You live in London, New York, Dubai or Singapore, and your French company — usually a SAS (société par actions simplifiée, the flexible joint-stock company most foreign founders choose) or a SARL (société à responsabilité limitée, the limited liability company with stricter statutory rules) — has just closed its first financial year. Sooner or later the same questions arrive: how much French corporate income tax does the company owe, when must it pay, what return must it file, and what happens if the French tax office disagrees with the figures? This guide answers those questions in English, step by step, for a business reader who manages a French company from abroad. It explains every French acronym as it goes: IS (impôt sur les sociétés, corporate income tax), CGI (Code général des impôts, the French Tax Code), LPF (Livre des procédures fiscales, the Tax Procedures Book), DRFiP (direction régionale des finances publiques, the regional tax authority), and CAA (cour administrative d’appel, the administrative court of appeal that hears most corporate tax disputes at second instance).

The logic of the French system is simple once stated plainly. A French company pays tax on the profits earned by its business operated in France, at a standard rate of 25%, through four advance payments during the year plus a final balance, and it reports everything on an annual company return. If the administration considers the return wrong, it must send a reasoned correction proposal, to which the company can reply before any additional assessment becomes final. Each of these stages has traps for a director who lives abroad: missed instalment dates, a return filed late, a correction proposal answered out of time, or books that cannot be produced from a foreign office. The sections below walk through what the company owes first, then how to handle a reassessment and defend the company from another country. Readers who are still choosing the vehicle itself may also want our companion guide on setting up a company in France as a foreign founder, from bank account and Kbis to VAT and first hire, which covers the registration steps that come before the first tax year.

I. Your French company pays corporate income tax on its French profits at 25%, through advances and an annual return

Before any calendar or payment method, two questions decide everything: is your company liable for French corporate income tax at all, and on which profits? French tax law answers both with short statutory rules, and the rest of this Part follows from them. Part A explains who pays and at what rate; Part B explains how the tax is paid and reported during the year.

A. Which companies pay IS and at what rate, including foreign-owned subsidiaries and branches

The starting point is Article 206 of the CGI, which states that “sont passibles de l’impôt sur les sociétés, quel que soit leur objet, les sociétés anonymes, les sociétés en commandite par actions, les sociétés à responsabilité limitée”, meaning that public limited companies (SA, société anonyme), partnerships limited by shares (SCA, société en commandite par actions) and limited liability companies (SARL) are liable for corporate income tax whatever their business purpose, subject to the detailed exceptions that follow in the same article (for instance the SARL that has validly opted for the partnerships tax regime). In practice, the foreign founder’s SAS is liable for IS as the default regime: the SAS pays tax on its own profits at the company level, and the foreign shareholder is then taxed separately on what it receives, such as dividends or a capital gain on sale, under the applicable treaty and domestic rules. That separation matters because newcomers sometimes assume that a French subsidiary with a foreign parent pays no French tax while its profits stay in France; the opposite is true, since the subsidiary is a French taxpayer in its own right from the day it starts operating.

The second boundary is territorial. Article 209 of the CGI provides that taxable profits are determined “en tenant compte uniquement des bénéfices réalisés dans les entreprises exploitées en France”, taking into account only the profits earned in businesses operated in France, plus certain listed categories of French-source income and profits attributed to France by a double-tax treaty. Concretely, a French subsidiary is taxed on the profits of its French business, while a foreign company without a French establishment is generally outside French corporate tax except on the specific French-source items the statute and the treaty assign to France. Between those poles sits the branch (succursale): a French branch of a foreign company is a taxable presence for the profits attached to the French operation, even though it is not a separate legal person. Founders choosing between a subsidiary and a branch therefore weigh more than liability and image; they weigh a distinct French taxpayer with its own return and advances against a taxable presence whose French profits are computed and audited locally all the same.

The rate itself is set by Article 219 of the CGI in one quoted sentence: “Le taux normal de l’impôt est fixé à 25 %.” The standard rate of the tax is fixed at 25%. That single rate applies to the taxable profit of the year, after the adjustments the Code requires between accounting profit and tax profit — non-deductible expenses added back, deductible items removed, loss carry-forwards applied where available. Special rates exist for narrowly defined items, such as certain long-term gains, but the working assumption for a trading subsidiary is 25% of its taxable result, and every advance payment and balance described below is computed from that base. A foreign director should therefore read any effective-rate surprise as a question of base, not of rate: the 25% rarely moves, while the taxable base moves with each adjustment the company or the auditor makes.

