You formed a company in France, you run it from London, New York, Dubai or Singapore, and the first profitable year is closing. Sooner or later the same question lands in your inbox: how does French corporate tax work when the director lives abroad, when does the money leave the account, what return has to be filed, and what happens if a deadline slips while you are thousands of kilometres away. This guide answers those questions in one place. It is written for the foreign founder and the foreign parent company, it explains every French acronym as it goes, and every decisive rule below is quoted from the statute or the court decision that states it, with a link to the official text so you can check it yourself.<\/p>\n
French corporate tax is called impot sur les societes, usually shortened to IS. It is the tax a French company pays on its own annual profit, at a headline rate of 25 percent, through a system of four advance payments during the year called acomptes, followed by a return and a final balance called the releve de solde. The company pays it itself, from its French bank account, on the French tax calendar, whether its shareholders and directors live in Paris or on another continent. Distance changes nothing about the due dates, but it changes everything about organisation: the notices arrive in French, the online accounts require French identifiers, and the penalties for a missed filing apply exactly as they would to a company whose director sits next to the accountant. The companion walkthrough that covers the whole creation sequence, from the blocked capital to the Kbis extract (the official company identity card issued by the greffe, the registry office of the commercial court), the VAT number and the first hire, is the natural starting point if you have not read it yet, and this article takes over exactly where it stops: setting up a company in France as a foreign founder, from bank account to Kbis, VAT and first hire<\/a>. Read together, the two pieces cover the birth of the company and the first full tax cycle of its life.<\/p>\n The starting point is simple: a French company is taxed in France because it is French, not because its owner lives in France. The general tax code, the Code general des impots universally shortened to CGI, states that “sont passibles de l’imp\u00f4t sur les soci\u00e9t\u00e9s, quel que soit leur objet, les soci\u00e9t\u00e9s anonymes, les soci\u00e9t\u00e9s en commandite par actions, les soci\u00e9t\u00e9s \u00e0 responsabilit\u00e9 limit\u00e9e n’ayant pas opt\u00e9 pour le r\u00e9gime fiscal des soci\u00e9t\u00e9s de personnes” (article 206 of the Code general des impots<\/a>). In plain English, public limited companies (SA, societe anonyme), simplified joint-stock companies (SAS, societe par actions simplifiee, which follows the SA regime for tax purposes), and limited liability companies (SARL, societe a responsabilite limitee) are liable for corporate tax whatever their business is, unless they have validly chosen the partnership tax regime. If you incorporated a SAS or a SARL through the one-stop shop, the Guichet unique run by the INPI (the Institut national de la propriete industrielle, the French intellectual property and business formalities office), your company entered this regime automatically on the day of its registration, and your residence abroad does not move that liability one millimetre.<\/p>\n Two frequent misunderstandings deserve to be cleared up immediately. First, the fact that the shareholders are foreign, that the capital came from abroad, or that the customers are outside France does not exempt the French company. Territoriality in French corporate tax turns on where the business is operated, and a company registered with a French registered office (siege social), filing French accounts and holding a French SIREN number (the unique identification number issued by INSEE, the national statistics institute), is a French taxpayer for its profits. Second, losses do not cancel the compliance calendar: a company that makes no profit still has to file, still has to keep books, and still has to be ready to prove its deficit, because a deficit carried forward is a tax asset the administration can examine later. The accounting duty itself is not a tax rule but a commercial one: “Elle doit \u00e9tablir des comptes annuels \u00e0 la cl\u00f4ture de l’exercice au vu des enregistrements comptables et de l’inventaire” (article L. 123-12 of the Commercial Code<\/a>). Every merchant, individual or company, must record movements chronologically, check assets and liabilities by inventory at least once every twelve months, and draw up annual accounts comprising the balance sheet, the profit and loss account and the notes, which form an inseparable whole. From abroad, this means one practical obligation above all: keep a French chartered accountant (expert-comptable) who closes the books on time, because every tax deadline below runs from the closing date of the financial year (exercice) that only proper accounts can establish.