and Financial Code issued by certain French-listed companies (i.e. financial instruments giving access to capital or to voting rights in the company and securities issued under foreign law representing French-eligible securities). FTT applies regardless of whether the transaction is executed inside or outside of France.

The tax is due by the investment service provider (ISP) that has executed the purchase order or, when there is no ISP, by the custodian, irrespective of its place of establishment.

In most cases, the central securities depositary will be in charge of centralising the collection of the tax, the reporting to the French tax authorities, and the payment of the tax to the French Treasury.

The tax is computed based on the acquisition price of the shares.

The FTT rate is equal to 0.3% for acquisitions made on or after 1 January 2017.