With the tax holiday set for July 27, thinking about the best ways to lower your tax rate is a necessary reflection. When we know that competitiveness depends on the ability to invest, a lower tax rate can go from bankruptcy to success.

So how do you go about it? There's no need to resort to tax havens, complex financial arrangements or the advice of a tax expert. The first point on which you can make savings is where you are domiciled, in order to influence your company's property tax (C.F.E.).

Explanations

What is the C.F.E.?

The Cotisation Foncière des Entreprises (C.F.E.) is a local tax introduced by the Finance Act of December 30, 2009. It is part of the territorial economic contribution (C.E.T.), which replaces the business tax. You can calculate your CFE using our free CFE simulator.

The C.E.T is composed of :

  • The C.F.E., which applies to property subject to property tax,
  • C.V.A.E. (cotisation sur la valeur ajoutée des entreprises).

The C.F.E. applies to all companies, including self-employed entrepreneurs, regardless of their place of business, legal status, type of activity or tax regime.

Understanding the C.F.E. in relation to company domiciliation

The C.F.E. is a local tax. The tax base is therefore established directly by the communes or public inter-communal cooperation establishments (E.P.C.I.) that have their own tax system. The tax rate, which depends on rental value, will therefore vary widely from one commune to another.

That's why choosing the right commune to live in can reduce your C.F.E. payments threefold.

CFE and domiciliation at the entrepreneur's home

When you decide to domicile a company in your home, you'll have to declare to the tax authorities the number of square meters you use to carry on your business. Based on this declaration, you will be subject to a certain C.F.E. rate.

If you work away from home, for example visiting patients or customers, you will still be subject to a flat-rate minimum contribution.

What is the minimum C.F.E. rate for your revenues?

The minimum flat-rate C.F.E. contribution is codified in article 1647 D of the French General Tax Code.

The low value of 224 euros never changes, while the high value is highly flexible for communes and E.P.C.I., and depends directly on the company's revenues.

Please note that if your company generates less than 5,000 euros in revenue, you will be exempt from paying the C.F.E. If your company is set up in 2023, you will benefit from this exemption in 2025 if your first year's sales do not reach 5,000 euros. However, you must file your declaration before January 1, 2024, i.e. before the first day of the year following the start of your business. You also need to do this to qualify for the first-year exemption.

There are two main business situations to be taken into account when paying the C.F.E. :

  • The single-establishment company,
  • The multiple-establishment company.

In the first case, that of a single establishment, this so-called "main" establishment will be charged a C.F.E. rate corresponding to the rate set by the commune in which it is domiciled.

In the second case, where the company has several premises, it is liable for the C.F.E. in each of the communes in which it owns premises or land.

Which CFE for your type of domiciliation?

When you choose to have your business domiciled with a domiciliation company, such as Sedomicilier.fr, your CFE rate will be calculated on the basis of the property rental value of the domiciliation address. However, as the tax authorities point out, no minimum contribution can be determined for the business address.

As a result, the C.F.E. will be calculated on the basis established by the E.P.C.I. in whose territory the company has dedicated business premises. The minimum contribution will therefore be that set at this address. So much for the general rule, but what about the exceptions?

The company only has a commercial address

If the company is domiciled in a domiciliation center, but has no other establishment, the value of the minimum contribution will be calculated at the domiciliation address.

More generally, the C.F.E. will be calculated on the basis of the rental value of the property attached to the domiciliation address, which the tax authorities consider to be the place where the business is carried on.

The company is domiciled at a personal address

When the company is domiciled at the address of the manager, a partner or the legal representative, the CFE base will be calculated at this address. The same applies to the company's minimum contribution.

As this type of domiciliation is often temporary, it should be noted that when a company chooses to be domiciled with a domiciliation company, it may be liable for CFE tax both at the place of domiciliation, and at the address of the residential premises, provided the company has premises or land there.

The entrepreneur or auto-entrepreneur is non-sedentary

Non-sedentary entrepreneurs or auto-entrepreneurs, i.e. traders operating on the public highway, must deposit a sum of money with their local tax office.

This deposit is a guarantee for tax collection purposes, and will give rise to the issue of a consignment receipt showing a business address. This address will be used to determine the C.F.E. tax base.

In the absence of this receipt, the tax authorities will rely on the principal place of residence of the entrepreneur or non-sedentary self-employed entrepreneur.

Foreign companies

In principle, foreign companies with no establishment in France are not liable for CFE. However, an exception to this rule applies to foreign companies offering real estate for sale or lease.

The latter will be taxed according to the address of the building.

Domiciliation in commercial premises

Many entrepreneurs who own their own commercial premises domicile their business there. They are therefore required to pay property tax on the premises. The question of whether the CFE applies in addition to the property tax is particularly pertinent.

The answer is yes. Even if the commercial premises are already subject to property tax, the CFE will also have to be paid on them.

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How to reduce your C.F.E.?

Cotisation foncière des entreprises is closely linked to the commune in which the company is domiciled, or to the EPCI to which this commune belongs.

Calculate your CFE in 2 minutes with our free CFE calculator. 

Consequently, choosing to domicile your business using the services of a domiciliation company can enable you to take advantage of the CFE base on which the address of the domiciliation company's premises depends.

Knowing that Paris has one of the lowest CFE rates in France, it may be a good idea to consider locating your business in the capital. Not only will you benefit from a prestigious address, but you'll also pay lower local taxes.

In some communes, you can even apply for an additional 3 years' exemption after your company has been set up. Expert advice is essential to optimize your choices in this area.