How to calculate your CFE?

Who is affected by the cotisation foncière des entreprises?

The CFE applies to all companies and individuals carrying on a business in France, whatever their tax regime, sector of activity or legal status. This local tax does not apply to subleases or rentals of buildings used for residential purposes.

On the contrary, all bare real estate used for purposes other than housing, whether rented or sublet, is subject to the CFE. This is not the case if gross receipts do not exceed €100,000.

In other words, if a property is rented out, the owner pays the property tax. The individual tenant will pay the taxe d'habitation, while the professional tenant will pay the CFE. This is why furnished rentals (LMP and LMNP) are also subject to business property tax.

On the other hand, empty rentals are not subject to CFE, except when renting to a professional tenant. The CFE is a local tax payable by companies engaged in a professional activity. Empty rentals are not considered as a professional activity, unless they are rented to a professional tenant, thus transforming the rental into an economic activity subject to CFE.

What is the basic amount for the CFE?

The CFE is one of the taxes making up the Contribution Economique Territoriale (CET), which replaces the taxe professionnelle. The amount of this local tax is calculated on the basis of the company's taxable income and according to the rates set by each commune.

If the company's tax base is less than the amount defined by the municipality, the company must pay a minimum contribution. The value of the minimum CFE base may vary from year to year. Here is the proposed scale for 2023, for example:

There is a close link between domiciliation and CFE, as the rate of the contribution can be revised upwards or downwards depending on the model chosen by the company. If the company is a single establishment, the CFE is levied in the commune in which it carries out its taxable activity. If, on the other hand, the company has multiple establishments, the address of the main company is taken into account in setting the minimum CFE and in determining the place of payment of the tax. The address may, however, be different from that of the company's head office.

In particular, this can happen when a company prefers to domicile its main activity in a commune offering more favorable tax advantages or CFE rates, while maintaining its head office in another locality for strategic or logistical reasons.

How to calculate CFE?

The CFE is calculated according to this formula:

• rental value of business premises X municipal tax rate.

The amount of the tax base generally varies according to the physical characteristics and nature of the property. The amount is also influenced by local rental prices and the rate at which the company rents its premises. The amount of the cfe therefore depends on a large number of factors. 

If this value is too low, the amount of sales achieved by the company in the year before last (reference period N-2) will be used to make the calculation. This last option is applied to self-employed entrepreneurs or freelancers who do not use business premises for their activity.

In this case, to calculate your CFE in 2023, for example, you need to take into account your company's revenues or sales in 2022.

You can also use a free CFE calculator to quickly find out the amount of your business property tax.

What are the conditions for reducing the tax base?

It's possible tooptimize your CFE by reducing the tax base for the Cotisation Foncière des Entreprises. This is reduced to 50% for the year following the creation of the company, which has a direct impact on the amount of the CFE. Industrial establishments can also benefit from a 30% reduction in the tax base. Companies concerned therefore have the option of adjusting the amount of their CFE instalment in anticipation of this reduction. An exceptional margin of error of 20% is tolerated in this case.

Craftsmen with more than three employees can also benefit from a reduction of 25, 50 or 75%, depending on the number of employees. Companies based in Corsica are also entitled to a 25% rebate on their share of municipal taxes. Further reductions are possible, depending on the nature of the premises or equipment. If the facilities are to be used for pollution control, the rebate is set at 50%. The same applies to equipment designed to reduce energy consumption or noise. Once the property tax has been calculated, an additional tax representing 0.89% of the CFE amount must be added.

Finally, the CFE tax base can be reduced in proportion to the time spent in business, particularly for companies with seasonal activities. If your CFE tax base is incorrect, you can report it to a tax audit and expect your company to be reassessed in future years.

What are the CFE exemption conditions?

All new businesses benefit from CFE exemption for the year in which they are taken over or set up. The following people and organizations are also automatically and permanently exempt from the CFE:

• ambulance or cab drivers and VTCs under certain conditions,
• self-employed home salespeople with gross earnings of less than 7,259 euros,
• fishermen and small-scale fishing companies,
• craftsmen and manufacturers under certain conditions,
• workers' production cooperatives,
• press activities,
• nurses, midwives, health auxiliaries and doctors under certain conditions,
• athletes, authors, composers, translators, choreographers...

You can also benefit from a temporary CFE exemption if you set up your business in a priority urban district (QPPV) or an urban free zone (ZFU).