France Tax Law

8/4/2019 France Tax Law

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NAME: GURPREET SINGH

MT NO: 7310016


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Government Tax Authority

Taxes On Income

Taxes On Expenditure

Taxes On AssestsLocal Direct Taxes

List Of Some Double Tax Treaty Countries

The Tax Structure


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In France, taxes are levied by the government, and collected by the public administrations.

French "public administrations" are made up of three different institutions.The central government

local governments , which include agencies with limited territorial jurisdiction.Social security association (ASSO) private organizations endowed with a mission of publicservice.

Structure of the taxationby administration.Structure of the taxation in France bysources in 2008


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There are four categories of income tax in France :

CORPORATION TAX.

PERSONAL INCOME TAX.SOCIAL LEVIES.

PAYROLL TAXES.


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Corporation tax is a tax, in principle payable annually, on all profits generatedin France by companies and other legal entities

The Standard Rate Of 33% For All Their Activities

joint-stock and simplified joint-stock corporations (SA and SAS), limited liabilitycompanies (SARL), partnerships limited by shares and, in certain cases,cooperative companies. A 3.3% social surcharge also applies when the globalcorporate income tax charge exceeds EUR 763,000, yielding an overall effectivecorporate tax rate of 34.43%At The Reduced Rates: Public bodies like public establishments and corporations under localauthority control and private bodies like associations and foundations pay

taxes on reduce rates . Such bodies are liable to corporation tax under special rules on certainincome they derive from their assets (income from real property, agriculturalprofits, certain investment income). The applicable rate is 24%, or 10% forcertain investment income, such as income from bonds. A body that does not carry on an activity for profit but receives income from

its assets is liable to corporation tax at the reduced rates


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General Rules For Determining Profits companies liable tocorporation tax must include all existing receivables and liabilities atthe end of a period in the calculation of their taxable profit .Profit liable to corporation tax is determined according to the

results of operations of all types carried out by the enterprise,including disposals of assets .The tax base therefore broadlycorresponds to the difference between net balance sheet assets atthe start and end of the period, minus contributions, pluswithdrawals made by members or shareholders during the period.

Calculating The Taxable Profit The taxable profit is equal to thedifference between the gross operating profit and incidentalincome, on the one hand, and deductible costs and expenses, onthe other hand.


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Business Profits;

Professional Profits;

Agricultural Profits;

Income From Real Property;

Wages, Salaries, Pensions And Annuities;

Income From Capital Assets;

Capital Gains.A. TAXABLE PERSONS Under Article 4 A CGI, individuals domiciled in France are taxable on all their

income of French or foreign origin. Persons not domiciled in France are taxable only on their incomefrom French sources.

1 Domicile for tax purposes Tax household rule Under Article 4 B CGI, persons are deemed to bedomiciled for tax purposes in France if:

Their Home Is In FranceTheir Main Place Of Abode Is In France

They Carry On A Professional Activity In France, Salaried Or Not, Unless They Can Prove That It Is ASecondary ActivityThey Have The Centre Of Their Economic Interests In France.

They Live regular More Than 183 Days In France


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Band of Value 2011 Rate of Tax

%

Less than 5,963 0.0

5,963 to 11,896 5.50

11,896 to 26,420 14.00

26,420 to 70,830 30.00

70,830 Above all 40.00

Before applying the above scale rates the total household'staxable income is divided by the number of family shares exp

marital status, number of children or dependent.

2 Tax treatment of persons domiciled in France Regardless of their nationality, personsdomiciled for tax purposes in France are taxable on their worldwide income3 Tax treatment of persons not domiciled in France Regardless of their nationality,persons not domiciled in France are taxable in France on their income from French sourcesonly if.

Pensions And AnnuitiesIncome From Real Property Situated In

France Or From Rights Relating To SuchProperty.

Income From Business Concerns SituatedIn France Including Salaries, In ConsiderationOf Artistic Or Sporting Performances GivenOr Used In France

All Income Derived From Industrial OrCommercial Property And Similar Rights

France has higher income tax not attractive for companies and individual


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GENERAL SOCIAL SECURITY CONTRIBUTION (CSG)The general social security contribution,which came into force on 1 February 1991, is a levy with a social purpose.

The CSG tax base is very wide, since it is levied in principle on earned income, substitution income,income from personal assets and income from investments in fixed-income securities subject towithholding tax or exempt from income tax .

II SOCIAL SECURITY DEBT REPAYMENT CONTRIBUTION (CRDS) The CRDS, which cameinto force on 1 February 1996, is intended to clear the deficits of the social security system. Likethe CSG, it is payable by individuals who are domiciled in France for tax purposes and, whereearned or substitution income is concerned, who contribute in any capacity whatsoever to aFrench compulsory health insurance scheme.

