Corporate Tax in France in 2026: Rates, Surtaxes, and What Foreign Subsidiaries Actually Pay

French corporate tax rates in 2026: the full picture

Corporate tax in France is the impôt sur les sociétés (IS). France applies a territorial system: only profits generated by a business activity in France are taxed, unlike the worldwide systems used in the United States or the United Kingdom.

For the 2026 financial year, French corporate income tax (IS) is structured around several rates and contributions.

• The standard IS rate stands at 25% and applies to all companies, on profits above the reduced-rate band.

• The reduced IS rate is set at 15%. It applies to the first 42,500 EUR of profit and benefits companies with revenue under 10 million EUR whose capital is at least 75% held by individuals.

• The social contribution (contribution sociale) amounts to 3.3% of the IS exceeding 763,000 EUR. It applies to companies with revenue above 7.63 million EUR and IS above 763,000 EUR.

• Finally, the exceptional contribution on large companies (CEBGE) is extended for 2026 by Article 12 of the 2026 Finance Law. The first threshold is raised to 1.5 billion EUR of revenue, with smoothing between 1.5 and 1.6 billion EUR. It applies to very large groups only.

Official reference: entreprendre.service-public.gouv.fr, corporate tax rates.

2 consequences that matter for planning:

The effective rate is the only number worth modelling. A company crossing the 763 000 EUR IS threshold pays more than 25%, mechanically. For groups, the statutory rate is a starting point, not a forecast.

The reduced 15% rate has a trap for group members. Following a Conseil d'État ruling of 13 March 2025, companies that are part of a group and applied the 15% rate incorrectly were given until 20 May 2026 to file corrective returns for 2023 and 2024 without penalties or late interest (DGFiP communication of 14 April 2026). If your French subsidiary is group-held and claimed the reduced rate, this is worth reviewing.

Who pays French corporate tax ?

A company is liable for IS in France if any of the following applies:

• It is incorporated in France (SAS, SARL, SA and similar forms)

• It has a permanent establishment in France: a fixed place of business, a branch, or a dependent agent with authority to conclude contracts

• It earns profits from French-sourced income within the scope of the territorial rules

Permanent establishment is where most foreign groups get caught. A home-working sales employee who negotiates and closes contracts on your behalf can create a PE, bringing corporate tax obligations you never registered for. We cover the payroll side of this exposure on our foreign employer payroll in France page.

How the taxable base is calculated ?

Taxable income is net accounting profit, adjusted for tax purposes:

Taxable profit = accounting profit + non-deductible expenses - deductible items - losses carried forward

The rules that shift the base most:

• Loss carryforward: indefinite, capped each year at 1 million EUR plus 50% of the taxable profit above 1 million EUR

• Loss carryback: one year only, capped at 1 million EUR

• Interest deduction: limited by thin capitalisation and the ATAD interest limitation rules

• Depreciation: French tax rules diverge from IFRS and US GAAP treatment, which is a recurring reconciliation item covered in our mapping and financial statement reconciliation method

Tax incentives in 2026: what survived the 2025 cuts

France still has one of the most generous R&D incentive regimes in Europe. It is smaller than it was, and guides written before 2025 overstate it.

Research tax credit (Crédit d'Impôt Recherche, CIR)

Governed by article 244 quater B of the General Tax Code.

• Rate: 30% of eligible R&D spend up to 100 million EUR, then 5% above. 50% in the overseas departments below the 100 million threshold.

• Immediate refund for SMEs (EU definition) and Jeunes Entreprises Innovantes. Other companies offset against IS and recover any unused balance after three years.

• Filed on form 2069-A-SD with the annual tax package.

Three cuts applied since 15 February 2025 and still in force in 2026:

• The flat-rate operating expenses allowance dropped from 43% to 40% of eligible personnel costs

• Patent costs (filing, maintenance, defence) and plant variety certificates were removed from the eligible base

• Technology watch expenditure (previously capped at 60 000 EUR) was removed

The jeune docteur regime, which doubled the salary base for newly recruited PhDs, was abolished in 2025. The 2026 Finance Law reintroduced a bonus in a different form, applying a 230% weighting to personnel costs for the first 24 months following a PhD holder's first permanent contract, for expenses incurred from 1 January 2026, subject to the research headcount not decreasing.

Net effect: for an identical project, the CIR calculated in 2026 is lower than in 2024. Budget accordingly. Official reference: economie.gouv.fr, research tax credit.

Innovation tax credit (Crédit d'Impôt Innovation, CII)

20% of eligible expenditure, capped at 400 000 EUR of expenditure per year, available to SMEs developing prototypes of new products. CIR and CII cannot be claimed on the same expenditure.

Jeune Entreprise Innovante (JEI)

The JEI status still exists, but the corporate tax exemption was withdrawn for companies created from 1 January 2024. Current JEI benefits centre on social security contribution exemptions for research staff and certain local tax exemptions. Any guide still promising an IS exemption under JEI is out of date.

Withholding tax on payments to the parent company

Dividends paid to a corporate shareholder are subject to a standard rate of 25%. However, this can be reduced to 0% under the EU Parent-Subsidiary Directive where the parent company holds at least 10% of the capital for two years; otherwise, treaty rates apply.

