France

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TAXES - ACCOUNTING

 

 

Corporate tax

Tax rate for resident companies

The standard corporate tax rate amounts to 33.33%. A 3% surtax is imposed on the gross corporate income tax. Consequently, the effective tax rate is 33.83%.

Companies with an annual turnover exceeding 7,630,000 EUR, and those which the share of individuals in their capital is lower than 75% are also assessed on a social security surtax of 3.3%.
Companies whose annual turnover is below 7,630,000 EUR or for which at least 75% of the company is owned directly or indirectly by individuals can benefit from a reduced rate of 15% up to 38,120 EUR.

   
Tax rate on long-term capital gains Long-term capital gains derived by companies are zero-rated since January 1st 2007.
   
System governing groups of companies and dividends paid by subsidiaries to their parent companies Dividends paid to non-resident companies are liable to a withholding tax of 25% or 0%, depending on international agreements.
   
Tax rate on branches Branches are subject to general corporate taxation rules.




Income tax

Fiscal year The fiscal year begins on January 1st and ends on December 31st of the same year.
   
Income tax rate Income tax scale:
- from 0 to 5,515 EUR: 0%
- from 5,516 to 11,000 EUR: 5,5%
- from 11,000 to 24,432 EUR: 14%
- from 24,433 to 65,500 EUR: 30%
- beyond 65,500 EUR: 40%
   
Tax deductions or other allowances Tax reductions (10%) applies to before the calculation of the fiscal result, the reduction of 20% is removed and has been taken into account in the income tax scale in which the amounts are consequently reduced. The net income tax basis amounts then to 72% of the net income.
Some tax reductions after calculation of the fiscal result (such as reductions as regards to the degree of studies of the children, gift for charity associations, capital for setting-up of companies...) can be deducted from the amount due.



VAT rates

Standard rates 19.6%
   
Reduced rates The reduced VAT rates are 2.1% and 5.5%.
The 5.5% tax rate applies to most food and agricultural products, water, books and newspapers, hotel rooms and medicines.
The 2.1% tax rate applies to certain medicines reimbursed by the social security system.
Exemptions include financial and insurance services, medical supplies, education and training.



Other important taxes


Name of tax
Rate
All the companies liable to IS are subjected to a contractual imposition called Contractual Imposition Annual (IFA). It is an imposition distinct from the IS which takes into account only the sales turnover and this whatever the benefit or deficits carried out by the company. As from 2006, the IFA is a deductible load fiscally and does not charge itself any more to the amount of the IS due.  
Progressive tax rate from 0% to 110,000 EUR.  
Business activity tax  
This rate is assessed on the value of the fixed assets. It varies and is voted by the local authorities. The national average rate is 23.16%.  
Patrimonial tax (ISF)  
This tax applies for the value of the patrimony of the individuals established in France or who own some property within if this property value is superior to 760,000 EUR (01/01/2007). The patrimony tax rate varies from 0% to 1.80%.  
Succession and Donation duties  
5% to 60%  
Local taxes  
Vary regarding the localities  


 

Accounting

Introduction
French accounting is regulated by the law. The law gives details about the accounting and financial information that the company has to establish and publish. It gives also a general orientation of fundamental principles to respect. This right arises from legislative or statutory rules as the commercial code, the labour regulations, the general tax law and also the jurisprudence and the doctrine. The companies have to produce each year a balance sheet, a profit and loss account and annexes which have to be published to the Register of Commerce.


Certification and auditing
The control of accounts is compulsory and must be made by an external "reviser" of the company. This reviser has to respect the main accounting rules issued by the International Accounting Standards Committee (IASC). The Chartered Accountants Association and the National Auditors Company represent France to the IASC.

Professionals and representative organizations
The National Auditors Company.



Useful links
French Ministry of Finance
French Tax administration
Main European Tax conventions
Customs Office

Last modified in January 2007
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