France is an excellent country for international business ventures, with the third largest economy in Europe and an incredibly simple start-up process for overseas entrepreneurs. With the right guidance and tools at your disposal, you can navigate your overseas corporate tax payments easily, without overspending.
What is the corporate tax rate in France?
Your corporate tax in France will depend on several factors: the nature of your business and whether your company is a resident or not.
The rate for resident companies is 28% and applies to all income earnings directly related to French business endeavours and property. If you’ve generated earnings from another country, it will be categorised based on whether France holds a tax treaty with that country or not. If a tax treaty applies, your overseas earnings will be attributed to foreign business activity and if there’s no treaty, it’s classed as a foreign PE.
If you’re a non-resident company operating in France, you’ll only need to pay tax on earnings related to French business activity, French-based real estate, or from a French permanent establishment.
How much tax will my business pay in France?
Corporate income tax in France is based on three systems which are tailored to accommodate different business structures and sectors. The amount of tax you pay will depend on the taxation system your business falls into.
The Bénéfices Industriels et Commerciaux (BIC) system is used for taxing businesses within manual, industrial or commercial trades and crafts. Bénéfices non commerciaux (BNC) taxes non-commercial professional businesses and the Bénéfices Agricole (BA) system handles agricultural businesses.
Each system has different taxation rules depending on the size of the business and the annual turnover. The BNC and BIC systems both have divisions for smaller businesses, which taxes them using a simpler system if they should fall under a certain threshold. For BIC businesses, the threshold is an annual turnover of less than €238,000 and for BNC businesses, the threshold sits at €70,000.
Sole traders and freelancers fall under the micro-enterprise regime (régime micro-entrepris) which means they only pay taxes based on business income.
Paying income tax instead of corporate tax
Smaller businesses have the option to pay personal income tax (Impôts sur le Revenu) during the first 5 years of business, rather than the full France corporate tax rate. You can also choose to be taxed under ‘régime micro-entrepris’ which is a simpler system designed for smaller businesses in the BIC and BNC categories. It allows you to be taxed on a fixed profit, based on your turnover declaration.
How do I pay corporate tax in France?
Corporate income tax in France falls in line with the standard calendar year and is typically paid online. Your tax return should be filed by April 30th or within three months of your business accounts being closed. Tax is paid quarterly, starting on March 15th and recurring on June 15th, September 15th and finally December 15th.
To make overseas payments quicker, easier and more affordable, you can opt to work with a currency exchange specialist. By using services and tools designed specifically for international business transactions, profits may be better protected from currency market fluctuations.
You can use a forward contract to secure a favourable rate for up to two years (this may require a deposit), which would allow you to make all four quarterly tax payments at the same exchange rate. International business corporate accounts also come with free rate tracking tools which automatically alert you when your desired rate has been reached. Payments can be made online 24/7 and can even be automated.
Speak to one of our currency specialists today to find out more about saving time and costs on your overseas business payments.