★ Must-know
A single-member company has one member, whereas a multi-member company has several members.
In a limited-liability company, members’ liability for company debts is limited to their contributions, whereas in an unlimited-liability company they may be liable for the debts without that limit.
In a partnership, the members’ personal characteristics are predominant (intuitu personae), whereas in a capital company the capital predominates and the person is not the main consideration.
Under the IR regime, company profit is included in the household’s global income and taxed using the progressive tax brackets after applying the family quotient.
The normal IS rate is 25%, while eligible SMEs may receive a 15% rate on the first €42,500 of profit if turnover is below €10 million, capital is fully paid up, and at least 75% of the capital is held by individuals or non-parent companies.
For IR companies, a deficit may be deducted in the same year and carried forward for up to the following sixth year; it may offset global income for a professional activity, but otherwise only income of the same nature.
Under IS, a deficit may be carried forward indefinitely, subject to an annual offset ceiling of €1 million plus 50% of profit exceeding €1 million.
In a transparent tax regime, the company is not taxed separately and its members are taxed on their shares of profit; under an opaque regime, the company itself is subject to IS.
The source lists eight categories of global income:
Further detail
The source classifies SNC, SCP and EURL as personal companies, and SA, SAS and SASU as capital companies.
With profit of €3 million, the source gives a maximum deficit offset of €2 million under the carryforward ceiling.
📌 Under the IS carryback option, a deficit may be charged against the profit of the preceding financial year, up to €1 million.
The source identifies SA, SAS, SARL and SCA as generally subject to IS, while remuneration paid to their managers and dividends received by members are taxed under IR.
The source describes SNC, SCI and SCS as generally transparent, with profits taxed directly to members under IR in proportion to their shares, unless a different tax option applies.
IR is transparent; IS is opaque
★ Must-know
Commercial activity may be taxable as BIC by its nature, by statutory designation, or by attraction to a commercial activity.
Unfurnished property rentals are taxed as property income, whereas furnished rentals are treated as commercial activity and taxed as BIC under Article 35 of the CGI.
A French tax resident is generally taxable in France on worldwide income, except where the source describes an independent foreign permanent establishment.
A non-resident is taxable in France on income connected to France, subject to applicable international tax treaties.
Further detail
Articles 34 and 35 of the CGI are cited for activities taxable by nature or by statutory designation, and the source describes habitual commercial acts carried out in one’s own name as commercial activity.
The source cites dealers in property and intermediaries negotiating such property as activities made taxable by statute under Article 35 of the CGI.
The source identifies an EI as a simple business structure taxed under IR and describes an SCP as generating BNC where it carries on a liberal profession.
📌 A civil company that carries on furnished rental is treated as carrying on commercial activity and becomes subject to IS, while unfurnished rental remains property income.
📌 The source states that a family SARL made up of direct ascendants or descendants may opt for IR indefinitely, while other companies may opt for IR only during their first five years.
The source uses a stay of more than 183 days per year in France as an indication of French tax residence.
When two states claim a person as resident, the source says to examine a tax treaty, determine the permanent home and center of vital interests, then consider habitual residence and nationality; the two administrations may then determine how taxation is allocated.
The source describes tax treaties as limiting double taxation, preventing tax fraud and enabling information exchange between states.
The source states that an SCCV under Article 239 ter of the CGI cannot opt for IS.
Under Article 238 bis K of the CGI, the source states that when a company member is a legal person, its share may be taxed under IS; it contrasts this with an individual member’s property income, for which it says the property is not depreciated.
★ Must-know
For a charge to be deductible, it must reduce net assets, be incurred in the business’s interest as part of normal management, and be regularly recorded with supporting documentation.
The source describes the micro-BIC regime for turnover below €188,700 for sales and €77,700 for services, with a flat allowance of 71% or 50% depending on the activity.
An immediate charge reduces the current result, whereas an asset intended to remain in the business is depreciated over its expected useful life.
Straight-line depreciation produces a constant annual charge, whereas declining-balance depreciation produces decreasing annual charges.
A tax reduction lowers tax due but cannot reduce it below zero, whereas a tax credit may result in a refund from the tax administration.
Further detail
📌 The source describes taxable global income as net of charges authorized by law, including alimony and retirement savings contributions.
📌 Products enrich a business, whereas charges reduce its assets or impoverish it.
The source lists these charge categories:
General expenses must be deducted in the financial year to which they relate.
