Like individuals, most businesses are subject to tax. The corporation tax or income tax is a tax calculated on the annual result of companies. Its calculation varies according to the profits made during the previous annual financial year.

Thus, the standard tax rate in France for any company that has generated a profit is 25% on the taxable income. However, a reduced rate is applicable under certain conditions:

• 15% for companies with a profit of up to EUR 42,500, if they meet the following two conditions
• an annual turnover (excluding VAT) of less than 10 million euros ;
• a capital fully paid up and at least 75% owned by natural persons (or by a company applying this criterion).

Which companies are affected by corporate tax?

Corporate tax does not apply to all businesses. It is mandatory for companies with certain legal forms while it is optional for others.

Companies established in France with a legal form in the list below must pay corporation tax:

• Public limited companies (SA);
• Limited Liability Companies (SARL);
• Limited Partnerships by Shares (SCA);
• Simplified Joint Stock Companies (SAS)
• The Self-Employed Companies (SEL, SELARL).

Corporate tax is optional for companies with a legal form in the following list:

• The individual entrepreneur in EIRL;
• The sole proprietorship with limited liability (EURL);
• Partnerships (SNC);
• Joint ventures;
• Civil companies having an industrial or commercial activity;
• De facto companies.

For the legal forms mentioned above, the choice of the "corporation tax" option is made when the company is created on the declaration of the start of activity.

When to declare corporation tax?

The corporation tax must be calculated at the end of each financial year and then be declared to the tax authorities. This declaration must be sent by electronic sending via an EDI partner (electronic data exchange).

The date of this declaration will depend on the closing date of the accounting year:

• Fiscal year ended December 31 (N-1): declaration no later than the 2nd working day following May 1 of year N;
• Financial year ending between January and November: declaration within 3 months at the latest following the closing date of the financial year;
• In the event of cessation of activity, the deposit must be made within 60 days.

When to pay corporate tax?

Each year, companies subject to corporation tax (IS) must pay 4 installments no later than March 15, June 15, September 15 and December 15. Each of these installments must correspond to 1/4 of the overall corporate tax on the profits of the previous financial year.

To compensate for the discrepancy with the date of declaration of corporate tax, the 1st deposit will be calculated on the basis due before the last closed financial year. It will then be subject to regularization when the second deposit is paid.