The CFE, or Cotisation Foncière des Entreprises, is the local tax paid by companies and individuals engaged in self-employed activities. Payment of this tax requires certain rules governing its calculation, such as the different tax brackets.
To help you better understand how the CFE calculation works, we've provided you with some essential information.
You may have noticed that the CFE tax is a regular topic of discussion in the entrepreneurial sphere. And with good reason: this tax can be difficult to understand, especially for administrative neophytes.
Don't panic, we'll explain everything!
In practical terms, the CFE is a substitute for the taxe professionnelle (business tax) and is paid in all communes where companies with self-employed activities are present. The CFE is calculated on the basis of the company's property subject to property tax , and also applies to self-employed entrepreneurs. In fact, self-employed entrepreneurs are also liable for CFE, except during their first year of business, when they benefit from a total exemption.
In certain specific cases, some businesses may be exempt from CFE. This applies to craft businesses, public authorities and press agencies. For the very first year of business, companies will be exempt from payment, as will those located in special zones (BER, QPPV and ZRD).
As mentioned above, the CFE has a tax base made up of the rental value of property subject to property tax. For these assets to be taken into account by the CFE, they must be at the disposal of the company concerned. In other words, the company must own or lease these assets.
The CFE is also linked to the commune where the company is physically located. As a result, there are fluctuations in the amount, whether you're in Paris, the suburbs or the regions.
Calculating it couldn't be easier!
CFE = Tax base x Rental value x CFE rate
Companies liable for CFE must pay a minimum amount, calculated by applying the tax rate set by the municipality to a minimum base. The minimum base is set by the municipal council, and is defined by six distinct tax brackets, based on the company's sales in N-2. To clear your head, there's nothing better than a concrete example! So, for the CFE due in 2020, we'll need to take into account the property subject to property tax for your company's business needs in 2018.
Here are the different sales brackets and associated CFE amounts for Paris, 93 and the Petite Couronne:
As you can see, the difference in CFE to be paid depends on the commune in which the company is located. In fact, the more companies there are in a given commune, the lower the CFE will be.
As Paris is a major business hub, the CFE applied is unquestionably one of the lowest in France.
So it's important to think carefully about where you set up and domicile your business, as the amount of your CFE depends on it!
Written by our expert Maeva Girardo
December 11, 2019
