France

Corporate taxation

The corporate tax rate in France is

2013 33.33%
2014 33.33%
2015 33.33%
2016 33.30%
2017 33.33%
2018 33.00%
2019 31.00%
2020 28.00%
2021 26.50%

A social surcharge of 3.3% applies to companies with a corporate income tax liability exceeding EUR 763,000. A reduced rate applies to the first EUR 75,000 of taxable income of small and medium-sized companies with turnover of less than EUR 50 million.

Special corporate tax incentives

The French Patents and royalties regime allows companies paying French corporation tax to pay a reduced rate of 15% (instead of 26.5%) on patent and royalties income as they are treated as a long term capital gain. If the licensee is a French corporation and actually uses the qualified IP licensed, the licensee may deduct the royalty payments from its income taxable at the standard 26.5% rate even if the licensor is taxed at the reduced 15% rate.

Transfer pricing

The following main statutory rules regulates transfer pricing:
Section 57 of the French tax code (CGI – Code Général des Impôts).
The concept of acte anormal de gestion (an abnormal act of management) also allows the FTA to deny tax deduction for expenses which are not related to normal acts of management or could not be deemed to have been incurred for the benefit of the business. The courts decide whether this concept applies by comparing the commercial practices of the company under review with what they judge to be ‘normal’ acts of management.
Sections L 13 AA, L 13 AB and L 13 B of the tax procedure code, which set out transfer pricing documentation requirements.
Section L 188 A of the tax procedure code.

Links

Transfer Pricing Case Law

Case NameDescriptionDateCountriesKeywords