Starting a business in France is an exciting step — and understanding how your profits will be taxed is one of the most important parts of your planning. France’s tax system has evolved significantly in recent years, with simplified corporate tax rates, gradual phase-outs of older levies, and special incentives for small and medium-sized companies (SMEs). This guide gives you a clear, up-to-date overview of French corporate taxes in 2025 — written for entrepreneurs and international founders who want clarity, not complexity.
The Standard Corporate Tax (Impôt sur les Sociétés)
Since 1 January 2022, the standard corporate income tax (IS) in France has been set at a flat rate of 25%. This simplified structure applies to nearly all French-registered companies, regardless of size or industry.
Reduced Rate for Small and Medium-Sized Enterprises (SMEs)
Qualifying SMEs can benefit from a reduced rate of 15% on the first €42,500 of taxable profit, provided that:
– Annual turnover is below €10 million;
– At least 75% of share capital is owned by individual persons; and
– The share capital is fully paid up.
Any profit above €42,500 is taxed at the standard 25% rate. This incentive aims to help smaller companies reinvest more of their early profits back into growth.
The Local Business Tax (CET): CFE and CVAE
In addition to corporate income tax, companies in France are subject to a local business tax known as the Contribution Économique Territoriale (CET). It’s made up of two components:
1. CFE (Cotisation Foncière des Entreprises) – a property-based tax paid by every business with physical or virtual premises in France.
2. CVAE (Cotisation sur la Valeur Ajoutée des Entreprises) – a levy based on the company’s added value.
CVAE Phase-Out in Progress
The French government is gradually abolishing the CVAE between 2023 and 2030 as part of a broader effort to simplify business taxation. During this transition period:
– The CET cap (combined CFE + CVAE) is set at 1.438% of value added in 2025.
– The cap will decrease over time — 1.531% (2026–27), 1.438% (2028), 1.344% (2029).
– From 2030 onward, only the CFE will remain, capped at 1.25% of value added.
– An exceptional additional CVAE contribution applies in 2025 to help fund the transition.
These adjustments mean that, for most businesses, local taxes will continue to fall steadily over the coming years.
Dividends and Investment Income: The 30% Flat Tax
Dividends and investment income distributed to shareholders are typically subject to the Prélèvement Forfaitaire Unique (PFU) — France’s flat tax of 30%. This consists of:
– 12.8% income tax, and
– 17.2% social contributions.
Entrepreneurs may choose, if more favorable, to be taxed under the progressive income tax scale instead of the PFU.
Example: Tax Scenario for a French SME
Let’s imagine ParisTech Consulting SAS, an SME with annual turnover of €8 million and taxable profit of €100,000.
| Tax Type | Basis | Rate | Tax Due |
| Corporate Tax (15% rate) | First €42,500 | 15% | €6,375 |
| Corporate Tax (25% rate) | Remaining €57,500 | 25% | €14,375 |
| Total Corporate Tax | €20,750 |
If ParisTech owns an office in Paris, it will also pay CFE, and possibly CVAE, though these will gradually reduce under the phase-out plan.
Other French Business Taxes to Know
– VAT (TVA): Standard rate 20%; reduced rates 10%, 5.5%, and 2.1% for specific goods/services.
– Payroll taxes: Social contributions typically represent 40–45% of gross salaries.
– Withholding taxes: May apply on dividends or royalties paid to foreign shareholders, though treaties often reduce them.
Why France Remains Competitive
Despite perceptions of high taxation, France’s corporate environment has become far more attractive:
– A single 25% corporate tax rate simplifies planning.
– Generous R&D credits (CIR) make France a leader in innovation incentives.
– The CVAE phase-out lowers local tax burdens each year.
Combined with robust infrastructure and access to the EU market, France continues to draw entrepreneurs and investors from around the world.
Key Takeaways
| Topic | 2025 Update |
| Corporate Tax | 25% flat |
| SME Reduced Rate | 15% on first €42,500 (under €10M turnover, 75% individual ownership) |
| CVAE | Gradually abolished (2023–2030) |
| CFE Cap | 1.438% of value added in 2025 |
| Dividends / Investment Income | PFU 30% (12.8% + 17.2%) |
Need Local Guidance?
Setting up or expanding a company in France involves more than just tax rates — it’s about choosing the right structure, managing compliance, and planning for long-term success.
Companow’s English-speaking experts are here to help you understand your options and guide you through every step of starting and managing your French business.
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Disclaimer
This article is for informational purposes only and reflects French regulations in effect as of October 2025. Tax rules may change. For personalized advice, please consult a licensed French accountant or contact our team.