CFE and CVAE in France: What a Foreign-Owned Company Actually Owes, When to Pay and How to Challenge the Bill
Your French subsidiary has just received an avis de cotisation foncière des entreprises — a local business tax bill you never budgeted for — or your accountant mentions a second instalment of CVAE due on 15 September. For a founder based in London, New York or Dubai, these two French local taxes are usually invisible until the first notice arrives, and by then the deadlines are already running. The cotisation foncière des entreprises (CFE) is a property-based local tax charged on almost every business operating in France, including companies with no French-resident director. The cotisation sur la valeur ajoutée des entreprises (CVAE) is a second layer, charged on the value added produced by larger businesses. Together they form the contribution économique territoriale (CET), France’s local business tax, collected by the service des impôts des entreprises (SIE), the local business tax office, on behalf of municipalities. Both are governed by the Code général des impôts (CGI), the French tax code, and both follow strict calendars that a foreign founder cannot afford to discover late: a creation-year exemption that disappears the following year, a 50 per cent base reduction that applies only once, declaration duties triggered by crossing €152,500 of turnover, instalments on 15 June and 15 September, and a hard 31 December deadline to challenge any bill. This article sets out, first, what your company actually owes and how the amount is built (I), and second, the calendar, the reduction mechanisms and the challenge routes available when the bill looks wrong (II).
I. What the CFE and the CVAE actually charge a foreign-owned company
A. The CFE: a property-based local tax that starts with the creation-year exemption and ends with the municipal minimum
The CFE is due by virtually every business operating in France, whatever the nationality or residence of its shareholders and directors. Article 1447 of the CGI provides that the contribution is due each year by individuals and legal entities « qui exercent à titre habituel une activité professionnelle non salariée » — who habitually carry on a non-salaried professional activity. A SAS, a SARL or the French branch of a foreign parent company falls squarely within that definition from the day it is registered. The fact that the sole director lives abroad, that the company banks outside France or that its contracts are signed remotely changes nothing: the tax attaches to the activity carried on in France and to the premises used to carry it on.
The taxable base is not turnover and not profit. It is the rental value (valeur locative cadastrale) of the real property the company used for its activity during a reference period defined by article 1467 A of the CGI: « l’avant-dernière année précédant celle de l’imposition ou le dernier exercice de douze mois clos au cours de cette même année » — the penultimate year before the tax year, or the last twelve-month financial year closed during that year. In plain terms, your 2026 CFE bill is built on the premises you occupied in 2024. This two-year lag constantly surprises foreign founders: a company that moved offices in 2025 will still be taxed in 2026 on the basis of its former, sometimes larger, premises, unless the change has been correctly declared.
Two reliefs soften the first years. Under article 1478 II of the CGI, « en cas de création d’un établissement […] la cotisation foncière des entreprises n’est pas due pour l’année de la création » — no CFE is due for the year in which the establishment is created — and « la base du nouvel exploitant est réduite de moitié pour la première année d’imposition », the base is cut by half for the first year of taxation. A French company incorporated in November 2025 therefore receives no CFE bill for 2025, pays on a halved base for 2026, and pays in full only from 2027 onwards. The same article adds a point foreign buyers should note: the CFE is due for the whole year by whoever carries on the activity on 1 January (« la cotisation foncière des entreprises est due pour l’année entière par le redevable qui exerce l’activité le 1er janvier »). If you buy a French business on 2 January, the seller remains liable for the entire year’s CFE — a negotiation point for the share purchase agreement.
Where the company owns or rents no premises at all — the classic situation of a foreign founder using a domiciliation address or working from a coworking space — the CFE does not disappear. Article 1647 D of the CGI subjects every taxpayer to a minimum contribution established at the place of the principal establishment, on a base set by the municipal council within statutory bands: between €250 and €597 where turnover is €10,000 or less, rising to between €250 and €7,769 where turnover exceeds €500,000. Only businesses with turnover of €5,000 or less are exempt from this minimum. The practical consequence for a foreign-owned SAS is that its first CFE bill will almost always be the municipal minimum, whose amount depends entirely on where the registered office sits. Paris, Lyon and the small municipalities of the Paris region apply very different rates and bases, so two otherwise identical companies can receive first bills of €300 or of €2,500.
The rate itself is voted each year by the municipality or the inter-municipal body (EPCI) where the establishment is located, and applied to the rental value or the minimum base. A tax for chamber of commerce costs is added on top. None of this is deductible from the analysis by reference to a national scale: the only way to anticipate the amount is to identify the SIE of the registered office and ask for an estimate, or to check the previous occupant’s bills when taking over premises.