Business taxes are generally deductible, except when the law excludes their deduction; the source specifically names IR and IS as non-deductible and local taxes as deductible.
An individual entrepreneur’s remuneration is not deductible under IR, and the source extends the same treatment to transparent companies; it contrasts this with a company that has opted for IS.
Under the actual BIC regime, beyond the micro-BIC thresholds, taxable profit is determined from accounting rules after deducting actual charges.
The source describes tax add-backs as the fiscal reintegration of accounting expenses that are not deductible for tax purposes.
The source gives an office purchase costing €500,000 amortized over 25 years as an example of an annual €20,000 charge.
The source says that since 2005, depreciation by components allocates an asset’s components to separate depreciation periods, and gives 25–30 years as a general property depreciation duration.
Deductible charges reduce net taxable profit
★ Must-know
📌 A tax reduction directly lowers the tax due but cannot reduce it below zero, whereas a tax credit can exceed the tax due and result in a refund.
Further detail
The notes describe the provision’s purpose as helping the balance sheet present a faithful image of the company’s accounts.
The notes identify these activities and areas:
Article 44 quindecies has applied since 2011 to the revitalized urban basin scheme described in the notes.
The notes cite the Pinel scheme as a tax advantage for an individual who purchases a new property.
The green-industry tax credit is described as 20% of expenditure on producing batteries, wind turbines, or heat pumps.
With €1 million of tax due, a €500,000 reduction or a €500,000 tax credit leaves €500,000 payable in the example given.
The notes cite Article 244 quater W for a tax credit equal to 35% of eligible property acquisition costs for companies subject to corporate income tax.
The notes also mention a 30% tax credit for energy renovation and a tax credit for business owners without specifying their rates or conditions.
A tax reduction lowers tax to zero; a tax credit can generate a refund.
★ Must-know
📌 Furnished rental income is classified as business and commercial profits (BIC), whereas unfurnished rental income is classified as property income.
For property income, the micro regime applies below €15,000 in annual income with a 30% allowance; above that threshold, the notes describe the real regime as allowing rental expenses to be deducted.
For furnished rentals, the notes give a micro-BIC threshold of €77,000 and a 50% allowance, and state that the real BIC regime permits eligible expenses and property depreciation to be deducted.
For an unfurnished rental, the notes describe the sale gain as a private individual’s capital gain; for furnished BIC rentals, they indicate that the gain may fall under private or professional rules depending on the taxpayer’s status.
The notes state that a furnished rental qualifies as professional (LMP) when annual rental receipts exceed €23,000 and rental income constitutes the majority of the taxpayer’s income.
The notes distinguish short-term gains, which include the depreciated portion and are reintegrated into taxable BIC income at the progressive income-tax rate, from long-term gains, taxed at a stated fixed rate of 12.8%.
Further detail
📌 The notes state that electing for the real property-income regime commits the taxpayer for three years and requires renting the property during that period; the micro regime has no such commitment.
📐 Formula - For a €200,000 property depreciated over 25 years, the annual depreciation is .
The notes describe a private property gain as the sale price minus the purchase price, with a holding-period allowance beginning after five years and full exemption after 30 years.
For a property bought for €200,000 and sold for €300,000, the notes calculate a €100,000 gain and illustrate taxation of that base at 37.2%, comprising 19% income tax and 17.2% social contributions.
The notes state that a furnished-rental nonprofessional deficit may be carried forward to subsequent years, while a professional-rental deficit may be carried forward under the conditions described in the course.
For gains on securities, the notes mention the flat tax (PFU) and an option to apply a 40% allowance to the gross gain, leaving 60% subject to the progressive income-tax scale.
Furnished rentals fall under BIC; unfurnished rentals produce property income.
★ Must-know
📌 BIC are divided into professional and nonprofessional categories; the notes state that nonprofessional BIC deficits cannot be offset against overall income and that depreciation and overall-income deficit offsetting are unavailable under that regime.
Professional BIC include income from habitual industrial or commercial activity and activities treated as commercial, including property dealing, professional or habitual furnished letting, buying for resale, and crafts.
BIC are calculated using accounting-period products and expenses under accrual accounting, rather than only cash receipts and payments.
A speculative gain on an asset held for less than two years is taxed like ordinary products, whereas the notes describe a qualifying long-term gain as subject to a 12.8% rate.
A deductible business expense must reduce net assets, not be excluded from deduction by law, serve the business’s interest rather than a personal interest, and be recorded with sufficient supporting documents.