III - SOCIAL LEVY AND OTHER ADDITIONAL LEVIESIndividuals domiciled in France for taxpurposes are liable to a 2% social levy, introduced in 1998, on income from personal assets and

investment income. The proceeds are allocated to the old-age solidarity fund, the nationalretirement pension fund and the pension reserve fund.

Act 2008-1249 of 1 December 2008 generalizing the earned-income supplement and reformingintegration policies introduced a new 1.1% additional contribution to the 2% social levy on incomefrom personal assets and investment income, intended to fund the earned-income supplement(revenue de solidarities active, RSA)


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Base Social levy on

foreignearnings*

CSG(1) CRDS PS & extra

charges

Total

Investment and rental income property andinvestment gains (4) (on the net taxableincome declared for income tax)

8.20% 0.50% 3.60%(2.2%+ 1.4%)

12.30%

Salaries and unemployment benefits (on97% of the gross amounts received)

7.50% 0.50% 0.00% 8.00%

Retirement or Disability Pensions taxable inFrance (2)

6.60% 0.50% 0.00% 7.10%

Foreign salaries 5.50% - - - 5.50%

Foreign professional earnings (3) 2.40% up to(est.) 34,8229.60%from 34,822 to 174,113

- - -Variable


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The main payroll taxes are the wage tax, the apprenticeship tax and employers' contributions to the development of continuous vocational training and to construction.The wage tax is payable by employers established in France

who are not liable to VAT or were not liable to VAT on at least90% of their previous year's turnover.

The taxpayers are mainly banks and insurance companies , themedical and paramedical sector, associations and other non-profit bodies.


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Taxes on expenditure are levied on household and business consumption and investment .Taxes on expenditure traditionally took the form of indirect consumption duties andcustoms duties. There are two types of expenditure taxes .Value added tax In order to create a single market between EU Member States, a number of VAT directives have been issued since 1967 which Member States have had to transposeinto their domestic law. FRENCH VAT RATES : The standard VAT rate in France is 19.6%. There is a reduced rate of 5.5% for: food & drink; books; passenger transport; and other. There is also a 2.1% VAT ratefor goods from chemists and some newspapers.

FRENCH VAT REGISTRATIONForeign companies may register in France for VAT without theneed to form a local company know as non-resident VAT trading. There is no VAT thresholdin France for the registration of non-resident traders a VAT number must be in placebefore the commencement of taxable supplies. Common scenarios which require a FrenchVAT registration include:Importing goods into France;Organizing live events, conferences etc in France;

Holding goods in a warehouse in France as stock for resale longer than 3 months;'Supply and install' services over 12 months;Selling goods from France to other EU countries; andDistance selling to private individuals, e.g. internet retailing.


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EXCISE DUTYThe harmonization relates to energy products, alcoholicproducts and tobacco products. The new system was transposed intoFrench law as of 1 January 1993 .The alcoholic beverages Beer :Minimum excise duty in EU is 1.87 EUR per hl/degree of alcohol of finished product (Article 6 of Directive 92/84EEC).Wine: The rate in France is 3.40 EUR per hectoliter still wine and 8.40 EURper hectoliter sparkling wine.Tobacco Cigarettes: The tax rate is 15.97 EUR per 1000 piecesGasoline Leaded petrol: Minimum excise duty in EU is 421 EUR per 1000 liter. InFrance is the rate 639.60 EUR per 1000 liter.Unleaded petrol: Minimum excise duty in EU is 359 EUR per 1000 liter. InFrance is the rate 606.90 EUR per 1000 liter.


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There are four kinds of taxes on assets.REGISTRATION DUTIES. Sale Of Real Property: A proportional duty is levied on sales of realproperty, in principle subject to the combined formality ,it may not be lessthan 1% or more than 3.6%;

Acquisitions made by the State or by its scientific, educational, assistanceor charitable establishments or by local authorities are exempt from alltransfer duty.Transfers Of Businesses And Similar Transfers

Registration Duties To Companies : Companies are liable to registration

duties on incorporation, on the occurrence of certain events during theirlifetime and on dissolution, and when shareholders sell their shares.Inheritance And Gift Duties

Transfers without valuable consideration include transfers following death(inheritance) and transfers without consideration inter vivos (gifts ).


