You live in London, New York, Dubai or Singapore, and the email from your French accountant ruins your week: your French subsidiary has closed its first profitable year, and France now wants its share. The message mentions impôt sur les sociétés, quarterly acomptes, a filing called relevé de solde, and a payment calendar that started months before you even knew the final profit. You wonder whether the 25 percent rate you read about really applies to you, whether the instalments already paid cover the bill, what happens to the losses of the first two years, and what you can do if the French tax office sends a reassessment while you are 6,000 kilometres away. This guide answers those questions in order. It explains how French corporate tax catches your company, how the reduced 15 percent rate works for small companies, how to pay on time from abroad without penalties, how losses and clean paperwork cut the bill, and how to challenge an assessment through a formal claim and the administrative courts without flying to Paris. The company formation path itself, the bank account, the Kbis extract, which is the official company identity document issued by the greffe, the clerk of the commercial court, and published in the BODACC, the official bulletin of civil and commercial announcements, is covered in our founding guide for foreign founders, and the yearly rhythm of meetings and filings is detailed in our annual legal calendar guide. Read this article with your latest balance sheet and your tax notices next to you, because every figure below translates into a deadline or an amount.
I. How much French corporate tax do you really owe, and when must you pay it from abroad?
French corporate tax looks simple from the outside: one rate, one return, one payment. In practice it is three questions asked at three different moments. First, does your company fall inside the tax at all, and on which profits. Second, which rate applies to those profits, 25 percent or the reduced 15 percent. Third, when and how the money leaves your account, because France collects the tax before the final figure is known and punishes late payers automatically. Foreign owners lose money on the third question far more often than on the first two, usually because nobody told them that instalments were due in March, June, September and December while the accountant was still closing the books. The sections below put the three questions in their legal order, with the exact texts.
A. How is your French profit taxed: who pays the IS, at 25 percent or 15 percent, and on which profits?
The impôt sur les sociétés, universally shortened to IS, is the French corporate income tax. It is administered by the direction générale des finances publiques, the DGFiP, which is the French public finances administration, and collected locally by your service des impôts des entreprises, the SIE, which is the business tax office your company depends on. The tax is defined in one sentence of the code général des impôts, the CGI, which is the French general tax code: article 205 of the CGI states that “Il est établi un impôt sur l’ensemble des bénéfices ou revenus réalisés par les sociétés et autres personnes morales désignées à l’article 206 . Cet impôt est désigné sous le nom d’impôt sur les sociétés.” In plain English, a tax is levied on all profits earned by the companies listed in article 206, and that tax is called corporate tax. If your French vehicle is a société par actions simplifiée, a SAS, which is the flexible joint-stock company most foreign founders choose, or a société à responsabilité limitée, a SARL, which is the limited liability company with stricter statutory rules, it is inside the tax by default. Article 206 of the CGI provides 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 n’ayant pas opté pour le régime fiscal des sociétés de personnes dans les conditions prévues au IV de l’article 3 du décret n° 55-594 du 20 mai 1955 modifié”, which means public limited companies, partnerships limited by shares and limited liability companies that have not elected for partnership taxation are liable whatever their business. A branch of your foreign company registered in France is also taxed here on its French-source profits, while a mere liaison office with no commercial activity is a different analysis that needs individual review.
Only French profits are taxed, but France reads that word broadly. Article 209 of the CGI provides that “les bénéfices passibles de l’impôt sur les sociétés sont déterminés d’après les règles fixées par les articles 34 à 45 , 53 A à 57 , 108 à 117 , 237 ter A et 302 septies A bis et en tenant compte uniquement des bénéfices réalisés dans les entreprises exploitées en France”, which means only profits earned by businesses operated in France enter the base, computed under the standard commercial-profit rules. Two consequences matter for a foreign group. First, the profits your parent earns abroad stay outside French IS, but every euro earned through the French team, the French warehouse, the French contracts or the French website operation sits inside it, and the boundary is policed through transfer pricing: dealings between your French subsidiary and its foreign parent must be priced as if the two were strangers, under article 57 of the CGI, which is expressly listed in the computation rules above. Management fees, royalties, intra-group loans and cost recharges without contracts, benchmarks or invoices are the classic adjustment material. Second, dividends your French subsidiary pays up to you are a separate question of withholding tax and treaty relief, not a deduction from the IS base: the IS is computed on the profit before distribution, and the distribution follows its own regime.