📐 Formula - The taxable result is calculated as .
Further detail
📌 Accessory agricultural or noncommercial income is treated as BIC when activities occur within one operation, industrial or commercial activity produces the main share of receipts, and the other activity is accessory or complementary.
📌 When a partnership not subject to corporate income tax earns BIC, the partners are taxed individually in proportion to their interests in the partnership.
BIC products include: operating products, accessory products, certain financial products, exceptional products such as subsidies, indemnities, and disposals of fixed assets
The notes identify hunting, fishing, pleasure residences, yachts, and passenger-car depreciation as expenses subject to exclusion or limitation under Article 39-4 of the French General Tax Code, while customary year-end gifts may be deductible.
In the Colibri example, an accounting deficit of €10,000 becomes a taxable profit of €10,000 after adding back €20,000 of personal restaurant and travel expenses.
📌 The notes state that a BIC deficit can offset the taxpayer’s overall income for the same period and that any excess can be carried forward against income for the next five years.
The notes list three regimes:
The notes illustrate accessory BIC with a car-rental operator who also runs a driving school and a person who buys puppies for resale while also breeding dogs on the same operation.
The notes identify detailed records of gifts and reception expenses, as well as fees and commissions such as those paid to lawyers and experts, as required supporting records for sensitive expenses.
Accounting result → tax adjustments → taxable result.
★ Must-know
📌 Le micro-BIC applique un abattement forfaitaire aux recettes, tandis que les régimes réels déterminent le bénéfice à partir des recettes et des charges, avec réintégrations et déductions.
Pour le micro-BIC, le cours indique des plafonds de chiffre d’affaires annuel hors taxes de 188 700 euros pour les ventes et de 77 700 euros pour les autres activités, avec des abattements respectifs de 71 % et 50 %.
Le cours présente le micro-BNC pour un chiffre d’affaires annuel hors taxes inférieur à 77 700 euros, avec un abattement forfaitaire de 34 % et un abattement minimum de 305 euros ; le bénéfice imposable correspond ainsi à 66 % des recettes.
📌 Dans une société de personnes soumise à l’impôt sur le revenu, les associés supportent directement l’impôt sur leur quote-part de bénéfices, au prorata de leur participation, car la société n’est pas un contribuable distinct.
Further detail
Dans l’exemple de la société Colibri, un résultat comptable déficitaire de 10 000 euros devient un résultat fiscal bénéficiaire de 10 000 euros après réintégration de 20 000 euros de dépenses personnelles non déductibles.
Un déficit professionnel peut être imputé sur le revenu global de la même période et, si ce revenu est insuffisant, sur les revenus des cinq années suivantes.
Le régime réel simplifié s’applique de plein droit, selon les seuils indiqués dans le cours, entre 176 200 et 818 000 euros de chiffre d’affaires annuel hors taxes pour les ventes, et entre 72 000 et 247 000 euros pour les autres activités.
Le régime réel normal s’applique de plein droit lorsque le chiffre d’affaires annuel dépasse le plafond du régime réel simplifié, et l’exploitant doit remplir une liasse fiscale.
La déclaration contrôlée des BNC s’applique lorsque les recettes annuelles hors taxes dépassent 77 700 euros ou sur option, et le bénéfice est déterminé selon la règle des recettes encaissées et des dépenses payées.
Un professionnel au micro-BNC peut choisir le versement libératoire de l’impôt sur le revenu, calculé à 2,2 % du chiffre d’affaires mensuel ou trimestriel.
📌 Dans le résultat d’une société de personnes, les charges doivent être liées à l’intérêt de la société ; les rémunérations des gérants ou associés et les frais de personnel engagés par les associés dans cet intérêt ne sont pas déductibles et doivent être rapportés au résultat.
📌 Un associé peut déduire de sa quote-part imposable des frais professionnels qu’il a personnellement et effectivement supportés, qui n’ont pas déjà été pris en compte dans le résultat imposable et qui seraient déductibles pour un exploitant individuel.
Micro-BIC forfaitaire, réel simplifié ou normal calculé sur le bénéfice réel
★ Must-know
📐 Formula - La plus-value brute est égale au prix de cession diminué du prix d’acquisition : .
📌 Lorsque les revenus locatifs sont inférieurs à 15 000 euros, le régime micro-foncier s’applique automatiquement avec un abattement forfaitaire de 30 %, tandis que le régime réel permet la déduction des charges effectivement admissibles.