<\/p>\n The branch of a foreign company, called a succursale, is a halfway case worth one paragraph. A branch has no legal personality of its own: it is the foreign company acting in France. It is taxed in France on the profit attributable to its French activity, it must keep accounts that isolate that activity, and it files in France, but the assessment technically attaches to the foreign head office through the branch. A subsidiary (filiale), by contrast, is a fully French company owned by a foreign parent: it is taxed exactly like a company owned by French residents, it distributes dividends under French withholding rules, and its director’s foreign residence changes nothing about its obligations. Most foreign founders who intend to stay and grow choose the subsidiary, usually a SAS, and accept the full French compliance calendar in exchange for limited liability and a clean separation of assets. That calendar is the subject of the rest of this article, and its first line is the rate.<\/p>\n The headline is one short sentence of statute: “Le taux normal de l’imp\u00f4t est fix\u00e9 \u00e0 25 %” (article 219 of the Code general des impots<\/a>). The normal rate of corporate tax is set at 25 percent. It applies to the taxable profit (benefice imposable), which is the accounting profit corrected by tax rules: some charges are added back, some deductions are capped, and some income follows special rates. A foreign director should understand three corrections that surprise newcomers. Client entertainment, fines and penalties of any kind are never deductible. Interest paid to related parties, typically to the foreign parent that lent money to the French subsidiary, is deductible only within caps and rates set by statute, and the excess is added back to taxable profit. And provisions, the accounting reserves for doubtful debts or future litigation, are deductible only if the loss is precisely identified and probable at the closing date, a point the tax courts police strictly, as the litigation section below shows. None of this requires you to become a tax technician; it requires you to send every material contract, loan and dispute to your accountant before the year closes, not after, because corrections made after closing are corrections made too late.<\/p>\n In cash terms, 25 percent means that a company earning 100,000 euros of taxable profit owes 25,000 euros of corporate tax for the year, before social contributions on distributed profits and before any withholding on dividends paid to the foreign shareholder, which are separate layers. Small companies benefit from a reduced 15 percent rate on the first 42,500 euros of profit when their turnover stays below 10 million euros and their capital is held mostly by individuals, a relief worth knowing but one whose conditions must be checked year by year rather than assumed. Long-term capital gains on qualifying participations follow their own special rates under the same article 219, which is why the sale of shares in a subsidiary is a transaction to plan with advice, not to improvise. The point of this article is not to optimise the base but to make the payment mechanics fail-safe from abroad, so keep one number in mind as you read on: every euro of taxable profit costs the company twenty-five cents of tax, payable in five movements, four advances and one balance, on dates the statute fixes to the day.<\/p>\n One more cost habit to build early: corporate tax is only one of the French levies on a company, and foreigners sometimes confuse it with the others. VAT (TVA, taxe sur la valeur ajoutee) is collected on sales and reclaimed on purchases; it is the company’s customers and suppliers who economically bear it, and it follows its own returns. The territorial economic contribution (CFE, cotisation fonciere des entreprises, with its companion CVAE now being phased out) is a local business tax due every year even without profit, with its own December deadline. Social charges on salaries are collected by URSSAF (the Unions de recouvrement des cotisations de securite sociale et d’allocations familiales, the social security collection agencies) on their own monthly or quarterly rhythm. Corporate tax sits on top of none of these and replaces none of them; it is the annual tax on the profit that remains after all of them have been accounted for. Missing any one of these calendars triggers its own penalties, which is why the foreign director’s real job is not to master each tax but to make sure each tax has an owner, a date and a payment method before the year starts.<\/p>\n French corporate tax is not paid once a year after the return; it is prepaid in four instalments and settled afterwards. The statute provides that “L’imp\u00f4t sur les soci\u00e9t\u00e9s donne lieu au versement, au comptable public comp\u00e9tent, d’acomptes trimestriels d\u00e9termin\u00e9s \u00e0 partir des r\u00e9sultats du dernier exercice clos” (article 1668 of the Code general des impots<\/a>). Corporate tax gives rise to quarterly advance payments to the competent public accountant, calculated from the results of the last closed financial year. The same article fixes the payment dates without ambiguity: “Les paiements doivent \u00eatre effectu\u00e9s au plus tard les 15 mars, 15 juin, 15 septembre et 15 d\u00e9cembre de chaque ann\u00e9e” (article 1668 of the Code general des impots<\/a>). Payments must be made no later than 15 March, 15 June, 15 September and 15 December of each year. Each instalment is roughly one quarter of the tax computed on the previous year’s result, and the total of the four is set against the final tax for the current year when the return is filed. If the advances exceed the final tax, the excess is refunded or carried forward; if they fall short, the company pays the balance with the return. For a founder living abroad, the practical translation is blunt: four direct debits or wire transfers must leave a funded French account on four fixed dates, and the person who checks that the account is funded cannot be someone who discovers the deadline the day before.