The CFE, or Cotisation Foncière des Entreprises, is a local tax paid by all forms of business. Although sometimes exempt, this tax can quickly become a significant burden for your business.
What is the CFE in concrete terms? How is it calculated? And above all, how can you avoid being taxed too heavily? Find out the answers to your questions in this article, as well as the tax advantages of domiciling your business in Paris!
The CFE is a local tax payable by companies and micro-businesses in the self-employed sector. It does not apply to craft businesses, public authorities or even certain press activities.
This tax is a substitute for the taxe professionnelle, and forms part of the CTE (Contribution Economique Territoriale), the other contribution being the CVAE (Cotisation sur la Valeur Ajoutée des Entreprises). The CFE is calculated on the basis of the company's property subject to property tax, in each commune where it has a physical presence.
New businesses are not subject to CFE in the year they are set up. Once this first year has elapsed, the company will benefit from a 50% rebate on the first year of taxation. To benefit from this reduction, don't forget to send the 1447-C-SD declaration to the tax authorities before December 31 of the calendar year of creation.
As we mentioned earlier, the CFE is a locally-set tax. Paris is renowned for being a concentrated breeding ground for companies of all kinds, enabling a rather minimal local tax compared with other French cities. For example, Saint-Ouen's CFE will be much higher than that of the capital.
Comparison of CFE between Paris and Saint-Ouen (93) :
To calculate the CFE, three essential data must be taken into account:
- The tax base
- Rental value
- The CFE rate
Before going into the details of the calculation, it is important to present the different pillars of this tax.
The tax base may vary according to the company's sales bracket. This is formed by the rental value of the company's property subject to property tax. It is important to note that these assets must be at the disposal of the taxpayer concerned to be included in the tax base. This rental value is calculated on the basis of the two years prior to the tax year (N-2).
The CFE rate is set either by the local authority, or by the public inter-municipal cooperation bodies. This rate is not set in stone, and can therefore change depending on the commune. If the company operates in several communes, it will have to pay CFE for each of them.
Calculating your CFE couldn't be simpler. Simply perform the following steps:
Tax base x Rental value x CFE rate
Calculation means payment! To do this, taxpayers must declare their tax base by May at the latest. Once you've received your dematerialized tax notice from your local council, you can opt to pay either by instalment or monthly. As the default payment is by instalment, you need to request a monthly payment if you wish to opt for this system.
This is why it's important to think carefully about your business address when setting up your company. Your choice will have consequences for the CFE, and therefore for your company's accounting. It makes more sense to set up your head office in a large city than in a small village. In France today, Paris is the city with the lowest CFE. If you can't afford to rent an office, think about business domiciliation! In just a few clicks, you can have an official address wherever you like. Don't hesitate, combine simplicity, cost reduction and security with online domiciliation in Paris!
Written by our expert Maeva Girardot
October 5, 2017