Further detail
📌 Les contribuables fiscalement domiciliés en France sont imposables sur les cessions de leurs biens situés en France ou à l’étranger, tandis que les contribuables domiciliés à l’étranger ne sont imposables que sur les plus-values de cession d’immeubles situés en France.
Le prix d’acquisition comprend le prix payé ou, si le bien a été acquis gratuitement, la valeur mentionnée dans la déclaration, auquel peuvent s’ajouter les frais de notaire et certaines dépenses de construction ou de rénovation.
Le cours cite plusieurs cas d’exonération:
Pour l’impôt sur le revenu, l’abattement pour durée de détention est de 6 % par année au-delà de la cinquième et jusqu’à la vingt-et-unième année, puis de 4 % pour la vingt-deuxième année révolue, ce qui conduit à une exonération après 22 ans selon le cours.
Pour les prélèvements sociaux, l’abattement pour durée de détention est de 1,65 % par année au-delà de la cinquième et jusqu’à la vingt-et-unième année, de 1,60 % pour la vingt-deuxième année et de 9 % par année au-delà de la vingt-deuxième année.
Le cours indique une surtaxe progressive de 2 à 6 % lorsque les plus-values immobilières dépassent 50 000 euros, et précise que l’impôt est dû à la signature de l’acte notarié.
📌 Le cours indique qu’une plus-value immobilière ne peut pas être compensée par une moins-value.
📌 Les cessions de meubles meublants et de voitures ne sont en principe pas imposées au titre des plus-values, tandis que le cours cite les bateaux, bijoux, objets d’art et titres de sociétés parmi les biens dont les cessions peuvent être imposées.
📌 Les revenus de location meublée ou saisonnière ne relèvent pas des revenus fonciers, pas plus que les revenus d’immeubles affectés à une entreprise ou à une activité professionnelle non commerciale.
La plus-value vient d’une cession ; le revenu foncier vient d’une location
★ Must-know
Further detail
Le report en avant du déficit est illimité dans le temps, mais son imputation annuelle est limitée à un million d’euros augmenté de 50 % de la fraction qui dépasse ce seuil.
Le report en arrière, ou carry back, impute le déficit constaté à la clôture d’un exercice sur le bénéfice de l’exercice précédent et crée une créance sur le Trésor public ; le cours indique qu’il n’a pas de limite de montant ni de durée.
Le cours indique un taux normal d’impôt sur les sociétés de 25 % et un taux de 15 % dans la limite de 42 500 euros.
Le régime des sociétés mères, réservé aux sociétés soumises à l’impôt sur les sociétés, vise à éviter la double imposition entre la société mère et sa filiale ; l’option suppose que la société mère détienne au moins 5 % de la filiale et permet l’exonération d’IS des dividendes distribués à la société mère.
Le cours indique que les dividendes distribués à des personnes physiques sont imposés à 30 %.
Le cours indique que les bénéfices agricoles relèvent du régime micro en dessous de 120 000 euros et du régime réel au-delà, avec des sous-catégories selon l’activité.
Le cours indique une contribution exceptionnelle de 3,3 % lorsque l’impôt sur les sociétés dépasse 763 000 euros pour des entreprises dont le chiffre d’affaires dépasse 7 530 000 euros.
Résultat → report du déficit → calcul de l’IS
★ Must-know
📌 A property deficit may offset other income categories up to €10,700; any excess is ring-fenced and can offset only profits for 10 years.
📌 For eligible energy-renovation work on properties rated DPE F or G, the property-deficit deduction ceiling was doubled to €21,400 for work carried out from 1 January 2023 through 31 December 2025.
Further detail
A property deficit can offset other income up to a limit; above it, it is ring-fenced.
★ Must-know
Under the course’s stated rule, corporate income tax (IS) uses the BIC tax base, subject to specific rules, as cited under Article 209 of the CGI.
A corporate tax deficit may be carried forward against later profits or carried back against the profit of the preceding financial year, creating a claim against the Treasury.
The course states that carry-forward is unlimited in time, but for each year the deductible amount is limited to €1 million plus 50% of the amount exceeding €1 million.
Further detail
For a deficit of €2 million, the course’s carry-forward limit gives €1 million plus 50% of the €1 million exceeding the threshold, or €1.5 million.
The course describes carry-back as having no limit on amount or duration and as creating a claim against the Treasury.