The headline rate is single and public. Article 219 of the CGI states that “Le taux normal de l’impôt est fixé à 25 %.” That 25 percent has applied to financial years opened since 1 January 2022, and it covers most foreign-owned subsidiaries, which rarely meet the small-company conditions. Taxable profit is rounded to the nearest euro, and one half counts as one. Before applying the rate, check the reduced rate, because it changes the first slice of every small profit. The same article 219 provides that “pour les redevables ayant réalisé un chiffre d’affaires n’excédant pas 10 millions d’euros au cours de l’exercice ou de la période d’imposition, ramené s’il y a lieu à douze mois, le taux de l’impôt applicable au bénéfice imposable est fixé, dans la limite de 42 500 € de bénéfice imposable par période de douze mois, à 25 % pour les exercices ouverts en 2001 et à 15 % pour les exercices ouverts à compter du 1er janvier 2002.” In practice, a company whose turnover does not exceed 10 million euros pays 15 percent on the first 42,500 euros of taxable profit for years opened since 2002, and 25 percent above. The condition on capital is strict: “Le capital des sociétés mentionnées au premier alinéa du présent b doit être entièrement libéré et détenu de manière continue pour 75 % au moins par des personnes physiques ou par une société répondant aux mêmes conditions dont le capital est détenu, pour 75 % au moins, par des personnes physiques.” Your capital must be fully paid up and continuously held at least 75 percent by individuals, directly or through a qualifying chain. A subsidiary wholly owned by a foreign corporate parent therefore fails the test and pays 25 percent from the first euro, which surprises many groups that assumed the small-business rate was automatic. For a group under the French tax-consolidation regime of article 223 A of the CGI, turnover is measured by adding up the members, so splitting activity across sister companies does not reopen the reduced rate.
Take three worked examples so the arithmetic is concrete. A French SAS owned 100 percent by your US holding earns 300,000 euros of taxable profit: no reduced rate, because the capital is held by a legal person, so IS equals 75,000 euros. The same SAS owned 80 percent by you as an individual and 20 percent by your spouse, with turnover of 2 million euros, earns 100,000 euros: 15 percent on 42,500 euros gives 6,375 euros, plus 25 percent on the remaining 57,500 euros gives 14,375 euros, for a total of 20,750 euros. A loss-making first year followed by a 2 million euro profit raises the carryforward question treated in Part II, and the answer is capped by law, not by optimism. Keep these mechanics in mind, because the payment calendar in the next section starts running long before you have agreed with your accountant which of these examples is yours.
B. How do you pay without a reminder: quarterly instalments, the balance, the filing date, and what a missed deadline really costs?
France does not wait for your final figure. It collects the IS in four instalments computed on last year’s profit, then settles the difference once the return is filed. Article 1668 of the CGI states that “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.” Each instalment is therefore a quarter of the theoretical tax on the last closed year, at the 25 percent rate, the reduced 15 percent slice and the patent-box slice of article 238 where relevant. The same article fixes dates that admit no negotiation: “Les paiements doivent être effectués au plus tard les 15 mars, 15 juin, 15 septembre et 15 décembre de chaque année.” Mark those four dates in every calendar your group uses, because the SIE computer issues penalties without a human reading your excuses. One relief exists for newcomers: “Les sociétés nouvellement créées ou nouvellement soumises, de plein droit ou sur option, à l’impôt sur les sociétés sont dispensées du versement d’acomptes au cours de leur premier exercice d’activité ou de leur première période d’imposition arrêtée conformément au deuxième alinéa du I de l’article 209 .” Your first year is exempt from instalments, but the second year is not, and the instalments of year two are computed on the first year’s profit, which means a profitable first year produces four heavy instalments in year two even if year two turns sour. Large companies face an extra squeeze on the December instalment, with a minimum top-up when turnover exceeds 250 million euros, at 95 percent of the estimated tax, or 1 billion euros, at 98 percent: thresholds your subsidiary will rarely hit, but your foreign parent’s group turnover is not the measure here, only the French company’s, aggregated with French tax-group members.