Three practical consequences follow for a company managed from abroad. First, the taxable profit is not the bank balance and not the parent company’s consolidated view; it is the French entity’s result as restated under French tax rules, so the French books must be complete, in French accounting format, and reconcilable with the return. Second, because the company is taxed where it operates, transfer prices with the foreign parent — management fees, royalties, intra-group services — are the first items an auditor examines, and each charge needs a contract, an invoice and evidence that the service was actually rendered at an arm’s length price. Third, the directors’ own tax position is separate: the company’s 25% does not settle the taxation of dividends or salary paid to a non-resident director, which follows its own withholding and treaty path. Keeping these three layers distinct — company profit, intra-group flows, personal taxation of the director — prevents most of the confusion this desk sees from founders who assumed one payment covered everything.

B. How the company pays during the year: four instalments, a balance, a return, and interest for late payment

French corporate income tax is not paid once a year after the return; it is paid in advance, in four instalments, with the return settling the balance. Article 1668 of the CGI states the principle in these terms: “L’impôt sur les sociétés donne lieu au versement, au comptable public compétent, d’acomptes trimestriels déterminés à partir des résultats du dernier exercice clos.” Corporate income tax gives rise to payment, to the competent public accountant, of quarterly instalments determined from the results of the last closed financial year. The same article fixes the calendar without ambiguity: “Les paiements doivent être effectués au plus tard les 15 mars, 15 juin, 15 septembre et 15 décembre de chaque année.” Payments must be made no later than 15 March, 15 June, 15 September and 15 December of each year. Each instalment is therefore computed from the previous year’s taxable result, and the company pays tax for the current year before that year’s profit is even known, which surprises founders used to systems where payment follows assessment.

Two reliefs soften that mechanism. Companies that are newly created or newly subject to corporate income tax are exempt from instalments during their first year of activity or first tax period, so a freshly registered SAS pays no advances in year one and settles its first year’s tax when it files. And where the expected current-year result is lower than the previous year’s, the company may, under conditions and at its risk, modulate or suspend instalments — a step that requires a careful estimate, because underpayment carries late-payment interest and possible penalties if the estimate proves wrong. The balance (solde) is then paid when the annual return is filed: if advances exceeded the final tax, the excess is refunded or credited; if they fell short, the company pays the difference. For a director abroad, the operational lesson is to calendarise four fixed dates that do not move with the company’s own year-end, and to keep the professional tax account (espace professionnel on impots.gouv.fr, the online account through which companies file and pay) funded and accessible to whoever actually clicks pay, since a missed instalment accrues interest automatically.

The return itself follows Article 223 of the CGI, which provides that “la déclaration du bénéfice ou du déficit est faite dans les trois mois de la clôture de l’exercice.” The declaration of profit or loss is made within three months of the end of the financial year. The same article adds the rule most companies actually use: “Si l’exercice est clos le 31 décembre ou si aucun exercice n’est clos au cours d’une année, la déclaration est à déposer au plus tard le deuxième jour ouvré suivant le 1er mai.” If the financial year ends on 31 December, or if no year ends during a calendar year, the return must be filed no later than the second working day after 1 May. In practice this is the company return form 2065 with its appendices (liasse fiscale, the bundle of financial statements and tax schedules attached to the return), filed electronically. A 31 December year-end therefore means a filing deadline in early May, while an off-calendar year-end means three months after closing — and a company that misses the deadline is exposed to the harshest procedure in the system, described in Part II.

Behind the return stands the bookkeeping duty, which many foreign directors underestimate because the French books live with a local accountant they rarely see. Article L123-12 of the Commercial Code states that “Toute personne physique ou morale ayant la qualité de commerçant doit procéder à l’enregistrement comptable des mouvements affectant le patrimoine de son entreprise.” Every individual or legal person with merchant status must record in accounts the movements affecting the assets of the business. It continues: “Elle doit établir des comptes annuels à la clôture de l’exercice au vu des enregistrements comptables et de l’inventaire.” It must draw up annual accounts at the end of the financial year on the basis of the accounting records and the inventory. The annual accounts (bilan, the balance sheet; compte de résultat, the profit and loss account; annexe, the notes) form an indivisible whole, and the tax return is built from them. A company whose records are incomplete, kept only in the parent’s foreign system, or impossible to produce during an audit starts every dispute with a handicap, as the case law in Part II shows.

Finally, late payment has a price that runs on its own. Article 1727 of the CGI provides that “Toute créance de nature fiscale, dont l’établissement ou le recouvrement incombe aux administrations fiscales, qui n’a pas été acquittée dans le délai légal donne lieu au versement d’un intérêt de retard.” Any tax claim whose assessment or collection falls to the tax administrations, and which has not been paid within the legal time limit, gives rise to payment of late-payment interest. Surcharges may be added on top where the Code so provides. Interest therefore accrues on a late instalment, a late balance, or additional tax after reassessment, regardless of good faith, and only the specific statutory exemptions — such as positions disclosed expressly with their legal reasoning on the return — can remove it. The message for a company run from abroad is blunt: diary the four instalment dates and the return date, pay through the professional account on time, and treat any notice proposing extra tax as the start of a formal procedure with its own deadlines, which is the subject of Part II.