The course states that the standard IS rate is 25% and that a 15% rate applies to a micro-regime band up to €42,500.
📌 The course states that an exceptional contribution of 3.3% applies when IS exceeds €763,000 and turnover exceeds €7,530,000.
★ Must-know
📌 The parent-subsidiary regime applies to companies subject to IS when the parent holds at least 5% of the subsidiary; distributed dividends are exempt from IS except for a 5% add-back for expenses and charges.
Further detail
The course attributes the parent-subsidiary regime to Articles 145 and 216 of the CGI and describes its purpose as limiting successive taxation of dividends within corporate groups.
A contribution of shares to a holding company is treated as a disposal for tax purposes, but Article 150-0 B ter of the CGI allows the capital-gains tax to be deferred under the conditions described in the course.
A residence held directly or through an SCI subject to IR may benefit from the principal-residence capital-gains exemption described in the course, whereas an SCI subject to IS does not qualify for that exemption.
If a holding finances 100% of a project while holding only 1% of the shares, the course identifies a risk of an act of abnormal management and says the holding needs an economic interest, such as earning interest on its loan.
For temporary usufruct, Article 669 of the CGI values the usufruct at 23% of the full ownership value for each 10-year period; the course’s example values a 10-year usufruct on a €2 million property at €460,000.
📌 In the proposed temporary split, the usufruct is held in an SCI subject to IS during the holding period, while the bare ownership remains with an IR-taxed entity for the eventual disposal.
📌 The course proposes that the individual hold 99% of the SCI for the principal residence and the holding 1%, while the holding finances the purchase through a shareholder current account rather than capital.
A qualifying parent receives dividends → only a 5% expense-and-charge share is added back to taxable income.
★ Must-know
Under Article 150-0 B ter of the French General Tax Code, an individual’s contribution of SASU shares to a newly created holding is treated as a transfer but can benefit from deferred taxation of the capital gain, which becomes due upon a subsequent sale of the holding shares, subject to conditions.
Under the parent-subsidiary regime, available when the parent owns at least 5% of the subsidiary, only 5% of intercompany dividends are taxable as a deemed expense-and-charge share.
To preserve the principal-residence capital-gains exemption, the residence may be held directly or through an income-tax SCI, while an SCI subject to corporate tax does not qualify for that exemption.
To justify a holding’s loan financing 100% of a project despite its 1% ownership, the loan should carry reasonable interest that demonstrates the holding’s economic interest; the source gives 3–4% as an example and cites a 4.49% fiscal cap.
Under Article 669 of the French General Tax Code, temporary usufruct is valued at 23% of full ownership value per 10-year period; on offices worth €2 million, a 10-year usufruct is €460,000 and a 20-year usufruct is €920,000.
During ownership, the corporate-tax usufructuary receives rents and may amortize the usufruct, while the income-tax bare owner sells the property and may benefit from holding-period allowances, potentially reaching full capital-gains exemption after 30 years.
Further detail
After the contribution, the individual owns 100% of the holding, which owns 100% of the SASU; the individual no longer directly owns the SASU.
On €8 million of dividends, the 5% taxable base is €400,000 and corporate tax at 25% is €100,000; direct distribution taxed at 30% would cost €2.4 million, for an estimated saving of about €2.3 million.
📌 The proposed structure places the principal residence in an income-tax-transparent SCI and the professional offices in an income-taxed SCI using temporary usufruct.
The proposed residence SCI is owned 99% by the individual and 1% by the holding to maximize the share of the gain eligible for the exemption.
The holding can fund the residence SCI through a shareholder current account loan rather than capital, allowing it to finance the acquisition without receiving additional shares.
Full ownership combines the rights to use an asset, receive its income, and sell it, while dismemberment separates these rights between usufruct and bare ownership.
A life usufruct lasts until the usufructuary’s death, whereas a temporary usufruct lasts for a predetermined period, such as 10 or 20 years.
When a temporary usufruct expires, it ends automatically and bare ownership becomes full ownership without new taxation, while the holding period for the bare owner’s capital-gains allowance continues.
The holding receives dividends; the individual receives no direct distribution.
★ Must-know
📌 Abuse of rights includes simulation, where the legal arrangement does not reflect reality, and fraud on the law, where the arrangement is real but has no purpose other than tax avoidance.
📌 An act of abnormal management occurs when a company makes a decision that impoverishes it without valid economic justification, and the administration may add the resulting foregone income back to its taxable result.
