France country tax guide

1.  Languages used by local tax authorities 

French. Foreign documents should be translated in French when provided to French tax Authorities. 

2. Main corporation tax characteristics 

2.1 Corporate tax rate / additional taxes / global aggregate rate 

The taxation of French companies relies on a territorial basis. Subject to specific anti-abuse provisions, French companies carrying on a trade or business abroad are generally not taxed in France on these profits and cannot offset the related losses.  

For financial years that have ended on December 31, 2022, and for future financial yearsstarting on or after January 1st, 2022, the corporate tax rates are the following: 

SME's

Turnover without VAT less than € 10M and at least 75% of the capital is held by individuals (or by a company satisfying this condition) 

15% up to € 42 500, and 25% above 

Other firms 

Regardless of the amount of the turnover 

25% 

 

A specific surtax applies on the corporate income tax amount. It applies at a 3.3% rate on the part of corporate tax due exceeding € 763k (before offsetting tax credits granted under tax treaties). The surtax does not apply to companies having a turnover lower than € 7,63M if at least 75% of the company is owned by individuals or by a company satisfying this condition.  

2.2 Corporate wealth tax 

France does not have a corporate wealth tax. 

2.3 Specific tax regime for dividends / interest / capital gains 

Dividends are subject to French corporate income tax at normal rate (25%) except in the following cases: 

  • Parent company regime: dividends received by French parent companies (i.e. companies incorporated in France and holding qualifying shares that represent at least 5% of the issued capital of a subsidiary) are exempt from corporate income tax; 5% of the dividends net amount must be added back to the parent company’s taxable results. Therefore, the effective tax rate on such dividends is 1.33%. 
  • Consolidated group regime: dividends received by a French company from a member of a consolidated group are exempt from corporate income tax; 1% of the dividends net amount must be added back to the company’s taxable results. Therefore, the effective tax rate on such dividends is 0.27%.  

Capital gains derived from the sale of fixed assets by French companies are subject to corporate income tax with other yearly profits at the standard rate. 

Capital gains derived from the sale of qualifying shares that have been held for at least two years are exempt from tax, but the corporate income tax applies to 12% of the gross capital gains realized on qualifying shares. As a result, the effective tax rate on such gains is 3.18%. 

2.4 Existence of exempt companies or companies subject to a reduced tax rate 

French tax law does not provide for any general regime of exemption or taxation at a reduced rate. 

Specific regimes of a reduced territorial scope may apply, subject to numerous conditions, to new companies established in specific geographical areas, can be exempt from corporate income tax for a limited period. 

3. Main personal income tax characteristics 

3.1 Personal income tax rate / additional taxes / global aggregate rate 

Personal income tax relies on the concept of residence. An individual is considered a resident for tax purposes when he has in France at least one of the following: 

  • his home; or,  
  • his main place of abode; or,  
  • the place he performs his professional activity/ when he is an executive of a French company with an annual turnover exceeding € 250M; or,  
  • the centre of his economic interest. 

Subject to tax treaties, French tax residents are liable to French income tax on their worldwide income whereas non-residents are liable only on their French source income. French income tax is computed using the following progressive scale: 

French Income Tax Progressive scale 

Part of the taxable income 

Rate 

Up to € 10,777 

0 % 

From € 10,777 to € 27,478 

11 % 

From € 27,478 to € 78,570 

30 % 

From € 78,570 € to € 168,994 

41 % 

More than € 168,994 

45 % 

An exceptional tax on high income applies at a rate of 3% and 4% when the yearly taxable income exceeds  
€ 250.000  (or € 500.000  for a married couple). 

Social taxes (distinct from the social contributions) are due at rates that depend on the type of income. Employment income is subject to social taxes of 9.7% and investment income is subject to social taxes of 17.2%. 

3.2 Any mechanism taking into account the family situation? 

Married couples and individuals living under a civil union are subject to a joint taxation regime.  

French law provides for a family unit system meant to reduce the progressivity of French income tax: the taxable income is divided by the number of parts of the family unit (determined by number of people living with the taxpayers such as spouse, dependent children or students) and tax is calculated on the basis of each part. The amount of taxes is then added to determine the final liability of the family unit.  

3.3 Specific taxation of dividends / interest / capital gains? 

Interest, capital gains and dividends are taxed at a flat rate of 30% (12.8% income tax and 17.2% of additional social taxes). An option for the standard progressive income tax is available.  

Capital gains derived from the sale of real estate are taxable at a rate of 19% and are subject to social charges of 17.2%. Specific rebates apply, depending of the duration of ownership, leading to a full exemption after 30 years.  

A surtax (up to 6%) applies to capital gains exceeding €50,000. 

3.4 Beneficial regimes? 

•Newcomers  

The regime benefits to employees and most executives. The key conditions to benefit from the regime are: 

  • The person has been domiciled out of France for at least 5 civil years; and, 
  • The person comes to France to take a professional position (employee or executive). 