Instalments are advances, not the tax itself. After year-end you file the result return, form 2065 with its schedules, and pay the balance, the solde, or book the overpayment. Article 223 of the CGI provides that “la déclaration du bénéfice ou du déficit est faite dans les trois mois de la clôture de l’exercice. 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.” A 31 December year-end therefore means filing in early May, with the balance due on the same electronic timetable. Everything travels online through the espace professionnel on impots.gouv.fr, the business portal where returns are filed and payments are ordered by direct debit: paper cheques and foreign wire transfers sent at the last minute are how missed deadlines happen. If the year was worse than the last one, you may reduce or stop instalments under conditions, and the official guidance explains the modulation mechanics on the page on changing IS instalments and in the BOFiP commentary on provisional IS payments, the BOFiP being the official published commentary of the tax administration. Modulate only on documented forecasts, because underpaying instalments that turn out to be due attracts its own surcharge, and the administration checks the arithmetic after the return lands.
Missing a date costs two layers at once. First, interest for late payment starts running by operation of law. Article 1727 of the CGI states 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.” Interest is not negotiable and not waived for distance or ignorance of French. Second, a flat surcharge hits late payment itself. Article 1731 of the CGI provides that “Donne lieu à l’application d’une majoration de 5 % tout retard dans le paiement des sommes qui doivent être versées aux comptables de l’administration fiscale au titre des impositions autres que celles mentionnées à l’article 1730 .” Five percent of the amount paid late, plus running interest, plus, where the administration finds deliberate behaviour or abuse, higher penalties on reassessed tax: that is the price of a forgotten 15 December. The practical defence from abroad is boring and effective. Give your French accountant a standing direct-debit mandate on a funded French account, calendar the four instalment dates with a ten-day advance alert, never let the balance wait for a board meeting, and reconcile every SIE notice against your ledger the week it arrives. Companies that do this never meet the recovery department; companies that pay from the parent’s foreign account the day before the deadline meet it regularly.
II. How do you cut the bill lawfully and fight it when the tax office disagrees?
Paying on time protects you from penalties, but it does not mean accepting every figure the administration puts forward. Once the return is filed, two battles remain open: reducing the base before it becomes final, through losses, provisions and documented intra-group pricing, and contesting reassessments through the formal claim and the administrative courts. Foreign owners often abandon both battles, either because the French correspondence looks intimidating or because they assume distance makes defence impossible. The opposite is true. French tax procedure is written, reasoned and deadline-driven, which means a well-kept file defended from abroad beats a messy file defended in person. What follows is the lawful toolkit: what reduces the base, what proves it, and the exact path from a reassessment proposal to a judge.
