France

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 permanent establishment (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 CIT rate in France is 25%.

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 that 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 12-month period (when a tax period or fiscal year is different from 12 months, the allowance is adjusted accordingly).

Exceptional contribution on CIT for large companies

An exceptional contribution is applicable for the first fiscal year ending on or after 31 December 2025.

It applies to corporations subject to CIT with turnover 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, and the parent company is liable for the contribution).

This contribution is only applicable for the first fiscal year ending on or after 31 December 2025. The taxable basis corresponds to the average of the CIT due for the current fiscal year and the previous one, based on total taxable profits before applying tax reductions, credits, and tax receivables of any nature.

The applicable rates are the following:

* 25% CIT + 3.3% social contribution (disregarding relief) + exceptional contribution

** 10% CIT + 3.3% social contribution (disregarding relief) + exceptional contribution

A smoothing mechanism allows to moderate the threshold effect for companies whose turnover slightly exceeds these thresholds of EUR 1 billion or EUR 3 billion. The exceptional contribution is not deductible from the taxable income.

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 intellectual property (IP) rights. Exceptional contribution would also apply.

This legislation implements the Organisation for Economic Co-operation and Development (OECD) 'nexus' approach, according to which a company may only be granted the reduced tax rate when it has carried out the research and development (R&D) activities from which the patent/related IP right derives.

Eligible assets must qualify as fixed assets for French Generally Accepted Accounting Principles (GAAP) purposes, as follows:

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

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

Note that restructuring operations (i.e. IP 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 MNE groups and large-scale domestic groups in the European 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 IIR applies, the UTPR 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.

These 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 an 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 Global Anti-Base Erosion (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 that will file the GloBE Information Return (GIR), and which entity will file the GloBE balance statement for France.

In addition, and in principle, French entities have to file the GIR within 15 months (18 months the first time) following the end of the fiscal year, except if the entity of the group that files the GIR is located in a country that 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.

For more detailed information and the most recent updates, please visit PwC’s Pillar Two Country Tracker.

Local income taxes

No income tax is levied on income at the regional or local level. See the Other taxes section for local non-income taxes.