Most business owners in France are liable for the local business rates, but this year an exemption has been granted to many affected by the Covid-19 pandemic.
The system of small business rates in France is called the Cotisation Foncière des Entreprises (CFE).
The rates are determined from the value of the real estate you use to run the business, or the rent you pay if you are a tenant.
Even though you may work from home you are still liable for the tax on the basis of the workspace you occupy.
There is a system of rates relief in place, 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 do not pay the tax.
- Artisans who work alone or within a family business have a permanent exemption (although not butchers or bakers), as do agricultural activities and artists/authors, and certain business activities in development areas.
- Owners of a chambre d'hôte or classified gîte accommodation are also exempt (unless the local council decides otherwise), provided the property is either their principle residence or second home.
- The letting of unfurnished accommodation is also exempt (up to €100K) as are lodgings.
This year, on an exceptional basis due to the Covid-19, local authorities have been given discretion by the government to grant small and medium sized businesses a reduction of up to two-thirds of the rates payable, in those sectors which have been particularly badly affected by the pandemic. The sectors include tourism, camping, hotel, restaurant, culture, air transport, sport and events. The full list of sectors concerned can be found at Décret n° 2020-979 du 5 août 2020.
You can find a list of those local councils who have made such a decision at CFE Communes; similarly, where the tax is levied by the inter-communal body, the list can be found at CFE Inter-Communes. In each case the list is by postcode.
The level of the rates payable is determined locally, but within parameters set by central government, revised upwards each year in line with inflation.
Most smaller councils set the minimum rate towards the lower end of each range if the rateable value of the space used is small. This is particularly the case if you work from home, when only the minimal local rate is likely to apply.
There are six rate bands, depending on the turnover of the business, as follows:
|Small Business Rates 2020|
|> €5,000 < €10,000||€221 - €526|
|> €10,000 < €32,600||€221 - €1,050|
|> €32,600 < €100,000||€221 - €2,207|
|> €100,000 < €250,000||€221 - €3,679|
|> €250,000 < €500,000||€221 - €5,254|
|> €500,000||€221 - €6,833|
The reference year used for determining the turnover figure is two years prior to the year of imposition, so for 2020 it will be based on your turnover for 2018. If you started the business in 2019, and your turnover was less than €5,000 you would need to apply to obtain exemption.
It is collected via the national tax authority, who have sent out tax notices to all businesses. They also collect a small management charge on behalf of the councils and themselves, which is added to the rates payable.
This year the tax is payable by 16th December, and can also be paid monthly by prior registration, although it is too late to do so for this year if you have not already opted for monthly payment.
To pay on-line this year, if you have not done so, you need to create an account on the website of impots.gouv.fr, in the section 'Votre espace professional''.