A. How do losses, provisions and clean intra-group paperwork cut the bill before it becomes final?
Losses are your most valuable French tax asset, and the law lets you carry them forward without a time limit, but within an annual cap. Article 209 of the CGI provides that “en cas de déficit subi pendant un exercice, ce déficit est considéré comme une charge de l’exercice suivant et déduit du bénéfice réalisé pendant ledit exercice dans la limite d’un montant de 1 000 000 € majoré de 50 % du montant correspondant au bénéfice imposable dudit exercice excédant ce premier montant.” A loss is treated as a charge of the next year and deducted from that year’s profit up to 1 million euros plus 50 percent of the profit above 1 million. The unused remainder carries forward again on the same terms, year after year. Work it through: 3 million euros of accumulated start-up losses, then a 2.5 million euro profit. The cap equals 1 million plus 50 percent of 1.5 million, which is 1.75 million deductible this year, leaving 750,000 euros taxed at 25 percent and 1.25 million of losses still available for later years. A separate option, carry-back against the previous year’s profit under article 220 quinquies of the CGI, exists for one year back within a capped amount and generates a claim on the Treasury rather than an immediate refund: useful when the group needs a receivable, but the forward route above carries most of the value. Guard the losses like cash. A change of activity, a merger, or a transfer of the loss-making company can suspend or extinguish them without the prior ruling of article 1649 nonies where the law requires one, and the administration reviews loss carryforwards with particular attention during audits.
Beyond losses, the base is shaped by provisions, depreciation and charges that must each survive three questions: is the expense real, is it attached to this year, and is it proved. Provisions for doubtful receivables need individual debtor analysis, not a flat percentage. Stock write-downs need inventory records. Bonuses and directors’ fees need board minutes and actual payment. Foreign groups fail most often on intra-group charges, because the French auditor reads management fees from a parent with no staff, no timesheets and no deliverables as a disguised profit transfer. Since article 209 expressly computes taxable profit under articles that include article 57 of the CGI on abnormal transfers of profit abroad, every cross-border flow needs the arm’s-length file: a signed services agreement before the year starts, time records or deliverables during the year, a pricing method with comparables, and invoices paid on matching terms. Interest on a shareholder loan from the parent is deductible only within the statutory maximum rate and thin-capitalisation limits, and the loan agreement, the bank statements and the interest computation must sit in the file before the audit, not after. None of this is optional polish. In a vérification de comptabilité, the tax audit of accounts conducted on your premises or in the auditor’s office from your electronic records, the auditor proposes adjustments for every undocumented line, and each adjustment then carries tax, interest and penalties through the procedure described in the next section.
Build the proof file as the year unfolds, because French tax litigation is won on documents dated before the dispute. Keep the signed trial balance, the general ledger export, every material contract with its amendments, board minutes approving remuneration and regulated agreements, the transfer-pricing documentation with its benchmark update, loan agreements with interest calculations, and the correspondence with the SIE. Store them where your French adviser can produce them within days: an auditor’s request for documents usually carries a short deadline, and late or partial production colours the rest of the audit. Reconcile the VAT returns, the payroll declarations and the IS return against each other before filing, since cross-tax inconsistencies are how audits start. And when the return contains an uncertain position, disclose it expressly in the return or an annexed note, because a disclosed position documented in good faith can neutralise the interest for late payment on that item and frames any later discussion as interpretation rather than concealment. The companies that pay the least tax over five years are rarely the most aggressive; they are the best documented.
B. How do you challenge a reassessment from abroad: the reasoned proposal, the formal claim, the deadlines and the judge?
An audit ends with paper, not with a handshake, and that paper must obey strict form. When the administration wants more tax after an audit, it sends a proposition de rectification, a formal reassessment proposal, before any collection. Article L57 of the LPF, the livre des procédures fiscales, which is the code of tax procedures, states that “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 proposal must be reasoned so that you can reply or accept with full knowledge. You then have, as a rule, thirty days to answer, extendable by thirty more days on request made before the initial period expires, and your reply should contest each head of adjustment separately, with law, facts and exhibits for each. Silence counts as acceptance of the figures, and acceptance closes doors that stay open after a reasoned refusal, so never let the deadline pass while documents travel between time zones. Give your French counsel a standing instruction to request the extension the day the proposal arrives, and use the extra month to assemble the evidence, not to discover the problem. Published case law confirms that additional assessments are reviewed case by case by the courts, where taxpayers seek discharge of the extra charges, as illustrated by disputes reaching the administrative courts of appeal, for example CAA Bordeaux, 11 March 2021, No 19BX01465.