B. The CVAE: the value-added layer above €152,500 of turnover, with payment only above €500,000 and an abolition postponed to 2030
The CVAE is the second component of the CET, and the one foreign founders most often miss because it is driven by turnover thresholds rather than by premises. Under article 1586 ter of the CGI, individuals and legal entities carrying on an activity within the CFE scope « dont le chiffre d’affaires est supérieur à 152 500 € sont soumises à la cotisation sur la valeur ajoutée des entreprises » — are subject to the CVAE. This is first and foremost a declaration obligation: crossing €152,500 of turnover obliges the company to declare its value added and its headcount every year, even where no tax is ultimately paid.
The payment threshold is higher. Article 1586 quater of the CGI sets the rate scale: « pour les entreprises dont le chiffre d’affaires est inférieur à 500 000 €, le taux est nul » — the rate is zero below €500,000 of turnover. Between €500,000 and €3 million, the rate rises progressively according to the statutory formula « 0,094 % × (montant du chiffre d’affaires-500 000 €)/2 500 000 € », reaching a maximum of 0.28 per cent of value added for companies above €50 million. A €188 relief (« dégrèvement de 188 € ») applies to companies below €2 million of turnover. Two aggregation rules matter for foreign groups: where a company belongs to a group within the meaning of article 223 A of the CGI, the turnover of group members is added together to test the thresholds (article 1586 quater I bis), so a modest French subsidiary of a large foreign group can be dragged into CVAE liability by its parent’s scale; and the value added on which the rate is applied is a fiscal aggregate capped at 80 or 85 per cent of turnover, defined by article 1586 sexies of the same code.
The CVAE was supposed to disappear. Successive finance acts scheduled its abolition, first for 2027, but the 2025 Finance Act postponed the repeal, and the 2026 Finance Act confirmed the existing rates without change: the CVAE remains fully due in 2026 and 2027, is then phased down, and disappears only for taxes assessed from 2030. Foreign founders reading older blog posts announcing the end of the CVAE should disregard them — the tax is alive, and the French tax authority continues to assess instalments on it. The official trajectory is reflected in the tax authority’s own administrative doctrine on the CET cap (BOI-IF-CFE-40-30-20-30), which applies the 1.531 per cent ceiling rate for 2026 and 2027 precisely because the CVAE remains in force at those dates.
Concretely, for a foreign-owned company in its first profitable years, the sequence is usually the following: no CVAE at all in year one and two while turnover stays below €152,500; a declaration duty from the year turnover crosses €152,500, with nothing to pay below €500,000; and real cash cost once turnover approaches €500,000, with two instalments the following year. A SAS distributing consulting services and growing quickly can cross all three steps within thirty months, which is why the CVAE must be built into the French subsidiary’s budget from the first business plan, alongside corporate income tax and the VAT registration obligations that arise at the same growth stage.
II. The calendar, the reductions and the routes to challenge a CFE or CVAE bill
A. Declarations and deadlines: the 1447-C-SD return, the May declaration, the June and September instalments and the December payment
The CFE calendar starts with a declaration most foreign founders never hear about. Article 1477 of the CGI requires taxpayers to declare the elements used to establish the CFE. Where an establishment is created or an operator or activity changes during the year, « une déclaration provisoire doit être fournie avant le 1er janvier de l’année suivant celle de la création ou du changement » — a provisional return (form 1447-C-SD, now filed online) must be filed before 1 January of the year following the creation or change. The same article sets the general rule: elements must be declared « au plus tard le deuxième jour ouvré suivant le 1er mai » — no later than the second working day following 1 May — of the year preceding the taxation year. In practice this initial return is the document on which the SIE will compute the first halved base; a company that never files it exposes itself to ex officio taxation and loses control of the rental value used against it.
Payment of the CFE itself is made once a year, in mid-December, exclusively online for companies: the notice no longer arrives by post for professionals, it is issued in the company’s professional account on impots.gouv.fr. A company whose previous year’s CFE exceeded €3,000 must also pay a provisional instalment in June. Because the bill is only visible online, a foreign-owned company that has not activated its professional tax account — or whose notices are sent to the wrong address — can discover the debt only when a recovery letter arrives, with late-payment interest already running.
The CVAE follows its own rhythm for companies above the €500,000 payment threshold. When the CVAE paid for the previous year exceeded €1,500, the company must pay two instalments, on 15 June and 15 September of the tax year, each equal to 50 per cent of the previous year’s amount, and then settle the balance in May of the following year when filing the liquidation return (form 1329-DEF). The annual declaration of value added and headcount (form 1330-CVAE) travels with the corporate tax return filed in May — the same season as the annual accounts filing with the greffe and the corporate income tax instalments, which makes April and May the densest compliance window of the French corporate year. Every one of these steps — declarations, instalments, balance — is dematerialised: no paper, no exceptions for companies managed from abroad.
