France

CIT

A resident company is subject to corporate income tax (CIT) in France on its French-source income. In that respect, income attributable to foreign business activity (if there is no treaty in force between France and the relevant foreign country) or to a foreign PE (if a tax treaty applies) is excluded from the French tax basis.

A non-resident company is subject to CIT in France on income attributable to French business activity or to a French PE, as well as on income from real estate located in France.

For fiscal years opened as of 1 January 2022, the standard corporate income tax rate in France is 25% (Article 219, I of the French tax code [FTC]).

A reduced CIT rate of 15% applies for small corporations on their first EUR 42,500 of taxable profits. It applies to corporations deriving a turnover up to EUR 10 million and which are held directly or indirectly up to at least 75% by individuals.

Social contribution on CIT

A social contribution of 3.3% is due by legal entities in addition to CIT, by larger companies whose CIT liability exceeds EUR 763,000. The contribution is equal to 3.3% of the CIT amount, reduced by an allowance of EUR 763,000 per twelve-month period (when a tax period or fiscal year is different from twelve months, the allowance is adjusted accordingly).

Exceptional contribution on CIT for large companies

This exceptional contribution is applicable for the first FY ending on or after 31 December 2025.

It applies to corporations subject to CIT with a revenue equal to or exceeding EUR 1 billion for the fiscal year during which the contribution is due or for the previous fiscal year (turnover generated in France during the financial year – in the case of tax consolidation, total turnover of the members of the group – the parent company is liable for the contribution). See Significant Developments section for more information.

Patent box regime

The Patent Box regime provides for a CIT rate reduced to 10% (instead of the current standard rate of 25%) on the net income derived from the disposal (to unrelated parties) / licensing of patents and related IP rights. Exceptional contribution would also apply. See Significant Developments section for more information. 

This legislation implements the OECD 'nexus' approach, according to which a company may only be granted the reduced tax rate when it has carried out the R&D activities from which the patent/related IP right derives.

Eligible assets must qualify as fixed assets for French GAAP purposes:

• Patents;
• Industrial manufacturing processes;
• Proprietary Variety Protection Certificates;
• Copyrighted software.

A formal election must be made in the yearly tax return, and the IP Box computation must be supported by an ad hoc documentation. This documentation must be provided to the French tax authorities upon request.

NB: Restructuring operations (i.e. IPs acquisition, election for tax consolidation regime) may have a significant impact on the nexus approach and should be anticipated.

Capital gains

A reduced tax rate applies to certain capital gains. See Capital gains in the Income determination section for more information. 

Global minimum tax and domestic minimum tax

France implemented Council Directive (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union. Specifically, the following elements of the global minimum tax are legislated:

• The Income Inclusion Rule (IIR), which applies for income years starting on or after 31 December 2023. This rule applies to French multinationals and French entities that are subsidiaries of a foreign-headquartered multinational located in a jurisdiction that has not implemented this rule.
• The Undertaxed Profits Rule (UTPR), which applies for income years starting on or after 31 December 2024. Where no Income Inclusion Rule applies, the Undertaxed Profits Rule will apply to foreign multinationals that operate in France.

In addition, a 15% domestic minimum tax (QDMTT) applies to income years starting on or after 31 December 2023 for France operations of multinationals and will ensure that France retains taxing rights over undertaxed French profits.

Those rules apply to companies located in France that are part of a multinational group whose consolidated turnover is EUR 750 million or more over at least two of the four preceding fiscal years.

A top-up tax is due when, in a fiscal year, the effective tax rate (corresponding to the sum of the adjusted covered taxes of the constituent entities located in the jurisdiction / sum of the qualified income of these entities) of a MNE or national group is lower than 15%, in a jurisdiction. France implemented the temporary safe harbour rules.

The top-up tax (levied through the IIR, the UTPR or the QDMTT) is not deductible from the corporate or personal income tax.

Each constituent entity located in France belonging to a group subject to the GloBE rules have to file an annual notification with its income tax return to disclose: the name of the Ultimate Parent Entity, the name of the entity which will file the GloBE Information Return (GIR) and which entity will file the GloBE balance statement fro France.

In addition, and in principle, French entities have to file the GloBE Information Return (GIR) within 15 months (18 months the first time) following the end of the fiscal year, except if the entity of the group which files the GIR is located in a country which agreed to share the GIR information with France. The GloBE balance statement, which will be a settlement statement for the top-up tax it has to pay (if any), has to be filed within the same delays as the GIR.

Local income taxes

No income tax is levied on income at regional or local level. See Other taxes section for more information.