French company tax payments
Taxes are always daunting when establishing a business in France. Not only do they have a reputation of being fairly high, but the amount you pay is also not consistent across all company types! As such, one can wonder: “if I want to pay as little taxes as possible, which company type should I choose?”
Summary
- Income tax or corporate tax?
- How taxable profit is calculated
Income tax or corporate tax?
Depending on the legal structure chosen, the profits of the company are either subject to income tax, or to corporate tax (IS).
When subject to income tax
The company is “transparent” when it comes to taxes. All profits are recorded in the overall income statement of the entrepreneur (or associates for their share of the profits) with this classification in the category:
- They appear in the industrial and commercial profits (BIC) category if the activity is industrial, commercial or craft,
- They appear in the non-commercial profits (BNC) category if the activity is of a liberal nature.
Basically, in terms of taxes, no difference is made between the profits of the company and the remuneration of the entrepreneur.
When subject to corporation tax
A clear difference is made between the profits of the company and the remuneration of the directors.
- The Net income, after deducting the revenue of the directors, is taxed at a fixed rate (see table below).
- Managers are then taxed personally on their remuneration and on the dividends received. This is subject to Income Tax, with remuneration appearing in the wage and salaries category, and dividends appearing in the property income category.
| Income tax | Corporate tax |
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Which company types?
Optionally:
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Which company types?
Optionally:
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The base of calculation of the Income Tax:
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The base of calculation of the Corporate Tax
It is always obtained by deducting real charges. |
Tax rate:
(Turnover is considered before taxes) |
2018 Tax rate:
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How taxable profit is calculated
There are two ways to determine the taxable profit of a business:
- it is either done by the tax administration in a “global” way by deducting an amount comparable to the fees of the company to the turnover. This is the Micro-Company scheme, and it can only be applied to Sole proprietorships.
- or it is done by the entrepreneur in “real” terms, and he determines his own taxable profit. This is the actual benefit scheme (for the BIC) or the controlled return (for the NCB) if it is a liberal profession.
Something to keep in mind: The turnover to be considered for the method of determining the taxable profit is either that of the previous year or of the year before that.
| Commercial and craft activities
Industrial and Commercial Profit (BIC)
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Liberal activities
Non-commercial Profits (BNC) |
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Sole proprietorships with a turnover less than or equal to:
Micro-Company regime (Possible to opt for the simplified or normal regime)
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Micro-Company regime (Possible to opt for the “Controlled declaration” regime)
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Sole proprietorships with a turnover between:
Simplified regime (Possible to opt for the normal regime)
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“Controlled declaration” regime
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Sole proprietorships with a turnover superior to:
Normal regime |
If you want to learn more about company types, you should check out this table. Everything you could want to know is there!