For a foreign founder, the practical calendar therefore looks like this: before 1 January of year two, file the 1447-C-SD return; in May, file the 1330-CVAE with the tax return if turnover exceeded €152,500; on 15 June and 15 September, pay the CVAE instalments if the previous CVAE exceeded €1,500; in mid-December, pay the CFE; and at any point, check the professional account on impots.gouv.fr rather than waiting for the post. Building these dates into the group’s central finance calendar, next to the corporate income tax deadlines of the branch or subsidiary, is the only reliable protection, because French local tax deadlines are not suspended by the taxpayer’s absence from France.
B. Reducing and challenging the bill: the CET cap, the 31 December claim deadline and the errors worth correcting
The first reduction route is not a challenge but a cap. Article 1647 B sexies of the CGI caps the sum of CFE and CVAE at a percentage of the value added produced by the company, and the tax authority’s published doctrine (BOI-IF-CFE-40-30-20-30) confirms the rate at 1.531 per cent for taxes assessed in 2026 and 2027, before it steps down to 1.438 per cent in 2028, 1.344 per cent in 2029 and 1.25 per cent from 2030, when the cap will apply to the CFE alone. The relief — a dégrèvement — is never automatic: it must be claimed with form 1327-CET within the general claim deadline, and it is credited against the CFE, without ever reducing the contribution below the municipal minimum. This mechanism typically benefits industrial or logistics companies whose premises carry heavy rental values relative to thin margins, but it is also relevant for a foreign group’s French warehouse or showroom. The doctrine is explicit: « le dégrèvement est accordé sur réclamation » — relief is granted only on claim.
Every other challenge follows the general contentious procedure of the Livre des procédures fiscales (LPF), the code governing tax procedure. Under article R*190-1 of the LPF, « le contribuable qui désire contester tout ou partie d’un impôt qui le concerne doit d’abord adresser une réclamation au service territorial […] dont dépend le lieu de l’imposition » — the taxpayer must first file a claim with the tax office of the place of taxation. This prior administrative claim is mandatory: going straight to court without it renders the action inadmissible. The deadline is fixed by article R*196-2 of the LPF: claims relating to local direct taxes « doivent être présentées à l’administration des impôts au plus tard le 31 décembre de l’année suivant » the year in which the assessment roll was issued, the collection notice notified or the payment made. For a 2026 CFE notice issued in the autumn of 2026, the claim deadline therefore expires on 31 December 2027. The comfortable delay should not induce procrastination: the claim suspends nothing by itself, and the tax remains payable unless a deferral of payment is requested and guaranteed.
Which errors are actually worth a claim? Experience with foreign-owned companies points to a recurring list. The rental value includes premises the company vacated more than two years ago, because the move was never declared under article 1477. The bill is established at the registered office although the actual establishment — and the competent SIE — is elsewhere. The halved base of the first taxation year under article 1478 II was ignored. The municipal minimum base was applied although premises do exist, or applied on a turnover band above the real one. The CVAE was computed without the group aggregation being checked, or without the €188 relief below €2 million. Each of these errors is correctable through the R*190-1 claim, supported by the lease, the exit inventory or the group chart, and each disappears if the 31 December deadline is missed.
Two habits close the loop. First, keep the 1447-C-SD return under version control like a contract: every office move, sublease or change of activity must trigger an updated declaration, because the reference period of article 1467 A makes today’s declaration the basis of the bill two years from now. Second, reconcile each autumn notice against the statutory markers before paying: creation-year exemption, halved first base, correct turnover band for the minimum, CVAE instalments consistent with the previous year’s liquidation. A company that performs this fifteen-minute review each year will either pay the right amount or hold the material for a well-founded claim — and will never again be surprised by the envelope from the SIE.
Conclusion
The CFE and the CVAE are not optional surprises of French business life: they are statutory local taxes with a creation-year exemption, a halved first base, a municipal minimum, turnover thresholds at €152,500 and €500,000, instalments in June and September, payment in December, and a hard 31 December deadline to challenge. For a foreign-owned company, the winning strategy is administrative, not heroic: file the 1447-C-SD before 1 January of the second year, activate and monitor the professional account on impots.gouv.fr, budget the CVAE as turnover approaches €500,000, test the CET cap when the premises weigh on the bill, and claim through the LPF procedure as soon as an error is identified rather than when recovery starts. Handled this way, the CET becomes a predictable cost line of the French operation instead of an annual ambush.
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