Guide to Starting a Business in France

10. Other Business Taxes in France

  1. Business Rates
  2. VAT
  3. Payroll Taxes

10.1. Business Rates - Contribution Economique Territoriale (CET)

The Contribution Economique Territoriale (CET) is a local tax imposed by the departmental and regional councils on businesses to assist in the funding of local services and the Chambres de Commerce/Metiers.

The tax was introduced in January 2010, replacing the previously controversial form of business rates called the taxe professionelle, a peculiar exception française.

The CET is made up of two component parts:

  • The Cotisation Foncière des Entreprises (CFE), based the rateable value of the property occupied by the business.
  • The Cotisation sur la Valeur Ajoutée des Entreprises (CVAE), based on the ‘value added’ each year by the business - more or less the wealth created by the business each year, a figure which is also used to calculate liability to VAT.


We do not consider the CVAE here as only those businesses with a turnover of greater than €500K are liable. In any event, in March 2022 President Marcron stated it was his intention to abolish it, after halving it in 2021. In September 2022, the government announced that the tax would be abolished over two years, with complete abolition planned in 2024 for small to medium sized businesses, although for larger businesses it has been delayed until 2027. The CFE will remain in place.

Local councils have the discretion to set a minimum level of rates, which is really aimed at to cover those circumstances where the business has no real estate.

The minimum rates depend on the level of turnover of the business and for 2023 the bands are as follows, subject to the local council having made an appropriate resolution to do so by September of the previous year. The rates are increased in line with inflation each year.

Turnover Minimum Rates
<€5,000 €0
Between €5,000 - €10,000 €227-€565
Between €10,000 - €32,600 €227-€1,130
Between €32,600 - €100,000 €227-€2,374
Between €100,000 - €250,000 €227-€3,937
Between €250,000 - €500,000 €227-€5,652
Above €500,000 €227-€7,349

The reference year used for determining the turnover figure is two years prior to the year of imposition. So for rates payable in 2023, the reference year is 2021.

10.2. Exemptions and Reliefs

There are a number of exemptions from the tax, some permanent and some temporary.

The tax is not payable in the first year of the business, and payable at the rate of 50% in the second year;

If your turnover is less than €5,000 you are not liable for the tax;

Artisans who work alone or within a family business (although not butchers or bakers);

Agricultural activities;


Certain business activities in development zones;

The letting of unfurnished accommodation is also exempt (up to €100K)

The rules for landlords of furnished accommodation are slightly complex, but many owners escape the tax. The specific exemptions that apply on a national basis are:

Where your turnover is less than €5,000 a year;

Non-periodic lettings of a main or secondary residence, but only provided the owner occupies the property outside the letting period;

Lodgings let at a reasonable rent as the principal residence of the occupant.

In addition, subject to no contrary decision of the local council where the property is located also exempt are:

Owners of a chambre d'hôte or classified gîte accommodation (meublé de tourisme);

Letting of all or part of the main or secondary residence where the property is not a classified meublé de tourisme;

In both cases, the property must be part of your 'habitation personnelle', whether main or secondary residence, ie, a property you use when not otherwise let.

Some local councils will exempt both, whilst others only classified accommodation, whilst others grant no exemption. In many areas, responsibility for such a decision lies with an inter-communal council. A decision either way is not necessarily permanent.

In order to benefit from these reliefs all new business creations and newly registered landlords need to return a declaration to the tax authority which they will receive as part of the formalities of business/landlord registration.

The 2020 Loi de Finances widened the level of relief to commercial businesses in rural communes and artisanal and commercial businesses located in zones de revitalisation des centres-villes. The relief is subject to the decision of the local councils.

Even though a new company will be granted exemption in its first year (and possibly second year by local decision) you will be sent a Form 1003 for completion in your first year in order for the assessment process to be carried out.

The tax is payable at the end of each year in December and can also be paid monthly.

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