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Corporation tax is a tax, in principle payable annually, on all profits generated in France by companies and other legal entities. It concerns about a third of French companies. Legal entities may be liable to corporation tax:

?? either at the standard rate of 33⅓% for all their activities;

?? or at the following reduced rates:• 15% for the first €38,120 of taxable profit of companies with turnover excluding VAT of less than €7,630,000 in the tax year or tax period, reduced where relevant to twelve months. The company's capital must be fully paid-up and at least 75% must be held continuously by individuals or by a company meeting the same conditions. For the parent company of a group as stipulated in Article223 A of the French Tax Code (Code Général des Impôts, CGI), turnover is the sum of the turnover of each company in the group;

• 0% for long-term capital gains resulting from the disposal of participating interests (see p. 15 below);

• 0% or 15% for long-term capital gains resulting from the disposal of units in venture-capital investment funds and sharesin venture-capital companies (see p. 15 below);

• 15% for income from granting licences to use patents, patentable inventions or certain industrial manufacturing processes and capital gains from the disposal of such elements (see p. 15 below);

• 19% for long-term capital gains resulting from the sale of securities of listed predominantly property companies(sociétés à prépondérance immobilière, SPI) (see p. 15 below);

• 19% for net capital gains booked on:

- the contribution or transfer before 1 January 2012 of properties, certain similar rights and securities of SPIs, under certain conditions, to listed property investment companies, variable-capital SPIs or their affiliates;

-the transfer before 1 January 2010 of developed or non-developed properties and securities of SPIs to organisations responsible for low-rental housing;

- the transfer before 1 January 2011 of developed properties by organisations responsible for low-rental housing;

• 24% or 10% for the income from assets of non-profit organisations.

11/105In addition, corporation tax payers are liable to a social contribution equal to 3.3% of the tax calculated on their taxable profits at the standard rate (33⅓%) and at the reduced rates, minus relief that may not exceed €763,000 per twelve-month period.

Companies with annual turnover of less than €7,630,000, at least 75% of whose fully paid-up capital is held continuously byindividuals or by a company meeting the same conditions are exempt from this contribution (see p. 41 below).

Legal entities liable to corporation tax are subject to an annual flat-rate tax, determined on a progressive scale according to turnover plus financial income. The tax is being phased out over three years from 1 January 2009.

• From 1 January 2009, the amount ofturnover as of which legal entities liable to corporation tax are subject to the annual flat-rate tax is raised from €400,000 to €1,500,000.

• From 1 January 2010, the threshold for liability to the tax is raised to €15,000,000.

• The tax is abolished as of 1 January 2011.

Corporation tax yielded €51.03 billion in 2007 and is expected to yield anestimated €52.01 billion in 2009.



1 – Corporation tax at the standard rate (Article 206-1 CGI)

Certain legal entities are liable to corporation tax on account of their legal form. They include, whatever their corporate purpose, joint-stock and simplified joint-stock corporations (SA and SAS),...
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