If the assessment is issued and put into collection despite your observations, the next step is the réclamation contentieuse, the formal claim to the administration that opens the road to court. Article L190 of the LPF gives the claim its scope: “Les réclamations relatives aux impôts, contributions, droits, taxes, redevances, soultes et pénalités de toute nature, établis ou recouvrés par les agents de l’administration, relèvent de la juridiction contentieuse lorsqu’elles tendent à obtenir soit la réparation d’erreurs commises dans l’assiette ou le calcul des impositions, soit le bénéfice d’un droit résultant d’une disposition législative ou réglementaire.” Errors in the base or the computation, or a right granted by statute or regulation, belong to the adversarial route that leads to a judge. The claim must be filed within a hard deadline. Article R*196-1 of the LPF provides that “Pour être recevables, les réclamations relatives aux impôts autres que les impôts directs locaux et les taxes annexes à ces impôts, doivent être présentées à l’administration au plus tard le 31 décembre de la deuxième année suivant celle, selon le cas :” followed by the triggering events, collection notice, payment, or the event giving rise to the claim. For IS, that is in practice 31 December of the second year after the tax was collected or paid. The official public guidance states the same deadline in plain terms on the service-public.fr page on tax claims and court appeals. Courts apply the deadline strictly, including where taxpayers seek reduction of an initial assessment, as shown for instance by CAA Nantes, 22 October 2020, No 18NT04231. File early, file complete, and keep proof of filing: a claim posted on 2 January for a 31 December deadline is dead whatever its merits.
After the claim, the administration has six months to answer; silence for six months is an implied rejection that you may take to court. The competent judge for IS disputes is the tribunal administratif, the TA, which is the first-level administrative court, and appeals go to the cour administrative d’appel, the CAA, with the Conseil d’État, the supreme administrative court, as the final review. Everything runs on written pleadings, which is why distance is no handicap: your Paris lawyer files the claim, the pleadings and the exhibits electronically, and you never need to attend a hearing for the case to be fully argued. Ask for a stay of payment, the sursis de paiement, when you file the claim if the amount threatens cash flow; with adequate guarantees the collector suspends enforcement while the dispute runs, though interest keeps accruing if you lose. Never pay the disputed amount late without the stay and never ignore the collection notices, the avis de mise en recouvrement and the enforcement steps that follow, because forced recovery against the French bank account continues in parallel with the dispute unless formally suspended. Set the sequence the day the proposal arrives: extension request, documented observations, formal claim before 31 December of the second year, stay of payment, then pleadings. Foreign owners who follow that chain recover assessments that looked final; those who answer informally by email from abroad, months late, fund them.
Conclusion
French corporate tax for a foreign-owned company follows a fixed chain, and each link has a date. First, confirm the base: your SAS or SARL pays IS on its French profits by default, at 25 percent from the first euro when a foreign company holds the capital, or 15 percent on the first 42,500 euros when individuals hold at least 75 percent of fully paid capital and turnover stays below 10 million euros. Second, pay before the final figure exists: four instalments on 15 March, 15 June, 15 September and 15 December computed on last year’s profit, with the first year exempt, then a filed return within three months of year-end, early May for a December closing, and the balance on the electronic timetable. Third, cut the base lawfully with carried-forward losses capped at 1 million euros plus half the excess, documented provisions, and arm’s-length intra-group pricing proved before any audit. Fourth, fight paper with paper: demand a reasoned reassessment proposal, answer each adjustment within the extended thirty days, file the formal claim no later than 31 December of the second year, secure a stay of payment, and plead in writing before the administrative courts. Interest and the 5 percent surcharge punish every missed step automatically, while each respected deadline preserves a remedy. Run the calendar, fund the direct debits, document the flows and challenge in writing: from abroad, that discipline is the whole difference between a subsidiary that funds its growth and one that funds its penalties.