- Tax Returns.
A corporate income tax return with all its appropriate schedules must be filed within a period of three months following the close of each fiscal year; if no fiscal year ended during a calendar year, a return must be filed for the preceding calendar year on or before April 30 regardless of the number of months of operation during such year. The tax return must be signed by a duly authorized representative of the company and filed with the local tax office or electronically.
The form on which a corporate taxpayer must report its income is Form No. 2065 N. It must be filed with the following schedules on the appropriate forms: a balance sheet (Forms Nos. 2050 N and 2051 N), an operating statement (Forms Nos. 2052 N and 2053 N), a schedule of fixed assets (Form No. 2054 N), a schedule of depreciation (Form No. 2055 N), a schedule of reserves (Form No. 2056 N), a schedule setting forth its credits and debits as at the end of the fiscal year (Form No. 2057 N), a schedule setting forth the method used to determine its tax profit or loss for the fiscal year (Form No. 2058 AN), a schedule of losses and non-deductible reserves (Form No. 2058 BN), a schedule setting forth certain miscellaneous information (Form No. 2058 CN) and schedules of capital gains and losses (Form Nos. 2059 AN, 2059 BN and 2059 CN). In addition, the following documents must also be enclosed with the tax return: a list of general overhead expenses (Form No. 2067), a memorandum setting forth certain information relating to certain reserves, copies of the minutes of the Board of Directors and Shareholders Meetings at which the corporate financial statements were approved and any distributions made to the shareholders were authorized and finally, a schedule setting forth certain information relating to automobiles owned by the company (Form No. 2075).
Failure to file a tax return or the late filing thereof may be sanctioned by a unilateral reassessment of taxable income and/or by fines and penalties for late filing.
During the three calendar years subsequent to the financial year of taxation, the tax authorities may request supplemental information from the taxpayer or third parties or proceed with a full tax audit.
- Rates of Tax.
The normal tax rate imposed on the net taxable income of companies subject to corporate income tax is 33.33 percent. Long-term capital gains realized upon the disposition of most fixed capital assets are no longer subject to a reduced tax rate but rather are subject to the normal 33.33 percent rate. Taxpayers subject to corporate income tax are also liable for a special 3.3 percent social contribution which is equal to 3.3 percent of the corporate income tax due by the taxpayer on its tax results less 763,000 euros.
Not-For-Profit Associations are subject to corporate income tax on the income generated by their capital, other than dividends paid on French stocks and interest paid on French bonds and certain negotiable debt instruments at a reduced rate of 24 percent. Where a Not-For-Profit Association carries out profit-making activities in a manner similar to commercial enterprises, it is subject to corporate income tax upon the same terms and conditions as a commercial enterprise. If, however, the income earned from such profit-making activities is less than 38,120 euros per year, the de facto or de jure managers do not have a financial stake in the not-for-profit association and the non-profit-making activities remain preponderant, such income is not subject to corporate income tax (CGI, art. 206(1 bis)).
- Minimum Tax
All companies subject to French corporate income tax are subject to an annual minimum corporate income tax (referred to as “IFA”). There are several exceptions to this general rule. First, newly incorporated companies, fifty percent of the capital of which is contributed in cash, are exempt from such minimum corporate income tax during their first three taxable years). Second, certain newly created industrial, commercial or artisanal firms created between January 1, 1995 and December 31, 2009 are exempt from one hundred percent of such minimum corporate income tax from the date of their creation until the end of the twenty-third month following the month during which they were created; said exemption is reduced to seventy-five percent, fifty percent and twenty-five percent respectively, for the first, second and third twelve-month periods following the aforesaid period of total exemption. Firms may only benefit from these provisions if they are established in special geographic zones. Third, companies created to take over an industrial enterprise undergoing economic difficulties are until December 31, 2013 exempt from one hundred percent of such minimum corporate income tax from the date of their creation until the end of the twenty-third month following the month in which they were created. Fourth, companies which are the subject of liquidation in bankruptcy proceedings are exempt from such minimum corporate income tax. Fifth, young innovative enterprises (jeunes entreprises innovantes “JEI”) conducting research and development are exempt from such minimum corporate tax for as long as they qualify as a JEI. Sixth, enterprises established in certain urban areas are exempt from 100 percent of such minimum corporate tax for the first 60 months following their establishment, and then 60 percent, 40 percent and 20 percent of such minimum corporate tax for the first, second and third 12-month periods following the period of total exclusion. Seventh, enterprises established in a research and development zone and which participate in an approved research and development project are exempt from the minimum corporate tax for as long as they qualify for the corporate tax exclusion, but no more than five years. Eighth, enterprises whose business activities are conducted exclusively in areas needing to further develop employment are exempt from the minimum corporate tax for 84 months.