<\/p>\n The first year of existence is the one exception, and it is generous: “Les soci\u00e9t\u00e9s nouvellement cr\u00e9\u00e9es ou nouvellement soumises, de plein droit ou sur option, \u00e0 l’imp\u00f4t sur les soci\u00e9t\u00e9s sont dispens\u00e9es du versement d’acomptes au cours de leur premier exercice d’activit\u00e9” (article 1668 of the Code general des impots<\/a>). Newly created companies are exempt from advance payments during their first financial year. The whole first-year tax is therefore paid in one balance with the first return, which helps cash flow at the exact moment the company is also funding its capital deposit, its lease guarantee and its first salaries. From the second year on, the ordinary rhythm applies automatically, and a profitable first year mechanically produces large advances in the second, a cash shock that surprises many foreign founders who assumed the tax would wait for the return. The defence is a forecast: as soon as the first year’s profit becomes visible, provision the second year’s four instalments in the treasury plan, and consider modulating them downwards if the current year is clearly turning worse, a procedure the online tax account allows under conditions your accountant knows.<\/p>\n The return itself follows the closing of the accounts. The statute requires that “la d\u00e9claration du b\u00e9n\u00e9fice ou du d\u00e9ficit est faite dans les trois mois de la cl\u00f4ture de l’exercice” (article 223 of the Code general des impots<\/a>). The declaration of profit or deficit is made within three months of the closing of the financial year. The same article adds the rule most companies actually live under: “Si l’exercice est clos le 31 d\u00e9cembre ou si aucun exercice n’est clos au cours d’une ann\u00e9e, la d\u00e9claration est \u00e0 d\u00e9poser au plus tard le deuxi\u00e8me jour ouvr\u00e9 suivant le 1er mai” (article 223 of the Code general des impots<\/a>). If the year closes on 31 December, the return must be filed no later than the second working day after 1 May. In practice this is the familiar early-May deadline, filed electronically as form 2065 with its appendices, together with the financial statements, and it is the return that computes the final tax and the balance due after crediting the four advances. Everything is filed and paid online through the company’s espace professionnel on impots.gouv.fr (the official portal of the French tax administration, the Direction generale des finances publiques), which means the foreign director needs working login credentials, a French bank account configured for SEPA direct debit (prelevement SEPA), and a person mandated to click before the deadline, because a return prepared but not transmitted is a return not filed.<\/p>\n Late payment, even by days, has a price that runs automatically. The statute provides that “Le taux de l’int\u00e9r\u00eat de retard est de 0,20 % par mois” (article 1727 of the Code general des impots<\/a>). The late-payment interest rate is 0.20 percent per month. The same article fixes the computation period: “L’int\u00e9r\u00eat de retard est calcul\u00e9 \u00e0 compter du premier jour du mois suivant celui au cours duquel l’imp\u00f4t devait \u00eatre acquitt\u00e9 jusqu’au dernier jour du mois du paiement” (article 1727 of the Code general des impots<\/a>). Interest runs from the first day of the month following the month the tax should have been paid until the last day of the month of payment. At 0.20 percent per month, a 25,000 euro balance paid three months late costs 150 euros of interest, which looks modest until the surcharges below are added, and until the same delay repeats on advances, VAT and social charges in parallel. Interest is not a penalty for bad faith; it is the automatic price of time, and it runs even when the delay was an honest mistake, a bank rejection or an accountant’s oversight. The only reliable protection is a calendar with alerts set one month, one week and one day before each of the five annual movements, held by two people, one of whom can pay.