Interest payments are generally subject to a 0% rate in most cases, and are exempt (0%) under the EU Interest and Royalties Directive.

Royalties are subject to a standard rate of 25%, which may be reduced to between 0% and 10% depending on the applicable tax treaty.

France has more than 120 double tax treaties. The applicable rate depends on the specific treaty, the holding percentage, and beneficial ownership. Payments to entities in non-cooperative jurisdictions face a 75% rate.

The parent-subsidiary regime (régime mère-fille) exempts 95% of dividends received by a French parent from its subsidiary, leaving only a 5% share taxed. At the 25% IS rate, the effective tax on the dividend falls to roughly 1.25%. Conditions: at least 5% of the capital held, shares retained for two years.

French CFC rules: article 209 B

This is the anti-avoidance rule that catches internationally structured groups, and it is more aggressive than most equivalents in Europe.

Under article 209 B of the General Tax Code, a French company holding more than 50% of the shares or voting rights in an entity established in a low-tax jurisdiction is taxed in France on that entity's profits, as if they were its own.

The low-tax test: the foreign entity is considered to be in a low-tax jurisdiction if it is subject to tax at less than half the French corporate tax rate it would have paid on the same profits in France. With the rate at 25%, the effective threshold is 12.5%.

The main exemptions:

• EU and EEA entities: article 209 B does not apply unless the arrangement is an artificial one designed to circumvent French tax law

• Genuine economic activity: outside the EU, the rule is disapplied where the entity carries on an effective industrial or commercial activity in its jurisdiction

• Passive income test: an exemption applies where less than 20% of the foreign entity's profits come from passive income or intra-group services

For SaaS and IP-holding structures, the passive income test is the pressure point. Licensing revenue routed through a low-tax entity is exactly the pattern article 209 B targets. If your group holds IP outside France and licenses it to a French subsidiary, this needs a documented analysis, not an assumption.

Transfer pricing and reporting obligations

• Arm's length principle applies to all intra-group transactions

• Transfer pricing documentation is mandatory for companies with revenue or gross assets of at least 150 million EUR, following the 2024 Finance Law lowering the previous 400 million threshold. Documentation must be available on the day a tax audit begins

• Country-by-Country Reporting (CbCR) applies to groups with consolidated revenue above 750 million EUR

• Form 2257-SD, the simplified transfer pricing return, is due within six months of the corporate tax return deadline for companies meeting the thresholds

France applies OECD BEPS standards and, since 2024, the Pillar Two global minimum tax of 15% for groups above 750 million EUR of consolidated revenue.

Filing calendar and payment schedule

The annual corporate tax return (form 2065, filed with the liasse fiscale) must be submitted within 3 months of the financial year-end. For companies with a 31 December year-end, the deadline is the second business day after 1 May, extended by 15 days for electronic filing.

Instalment payments (acomptes) are made four times per year, on 15 March, 15 June, 15 September, and 15 December.

The balance payment (solde) is due on 15 May for a 31 December year-end.

The CIR claim (research tax credit, form 2069-A-SD) is filed with the annual tax package.

Finally, the transfer pricing return (form 2257-SD) must be filed within 6 months of the tax return deadline.

Instalments are calculated on the previous year's taxable result. A company in its first year of profit pays no instalments and settles the full amount at the balance date, which is a cash-flow point worth planning for.

Late filing triggers a 10% surcharge, rising to 40% where a formal notice goes unanswered for 30 days, plus 0.20% interest per month under article 1727 of the General Tax Code.

5 mistakes that cost foreign-owned subsidiaries the most

• Assuming 25% is the effective rate. The social contribution of 3.3% applies above 763 000 EUR of IS. Groups model the statutory rate and under-provision.

• Claiming the 15% reduced rate as a group subsidiary. The Conseil d'État ruling of 13 March 2025 tightened this. Companies that applied it incorrectly had a regularisation window to 20 May 2026.

• Budgeting the CIR at pre-2025 levels. With patent costs and technology watch removed and the operating allowance cut to 40%, the same project yields materially less credit.

• Ignoring article 209 B on IP structures. The 12.5% effective-rate threshold catches more structures than groups expect, especially where licensing income flows through a low-tax entity.

• Creating an unintended permanent establishment. A French-based employee with contract-signing authority can trigger corporate tax registration retroactively, with penalties.

How Vachon supports foreign-owned French subsidiaries ?

We prepare and file the corporate tax return, manage the instalment schedule, build and defend CIR and CII claims, document transfer pricing, and handle DGFiP audits. The work runs alongside the statutory accounts, the VAT filings, and the French GAAP to group GAAP reconciliation your parent needs.

One bilingual partner is accountable for the whole French tax position, and the reporting your group receives is built to be audited, not just filed. For the wider advisory perimeter, see our tax consulting in France page.

Get your French corporate tax position reviewed

If your French subsidiary's effective rate does not match your model, if your CIR claim was built on pre-2025 rules, or if your group structure has never been tested against article 209 B, a short review will tell you where you stand. We will look at your last filed return and your current structure, and give you a written assessment.