French Corporate Tax Explained: What Foreign Company Owners Need to Know

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 most newly incorporated foreign subsidiaries and founder-led companies, this reduced-rate band matters — it is real savings, but only if your accounting is structured to claim it correctly from year one.

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.

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.

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