II. When the tax office challenges the figures: correction proposals, proof, and defending the company from abroad

Most reassessments (redressements, the additional assessments issued after an audit) follow the same path: an audit, a formal correction proposal, a window for the company to reply, then assessment and collection, with review and court action available afterwards. The procedure is adversarial by statute, which means the company has real rights — but only if it uses them in time and with documents. Part A explains the correction procedure and the central role of evidence; Part B explains how to pay, dispute and appeal while the decision-makers live outside France.

A. The correction proposal you receive, the reply you must send, and why the books decide most cases

After an audit (vérification de comptabilité for a company, the on-site examination of the accounts, or examen de comptabilité from the office), the administration cannot simply bill extra tax; it must first send a reasoned correction proposal. Article L57 of the LPF states the guarantee in one sentence: “L’administration adresse au contribuable une proposition de rectification qui doit être motivée de manière à lui permettre de formuler ses observations ou de faire connaître son acceptation.” The administration sends the taxpayer a correction proposal which must be reasoned so as to allow the taxpayer to submit observations or to signify acceptance. That single sentence carries the whole defence strategy: the proposal must explain itself well enough that the company can answer it, and the answer — observations sent within the statutory period — is the moment to kill the reassessment before it becomes an assessment.

The courts give that guarantee teeth by spelling out what reasoning is enough. In a decision of 21 December 2023 (CAA Marseille, No. 22MA00881, full text on Légifrance), the court recalled that “l’administration doit indiquer au contribuable, dans la proposition de rectification, les motifs et le montant des rehaussements envisagés, leur fondement légal et la catégorie de revenus dans laquelle ils sont opérés, ainsi que les années d’imposition concernées.” The administration must state, in the correction proposal, the reasons and the amount of the envisaged increases, their legal basis and the category of income in which they are made, together with the tax years concerned. A proposal that merely asserts figures, cites no legal basis, or leaves the years unclear is therefore attackable for defective reasoning, and the court in that case examined precisely whether the proposal, together with the attached company-level proposal the manager had himself handed to the auditor, had given the taxpayers all the information the statute requires. For a foreign director, the checklist on receipt is immediate: does the letter state reasons, amounts, legal basis, income category and years, and does it identify the documents it relies on? Anything missing becomes a ground of challenge, and the reply should say so explicitly rather than arguing only the figures.

The reply itself follows a strict rhythm. The taxpayer has a short statutory period to submit observations or accept, and Article L57 adds that an extension of thirty days is granted where the taxpayer asks before the initial period expires under Article L11 — so the extension must be requested early, in writing, before the first deadline passes. A silence counts as acceptance in practice: without observations, the proposed corrections are assessed as notified. The reply should therefore be complete on day one — facts, law, figures, attached evidence — because later stages review what the file contains, and a bare denial with promises of documents to follow carries little weight. From abroad, this means organising immediately: confirm who receives the mail at the French registered office, who holds the books, and who signs the reply, since a correction proposal sent to a Paris address while the director is in another country still makes time run.

On substance, most corporate cases turn on proof, and proof turns on the books. The administration may reject accounts as non-probative (comptabilité non probante, books so irregular that they cannot be relied on) where it records concrete omissions and irregularities, and the consequences are severe because the burden of proof then shifts against the company. But the company’s best defence is symmetrical: complete, consistent records, filed returns and reconciled figures leave the administration to prove its own adjustments. The Paris court’s decision in the Paribâtiment matter (CAA Paris, No. 21PA00643, full text on Légifrance) shows the mirror image: the court found that the disputed assessments “résultent exclusivement d’une taxation d’office faute de dépôt de ses déclarations de résultats et de chiffre d’affaires dans les délais”, resulted exclusively from an ex officio assessment for failure to file its profit and turnover returns on time, so that the company “ne peut utilement critiquer le rejet de sa comptabilité comme non probante”, could not usefully challenge the rejection of its accounts as non-probative. In plain terms, a company that files nothing is assessed by the office (taxation d’office, the procedure by which the administration assesses tax without the taxpayer’s return), and complaints about the books then go nowhere. Filing on time, even an imperfect return later corrected, keeps the company inside the adversarial procedure where its evidence counts; filing nothing puts it outside, where the administration assesses alone.

Intra-group charges deserve special attention because they dominate audits of foreign-owned subsidiaries. Management fees from the parent, royalties for a brand or software, interest on a shareholder loan (compte courant d’associé, the current account through which a shareholder lends to the company): each must be supported by a written agreement signed before or when the charge arises, an invoice, proof of actual performance (reports, time records, deliverables, access logs), and a price consistent with what independent parties would agree. Bank statements alone prove payment, not service. Where the auditor disallows a charge for lack of evidence, the observations should attach the missing proof item by item, cross-referenced to the proposal’s paragraphs, and quantify the corrected base. General statements about group policy do not move an auditor; a dated contract, a monthly report and a matching invoice do.

