Companies in France are subject to various tax obligations, including the CFE (cotisation foncière des entreprises). You've just set up your business and you're liable for your first CFE (cotisation foncière des entreprises) tax? Find out here what you need to know to estimate your CFE.

CFE payments: which companies are concerned?

All companies and individuals engaged in self-employed, non-salaried professional activities are liable for the CFE. As such, this property tax even concerns auto-entrepreneurs, who generally benefit from lighter taxation. It affects all companies in business on January 1ᵉʳ of the tax year. Some companies, however, benefit from an exemption.

Exemption from business property tax

Company founders

When you set up a new business, you automatically benefit from an exemption from business property tax. This exemption applies only to the year in which the business is created. And it is automatic.

Companies in the agricultural sector

Companies engaged in agricultural activities benefit from CFE tax exemption. Activities covered by this tax exemption include :

  • agriculture ;
  • forestry ;
  • animal husbandry (fish farming, poultry farming, oyster farming, etc.);
  • donkey and/or horse training ;
  • running an equestrian center.

Exemptions do not apply to agricultural activities carried out on behalf of a third party. Ancillary activities carried out in parallel are also exempt. For example, the operator of a riding school offering accommodation and catering services will not benefit from the exemption. The same applies to a company carrying out agricultural work on behalf of a third party.

Craftsmen

These are self-employed craftsmen or those with EURL status who do not work with large-scale resources. They include, but are not limited to, those who work with apprentices under contract or with disabled workers. Those who benefit from this exemption also include those who work alone or with family labor. Cooperatives of craftsmen, ambulance drivers, cab drivers and fishermen are also among the beneficiaries of this exemption.

Single-site companies (under certain conditions)

Single-establishment companies are entitled to exemption from the minimum contribution under certain conditions. To qualify, sales must not exceed €5,000.

  • Private schools under certain conditions
  • A selection of non-commercial activities

Certain professionals working in the fields ofart, health andeducation are exempt from paying the CFE. These professionals include :

- young lawyers ;
- professional athletes;
- professionals who sell only the production of their art (artists, engravers, art photographers, painters, sculptors);
- songwriters, lyrical and dramatic artists;
- nurses and midwives;
- hobby art teachers, science teachers and literature teachers.

  • A selection of industrial and commercial activities

Most of these arepublishing, home sales andrental activities. The trades and activities concerned include :

- all approved press agencies;
- all periodical publishers;
- rental of bare real estate generating sales of less than 100,000 euros excluding tax;
- rental of bare buildings intended exclusively for residential use;
- all activities carried out in priority development zones or urban areas in need of revitalization;
- VDIs (independent door-to-door salespeople);
- Scops (production cooperatives).

It is important to note that Scops and independent door-to-door salespeople are only exempt under certain conditions. These include Scops in which more than half the capital is held by holders of cooperative certificates. The same applies to Scops in which non-cooperative partners hold more than 50% of the capital. Similarly, all VDIs earning more than 16.5% of the annual social security ceiling are not eligible for exemption.

There is also a link between company domiciliation and CFE. By virtue of this link, companies located in certain zones can benefit from an optional CFE exemption.

 

How is the CFE calculated?

Basic criteria

The calculation of the CFE base is based on the rental value of the real estate used by the company. Not just any real estate. These properties are liable for property tax, and must have been used by the company in the course of its business. In addition, the estimated rental value of real estate is based on a reference period of N-2. This means that when calculating CFE for 2023, for example, the reference period will be 2021.

It may be that the rental value of the real estate is very low, or that the company has no premises at all. In such cases, the company will have to pay a minimum assessment. The amount of this flat-rate assessment is set by the commune or EPCI. It is determined on the basis of sales in N-2, and the scale is adjusted annually.

The rental value of real estate is not the only basic criterion. As an entrepreneur, you can benefit from a reduction in the tax base in certain situations. This reduction applies in 5 cases.

  • New contractor

As a new entrepreneur, your CFE base is halved during your second year of business.

  • Press distributor

This activity automatically entitles you to a reduction in CFE tax.

  • Seasonal activities

The reduction is subject to certain conditions. It is reserved in particular for spa operators, restaurants and cafés, and nightclubs. Gambling establishments, entertainment venues and companies running seasonal tourist hotels are also eligible.

  • You are a craftsman with up to 3 employees.

The reductions you can claim range from 25% to 75%. They depend on the number of employees you have.

  • Setting up a business in Corsica

Setting up a business in Corsica entitles you to a 25% rebate on taxes payable to local authorities.

 

The CFE calculation itself

To find the amount of CFE you owe, multiply theCFE base by the tax rate. If your company benefits from a reduction in the tax base, apply the rate to which you are entitled in your calculations. To these figures, add the additional tax intended to finance the activities of chambers of commerce and industry. This tax is equivalent to 0.89% of the CFE amount.

To make things easier for you, we've developed a free CFE calculator. 

When and how to pay CFE?

Payment of the CFE is due by December 15 of each year. There is, however, a special requirement for companies whose CFE exceeds 3,000 euros. Entrepreneurs in this situation are required to pay at least 50% of the CFE during the year. This payment must be made before June 15.

There are three payment options for CFE. These options are linked to the method of payment of this tax. These choices must be made during the current year.

  • Companies wishing to opt for direct debit must make their choice before November 30.
  • Those wishing to opt for a monthly direct debit must do so before June 30.
  • The final option is direct online payment. Entrepreneurs who have opted for this option must pay their CFE on their impots.gouv space before December 15.

New entrepreneurs are exempt from CFE in the year their business is created. However, they must file a CFE declaration before January 1ᵉʳ of the year following the creation of their business.

Each company receives its CFE notice in November. If you have several establishments in different communes, you will receive a notice for each establishment. To avoid falling foul of the law, remember to notify us of any head office transfers. The same applies to the creation of secondary establishments.

CFE and CVAE: how are they linked?

The CVAE (Cotisation sur la Valeur Ajoutée des Entreprises) is the second component of the territorial economic contribution (CET). It is paid at the same time as the CFE. It is calculated on the basis of the company's added value and the effective tax rate. To find your CVAE, multiply your company's added value by your tax rate. But that's not all. You will also need to add an additional tax to these figures. This has a rate of 1.73%. Only after taking this into account will you know the total cost of your CVAE.

CFE: why domicile your company in Paris?

Paris is one of the most expensive cities in France. But contrary to what you might think, this city has the cheapest CFE. This is due to the high concentration of businesses in the city. In fact, the tax rate in a commune is inversely proportional to the number of businesses located there. If you want to benefit from a low CFE, choose Paris as your company's headquarters.

For your company to be domiciled in Paris, you don't need to rent premises on a grand scale. All you need to do is use a domiciliation company. Thanks to these professionals, you can transfer your registered office to Paris without any hassle. Note that savings on CFE will not be your only benefit. By domiciling your company in Paris, you'll have the advantage of a prestigious address. You'll also gain credibility with your customers and business partners.