Doing Business in France - RSM International

4 Taxation
4.1 Overview
Companies
Corporate income tax The normal rate of corporate income tax is 33.33%.
An additional 3.3% social contribution is levied on the
portion of corporate income tax that exceeds €763K,
leading to a total rate of 34.43%.
A temporary 5% exceptional contribution also applies
based on corporate income tax liability for companies
whose turnover exceeds €250,000K, for financial years
closed between December 31, 2011 and December 30,
2013.
Small companies with gross revenues of under €7,630K
benefit from a reduced corporate income tax rate of
15%. The reduced rate applies only to the portion of
taxable income that does not exceed €38.12K.
Tax base
Capital gains
Participation exemption
Territorial (active income) meaning that industrial and
commercial profits are subject to French tax only if they
are earned in France, except when CFC rules applies
Worldwide (passive income, i.e. dividends, interest
payments and royalties)
Short-term capital gains are subject to the standard
corporate tax rate of 33.33% and potentially to
additional contributions above mentioned.
Long-term capital gains derived from disposals of
substantial shareholdings are tax exempt, except for
a 10% share of expenses, i.e. a 3.3% taxation. Other
long-term capital gains are taxed at 15.5% (notably
gains deriving from disposals of patents as well as
royalty fees on patents) or 19% (gains deriving from the
sale of shares held in listed predominantly real estate
companies).
Yes, specific tax rules apply to dividends received by
French companies that qualify as parent company. If
certain conditions are fulfilled, 95% of the dividends
received from the subsidiary are exempt from
corporate income tax.
In addition, as above mentioned, long-term capital gains
derived from disposals of substantial shareholdings are
90% tax-exempt under certain conditions.
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