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Band of ValueFor gifts made in 2010

Rate of Tax

%

Less than 8,072 5.00

8,072 to 15,932 10.00

15,932 to 31,865 15.00

31,865 to 552,324 20.00

552,324 to 902,838 30.00

902,838 to 1,805,677 35.00

1,805,677 Upwards 40.00

transfers (inheritance or gift) between parents and children

Band of Value Rate of Tax

%

Less than 8,072 5.00

8,072 to 12,109 10.00

12,109 to 15,932 15.00

15,932 to 552,324 20.00

552,324 to 902,838 30.00

902,838 to 1,805,677 35.00

1,805,677 Upwards 40.00

Donations between spouses and partners


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STAMP DUTY AND SIMILAR DUTIESStamp duty has to be paid in order to obtain many administrative documents ,such as residence permits and passports, hunting permits and licenses to drivemotor pleasure boats.VEHICLE STAMP DUTY: The level of polluting vehicle emissions has become acriterion for setting the amount of duty payable on documents relating to motorvehicles.TAX ON VEHICLE REGISTRATION CERTIFICATESSURTAX ON THE MOST POLLUTING PRIVATE VEHICLESTAX ON COMPANY CARS : This tax is payable on private cars owned or used by

companies, wherever they are registered, including, under certain conditions, carsused by employees or senior managers for which the company pays mileage.


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Taxable Wealth Rate

%

Less than 800,000 0.00

Between 800,000 and 1,310,000 0.55

Between 1,310,000 and 2,570,000 0.75

Between 2,570,000 and 4,040,000 1.00

Between 4,040,000 and 7,710,000 1.30

Between 7,710,000 and 16,790,000 1.65

Above 16,790,000 1.80

This applies to non-residents if the net value of their French assets(excluding investments in France) exceeds the limit of 800,000 (as at 1January 2011).

WEALTH TAX: is an annual tax payableby individuals on account of theirownership of personal assets, the netvalue of which, assessed on 1 January of the year of taxation, exceeds a certainamount. It was introduced in 1989.

PROPERTY TAX PAYABLE BY LEGAL ENTITIES:Legal entities liable to the 3% tax must filea return at the latest by 15 May of eachyear stating the place, composition andmarket value of taxable real properties

and real property rights owned at 1January of the year of taxation. Thereturn must be accompanied by paymentof the tax.


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Local direct taxes are the oldest taxes in the French tax system. They succeed the direct taxesthat had been created in 1790 and 1791 as State taxes and were transferred to localauthorities in the 1914-1917 tax reform.

PROPERTY TAX ON DEVELOPED LAND :levied annually on developed land situated in Franceexcept where there is entitlement to permanent exemption (public property, farm buildings,etc.) or temporary exemption (new or innovative enterprises, incentives for development aspart of urban or regional development policy.

PROPERTY TAX ON UNDEVELOPED LAND:is levied annually on owners of any undevelopedland situated in France except where there is entitlement to permanent exemption (publicproperty) or temporary exemption (e.g. incentives for organic farming, reforestation and theconservation of environmental interest zones).

RESIDENCE TAX :is payable by any person who, on 1 January of the year of taxation, hastaxable premises at their disposal, whatever their status (owner, tenant, free occupier).

LOCAL BUSINESS TAX :is payable annually by legal entities or individuals carrying on a regularnon-salaried business activity in France.local business tax is assessed on the rental value of fixed assets liable to property tax(developed and undeveloped) available to the taxpayer for the requirements of his businessduring a reference period which is generally the last but one calendar year before the year of taxation.


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Country Treaty date Treaty concenred

Austria T 26 March 1993T 26 March 1993

IT, WT IN, G

Begium T 12 August 1843 T 10March 1964 R 15February 1971 ,R 8February 1999 ,T 20January 1959

Exchange of informationITIN, RD

Brazil T 10 September 1971RR 5 February and 4March 1974

IT

CANADA T 2 May 1975R 16 January 1987 R 30November 1995

IT, WT, IN, G

CHINA T 30 May 1984 IT

Germany T and EL 21 July 1959R 9 June 1969R 28 September 1989R 20 December 2001RR 16 February 2006T 12 October 2006

IT, WTITFrontier workers andtemporary assignmentsIN, G

India T 29 September 1992 IT, WT

Abbreviations:EL : exchange of lettersG : giftsIN : inheritance taxIT : income taxR : riderRD : registration dutySA : special agreementT : treatyWT : wealth tax

France has double taxation agreementswith the following countries

EU membersAustraliaCanadaChinaIndiaIsraelJapanMalaysiaNew ZealandPakistanPhilippinesSingaporeSri LankaSwitzerlandUSA

France has abroad tax treaty network coveringmore than 100 countries


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TAX REVENUE

MILLIONValue Added tax 138,331Income Tax 52,805Corporation Tax 52,009Domestic Tax On Minereal Oil Product 15,594Other Taxes 17,122

Total Net Tax Revenues 275,861

NON TAX REVENUETotal non tax revenue 22,669TOTAL REVENUE BEFORE DEDUCTION 298,530

DEDUCTION FROM STATE REVENUEFor local government 52,393

For the european communities 18,900

Total deduction from state revenue 71,293TOTAL NET STATE REVENUE 227,237

France is not attractive for invesstor but for R&D process France give lot of benefits and tax relaxation.


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Documents

France Tax Law