French tax rules have a reputation for complexity that is, frankly, deserved. But the core numbers that affect most foreign-owned small and medium businesses are more straightforward than the reputation suggests, as long as someone lays them out clearly.
Corporate income tax (impôt sur les sociétés)
The standard corporate tax rate in France is 25%. However, small and medium-sized companies with turnover under €10 million benefit from a reduced rate of 15% on the first €42,500 of taxable profit each year, with the standard 25% applying above that threshold. For a company owned by its founders, this reduced-rate band is a real saving. A subsidiary of a foreign group often does not qualify, because there is a second condition on who holds the capital (see below).
VAT: what you need to register for and when
The standard VAT rate is 20%, with reduced rates of 10%, 5.5%, and 2.1% applying to specific categories of goods and services (books, certain food products, and other exceptions). If you are invoicing clients in France or across the EU, VAT registration is not optional once you cross the relevant thresholds, and getting it wrong retroactively is far more painful than registering correctly at the start.
The compliance calendar foreign owners underestimate
Unlike some jurisdictions where a single annual filing covers most obligations, France expects monthly or quarterly VAT returns, annual accounts filed with the tax authorities, payroll declarations if you employ anyone (even yourself, as a company officer, under certain structures), and corporate tax installments paid throughout the year rather than as one year-end bill. Missing any one of these does not just risk a fine. It can flag your file for closer review going forward.
Who really gets the 15% rate
The turnover limit is only one of two conditions. To use the 15% rate, a company must meet both:
- Turnover of €10,000,000 or less over the financial year
- Share capital fully paid up, and held for at least 75% by individuals (natural persons)
A company owned by another company can still qualify, but only if that parent is itself held for at least 75% by individuals. This matters for a French subsidiary of a foreign group. It also matters for a new company whose capital is only partly paid in at creation: the 15% rate is out of reach until the capital is paid in full.
When corporate tax is actually paid
Corporate tax is paid in four instalments, due by 15 March, 15 June, 15 September and 15 December. Each one equals a quarter of the tax paid on the previous year's profit and is declared on form 2571-SD. No instalment is due if the tax for the last closed year was under €3,000.
- The balance goes on form 2572-SD. For a year that ends on 31 December, it is due by 15 May of the next year. For other year ends, it is due by the 15th of the fourth month after closing.
- The yearly results return is form 2065-SD. For a 31 December year end, it is due by the second working day after 1 May. For other year ends, it is due within 3 months of closing. Filing online gives 15 more days.
The small-business VAT exemption and e-invoicing
A small business can be exempt from charging VAT under the "franchise en base" scheme. For 2026 the limits are unchanged: €85,000 of turnover in the previous year for sales of goods, and €37,500 for services.
Electronic invoicing started on 1 September 2026. The calendar is:
- Since 1 September 2026, every company must be able to receive electronic invoices.
- Large and mid-sized companies have had to issue them since the same date.
- Small and medium-sized companies and micro-businesses must issue them from 1 September 2027.
Invoices pass through an approved platform (plateforme agréée). The rule covers sales between VAT-registered companies established in France. Sales to consumers or to clients abroad are not invoiced this way. Their data is sent to the tax office instead, which is called e-reporting. A PDF sent by email does not count as an electronic invoice.
Where foreign owners actually lose money
In our experience, it is rarely the headline tax rate that costs foreign-owned companies money. It is missing the reduced-rate eligibility, misclassifying deductible expenses under French rules (which differ meaningfully from US, UK, or Gulf conventions), or discovering a VAT obligation only after a client or supplier flags it. None of this requires you to become a French tax expert. It requires someone qualified reviewing your setup before it becomes a filing.