B. Paying, disputing and appealing from abroad: notices, remedies, Paris procedure and the file that wins

When observations are rejected, the administration notifies a reply and then assesses the additional tax (avis de mise en recouvrement, the collection notice that makes the sum payable), and from that notice new deadlines run for challenge. The standard route is a formal claim to the tax authority (réclamation contentieuse, the written claim asking for discharge or reduction of the assessment), followed, if the claim fails expressly or by silence, by action before the administrative court (tribunal administratif, the first-instance administrative court), then appeal to the CAA and, on points of law, to the Conseil d’État. Each step has its own statutory time limit printed on the notice and in the Code, and missing a limit ends the dispute regardless of the merits — the single most common cause of lost cases for companies whose mail is read weeks late. The discipline from abroad is therefore postal and digital before it is legal: designate who opens French mail daily, connect the company’s professional account so notices and claims are tracked online, and diary every deadline from the date on the notice, not from the date the director happens to read it.

Payment and dispute run on parallel tracks, and confusing them is expensive. An assessment is payable even while disputed unless payment has been formally suspended, so the company must either pay and seek a refund later or apply in writing for suspension of payment pending the dispute (sursis de paiement) under the statutory conditions, and obtain written confirmation — never assume that filing a claim freezes collection. Meanwhile late-payment interest under Article 1727 of the CGI continues to accrue on sums that remain unpaid, which is why advisers often recommend paying the principal to stop interest while contesting the merits, or securing the claim with guarantees where the statute allows. For a director abroad, the cash question comes first in every reassessment meeting: how much is payable now, what stops interest, and what document proves the dispute suspends enforcement.

Companies based in Paris and the Île-de-France region (the Paris metropolitan region, whose companies answer to the Paris tax offices and courts) follow the same national procedure with local addresses that are worth knowing. Audits and collection are handled by the Paris services of the DRFiP, correspondence goes to the addresses on the notices, and first-instance appeals for a company with its registered office (siège social, the legal domicile shown on the Kbis, the official company identity certificate issued by the greffe, the commercial court registry) in Paris go to the Paris administrative court, with appeals to the Paris CAA whose decisions, like those cited in this article, are published on Légifrance. Practical Paris points for a non-resident director: keep a reliable French mailing address that is actually monitored, since service to the siège is valid even if the director is abroad; keep the books and supporting documents producible in France, since an auditor examines records here, not at the parent’s foreign office; and allow for in-person steps — an audit meeting, an expert valuation, a hearing — by giving a French-based representative a written mandate early. None of this changes the law, but in Paris files it often decides the timetable.

The file that wins, whether the dispute ends in negotiation or in court, is built long before the dispute. It contains the statutory core — articles of association, Kbis, returns with proof of filing, the full liasse fiscale for each disputed year, bank statements — plus the profit-and-proof layer the auditor will test: the general ledger and journals exportable in the statutory format, the sales listing reconciled to the declared turnover, purchase invoices matched to payments, employment records reconciled with the DSN (déclaration sociale nominative, the monthly payroll return) where wages affect the base, and the complete intra-group pack of contracts, invoices and performance evidence. It also contains the procedure layer: the correction proposal with its attachments, the observations with proof of sending, the reply to observations, the assessment notices, and the claim with its receipt. Assembled as one indexed bundle, this file lets the reply, the claim and any court pleading cite the same numbered exhibits — and it answers, in advance, the two questions every auditor and every judge asks: where is it written in the books, and where is the document that proves it. The statutory anchors of this whole system are short enough to keep on one page: liability in Article 206 of the CGI, territoriality in Article 209 of the CGI, the 25% rate in Article 219 of the CGI, instalments in Article 1668 of the CGI, the return in Article 223 of the CGI, late interest in Article 1727 of the CGI, bookkeeping in Article L123-12 of the Commercial Code, and the reasoned proposal in Article L57 of the LPF.

Conclusion

A French subsidiary or branch managed from abroad lives under a compact set of duties: it pays corporate income tax on its French profits at the standard 25% rate, through instalments on 15 March, 15 June, 15 September and 15 December with a balance on filing, and it reports on the company return within three months of year-end — early May for a 31 December close. Complete books kept in France turn those duties into routine; missing returns or unproven charges turn them into ex officio assessments that courts will not undo. And where the administration proposes corrections, the statute guarantees a reasoned proposal and a real right of reply, with review and court action afterwards for a company that meets each deadline and documents each figure. Run the calendar, keep the proof in France, and answer every proposal in time and in writing: that is how a foreign founder keeps French corporate tax a managed cost rather than a crisis.