<\/p>\n Failing to file the corporate tax return is treated more severely than paying late, and the machinery is designed to force the taxpayer back into compliance. The Livre des procedures fiscales, the LPF (the code of tax procedure that governs audits, assessments and disputes), provides for automatic assessment: “\u00e0 l’imp\u00f4t sur les soci\u00e9t\u00e9s, les personnes morales passibles de cet imp\u00f4t qui n’ont pas d\u00e9pos\u00e9 dans le d\u00e9lai l\u00e9gal leur d\u00e9claration” are taxed automatically (“Sont taxes d’office”) (article L. 66 of the Livre des procedures fiscales<\/a>). Companies liable for corporate tax that have not filed their return within the legal deadline are assessed automatically. Taxation d’office, automatic assessment, means the administration computes the tax itself from the information it holds, without the taxpayer’s return, and the taxpayer who wants to contest must then prove the assessment is excessive, a reversal of the burden of proof that makes disputes painful. Before that stage, the administration sends a formal demand (mise en demeure) by registered letter, and the surcharge scale that follows is mechanical. The statute punishes “Le d\u00e9faut de production dans les d\u00e9lais prescrits d’une d\u00e9claration” with a surcharge of 10 percent without a formal demand or with filing within thirty days of it, and 40 percent when the return is still not filed thirty days after the demand (article 1728 of the Code general des impots<\/a>). An 80 percent surcharge applies where a hidden activity (activite occulte) is discovered, the situation of a company operating without ever registering or declaring, which a foreign-run company must never allow itself to approach.<\/p>\n The courts apply this scale without sentiment, and a Paris case every foreign director should know shows why organisation beats excuses. A service company, SARL 6eme Sens, filed its corporate tax return for the year ended 31 May 2013 only on 15 May 2015, more than thirty days after receiving a formal demand on 18 July 2014, and the administration applied the 40 percent surcharge. The administrative court of appeal confirmed: “L’administration \u00e9tait d\u00e8s lors fond\u00e9e \u00e0 appliquer \u00e0 l’imposition litigieuse la majoration de 40 % pr\u00e9vue au b du 1 de l’article 1728 du code g\u00e9n\u00e9ral des imp\u00f4ts, sa bonne foi all\u00e9gu\u00e9e \u00e9tant sans incidence sur le bien-fond\u00e9 de la p\u00e9nalit\u00e9 contest\u00e9e” (CAA Paris, 24 November 2020, no. 19PA00931<\/a>). The administration was therefore entitled to apply the 40 percent surcharge, and the company’s alleged good faith had no bearing on the validity of the penalty. Two lessons follow for a director living abroad. First, good faith does not erase the surcharge: neither distance, nor a change of accountant, nor ignorance of French wakes the administration’s mercy, because the penalty attaches to the objective fact of late filing after a demand. Second, the same judgment upheld the rejection of a provision for a doubtful debt because the circumstances making the loss probable had to be assessed at the closing date, not with later documents, which confirms that tax evidence is frozen at year-end and that post-closing justifications rarely save a deduction. File on time, close cleanly, document at closing: the whole strategy fits in one sentence.<\/p>\n The administration’s power to look back is bounded, and the boundary is three years. The procedure code states: “Pour l’imp\u00f4t sur le revenu et l’imp\u00f4t sur les soci\u00e9t\u00e9s, le droit de reprise de l’administration des imp\u00f4ts s’exerce jusqu’\u00e0 la fin de la troisi\u00e8me ann\u00e9e qui suit celle au titre de laquelle l’imposition est due” (article L. 169 of the Livre des procedures fiscales<\/a>). For corporate tax, the administration’s right to reassess runs until the end of the third year following the year for which the tax is due. The same article extends the window to ten years where the taxpayer carries on a hidden activity or receives distributions from a company that does, which is the legal reason never to let registration, filing or disclosure lapse: compliance buys the short limitation period, and opacity buys the long one. Within the three-year window the administration may audit the accounts (verification de comptabilite), issue a proposed rectification (proposition de rectification) that the company can answer within thirty days, and then assess additional tax with interest and surcharges. From abroad, the thirty-day answer period is the dangerous one: the letter arrives at the French registered office or in the online account, the director is travelling, and silence at this stage becomes consent in practice. The fix is procedural, not legal: designate a French address that is actually read, activate electronic notification, and instruct the accountant in writing that every administrative letter is forwarded within forty-eight hours with a proposed reply.<\/p>\nI. Your French Company Owes Corporate Tax: Who Pays and What the 25 Percent Rate Means<\/h2>\n
A. Which companies are liable for French corporate tax when the owner lives abroad<\/h3>\n
B. The 25 percent rate: what profit it applies to and what it costs in practice<\/h3>\n
II. Paying and Filing Corporate Tax From Abroad: Deadlines, Interest and How to Challenge<\/h2>\n
A. Advance payments, tax return and balance: the dates that trigger interest when missed<\/h3>\n
B. Late filing, reassessment and penalties: the three-year window and your defences from abroad<\/h3>\n