This preferential regime provides for a tax exemption of up to 50% of the professional income (provided some caps and floors are respected).  

The impatriate benefits also from a partial tax exemption (a 50% exemption for income tax purposes only) with respect to his foreign-source investment income.  

The regime is applicable for a period of 8 years following the arrival in France.  

In addition, all persons arriving in France after a period of non-residence of at least 5 years, even if they do not start any professional activity, may benefit from a wealth tax exemption with respect to their foreign assets. 

•Expatriates 

Employees working abroad and are French tax resident can benefit from an exemption on the compensation they receive for their activity performed outside of France. Subject to conditions related to the nature of the activity carried out abroad and its duration, the exemption may be full or partial. 

3.5 Personal wealth tax 

France levies a tax on the individual wealth since the beginning of the 80s. The scope of French wealth tax has been reduced as from 2018 and targets today real estate assets only. Such real estate may be held directly or indirectly, through one or several companies 

Subject to tax treaties, French tax residents are taxed on their worldwide real estate assets whereas non-residents are only taxed on their French real estate assets. 

Real estate assets held by companies and used for their business activity are exempt. Same is true for personal assets used for a professional activity. Detailed conditions exist for defining a business / professional activity. 

French real estate wealth tax applies to individuals having a total net real estate asset exceeding a threshold of €1,300,000 as of January 1st of each year. The rates are the following: 

Taxable share of the gift value (after rebate, if any) Tax rates  

Up to € 800,000 

0 % 

From € 800,001 to € 1,300,000 

0,50 % 

From € 1,300,001 to € 2,570,000 

0,7 % 

From € 2,570,001 to € 5,000,000 

1 % 

From € 5,000,001 to € 10,000,000 

1,25 % 

More than € 10,000,000 € 

1,5 % 

3.6 Gift and inheritance tax rates 

Subject to applicable tax treaties, gifts and inheritance transmissions are subject to French taxes if one of the following conditions is met:  

  • the donor is a French tax resident; or, 
  • the transfered asset is in France; or  
  • the beneficiary is a French tax resident and has been such for at least 6 years over the last 10 years preceding the gift.  

Specific rebates and rates apply depending on the family ties between the donor/deceased and the beneficiary.  

Limited rebates or taxation thresholds apply, the most important one is the gift tax rebate of € 100,000 for a gift made by a parent to his child.  

The net taxable basis is taxed at the following progressive rate: 

Taxable share of the gift value (after rebate, if any)Tax rates 

Up to € 8,072  

5% 

From € 8,072 to € 12,109  

10% 

From € 12,109 to € 15,932  

15%  

From € 15,932 to € 552,324 

20%  

From € 552,324 to € 902,838 

30%  

From € 902,838 to € 1,805,677  

40%  

More than € 1,805,677 

45%  

Tax incentives: 

  • French law allows the possibility to split the ownership of a property into two different parts to be held by a usufruct holder and a bare owner. It is possible (and quite common) to give the bare ownership of an asset and to retain a lifetime interest. The tax impact is the following:  
  • the basis for gift taxes is reduced compared to a gift of the full ownership; and, 
  • at the end of the of the usufruct duration (which could be the lifetime of the usufruct holder), full ownership of the property is carried over to the bare owner without any liability for tax purposes. 
  • In order to encourage long-term family ownership of companies, French law provides that the taxable basis for gift and inheritance tax can be reduced by a 75% rebate when the shareholders take a collective holding commitment.  

4. Visas and residence permits 

4.1 Golden visa or equivalent regime? 

France does not have such a regime. 

4.2 If not: capacity to have a residence permit for HNWI? 

HNWI may obtain a visa and a residence permit by proving they have a certain level of wealth/income. 

4.3 Ability to travel to the European Union? 

As France belongs to the Schengen Space, French citizen and persons having a French visa or residence permit are allowed to travel in the European-Union within a passport or a visa.  

5. Trusts / foundations/ Fiducies / Treuhands / Stiftungen 

5.1 Are these vehicles used / recognised in your jurisdiction? 

Trusts and similar foreign structures are not recognised. 

Foundations can be set under French law, but only as a charity. French fiducies can be created but they cannot have any patrimonial purpose. 

5.2 Are these vehicles subject to a disadvantageous tax regime in your jurisdiction? 

Trusts and similar foreign structures are subject to a disadvantageous tax treatment in France:  

Specific yearly filing duties exist, and the trustee/manager of the structure should comply with these duties.  

Wealth tax is due by the settlor and the inheritance tax treatment is equivalent to or less advantageous than the standard inheritance tax.  

A trust register has also been set up in order to face tax fraud. Some authorities have unlimited access within the scope of their mission (judiciary authorities, tax authorities, government’s anti-money laundering unit), whereas some have a restricted access limited to the information on beneficial owner, upon written request and subject to be able to demonstrate a legitimate interest.