📌 Direct individual ownership of a principal residence can qualify for the full exemption, and ownership through an income-tax SCI can qualify proportionately to the associate’s share, whereas an SCI subject to corporate tax pays tax on the gain without the principal-residence exemption or holding-period allowances.
Further detail
Article L64 of the French Tax Procedures Code gives the tax administration power to disregard an arrangement implemented solely to avoid tax without a genuine economic reason.
The administration may examine:
Examples of evidence of economic substance include:
If a holding owning 1% of an SCI lends it €2 million interest-free, the administration may impute the interest the holding should have received and tax that deemed income.
📌 For the source’s example of the interest-deductibility cap, a 3% loan rate allows a 3% deduction, while a 6% rate allows only 4.49% to be deducted and the remainder is added back.
📌 If a property includes both residential and office space, the principal-residence exemption applies only to the residential portion and the office portion remains taxable.
The three identified risks are:
The source’s principal-residence example gives a €500,000 capital gain on a home bought for €300,000 and sold for €800,000, with no tax when the exemption applies.
AAG-RP: abuse of rights, abnormal management, residence-principal exemption.
★ Must-know
📌 To join the tax-consolidation perimeter, companies must be subject to corporate tax and the parent must hold at least 95% of each subsidiary.
Further detail
Without tax consolidation, a company with €1 million profit pays €250,000 corporate tax at 25%, while a separate company with a €1 million deficit pays no tax and carries its deficit forward.
If one subsidiary earns €1 million and another has a €1 million deficit, consolidation produces a zero combined result, zero corporate tax, and an estimated €250,000 saving at a 25% tax rate.
For three subsidiaries with results of €800,000, €200,000, and a €600,000 deficit, the combined result is €400,000; at 25%, the parent pays €100,000, compared with €250,000 without consolidation, a €150,000 saving.
Tax consolidation can neutralize intra-group flows, including dividends paid by subsidiaries to the parent and debt waivers between group companies, and it allows one tax return for the group.
📌 If an outside investor reduces a subsidiary’s parent-owned shareholding below 95%, that subsidiary leaves the tax-consolidation perimeter.
📌 The source states that the tax-consolidation regime must be maintained for at least five years and that a subsidiary leaving the group does not recover deficits it previously contributed, which remain at the parent level.
A holding gathers subsidiaries’ profits and losses into one shared tax result.
★ Must-know
Under tax consolidation, the holding company combines group companies’ profits and losses into an overall result and pays corporation tax on that result, while subsidiaries make no direct payment of that tax.
At a 25% corporation-tax rate, separate taxation of Filiale A’s €800,000 profit and Filiale B’s €200,000 profit, with Filiale C’s deficit carried forward, results in €250,000 tax; consolidation taxes the €400,000 group result at €100,000 and saves €150,000.
📌 Tax consolidation requires the holding company to own at least 95% of each subsidiary and every group company to be subject to corporation tax.
Further detail
📌 The tax-consolidation regime must be maintained for at least five years and cannot be entered and left at will according to annual results.
📌 If a subsidiary leaves the tax-consolidation group, the deficits it contributed are not returned to it and remain at the holding-company level.
Within the tax-consolidation perimeter, intra-group flows are neutralized, including dividends paid to the holding company and debt waivers between group companies.
The group VAT regime, introduced in 2023, allows intra-group transactions to be invoiced without VAT.
Tax consolidation allows the group to file a single tax return for the whole group.
The group VAT option is of particular interest to sectors such as healthcare, education, and training, where activities may limit VAT recovery.
Consolidation offsets profits and losses; group VAT removes VAT from intra-group supplies.
★ Must-know
🔄 A taxable business handles VAT in three steps:
Under Article 256 of the French General Tax Code, supplies of goods and services made for consideration by a taxable person acting as such are subject to VAT.
A supply of goods involves transferring the power to dispose of tangible property, whereas a service covers transactions not classified as supplies of goods, including intangible-property transactions such as software sales.
A transaction outside the scope of VAT is not subject to VAT, whereas an exempt transaction remains within the scope but is exempted by law.
Further detail
A baker buying flour for €100 excluding VAT plus €20 VAT and selling bread for €200 excluding VAT plus €40 VAT remits €20 to the state; the consumer bears €40 VAT on the sale.
The European directive of 28 November 2006 established common VAT rules intended to harmonize the basic system among EU member states; the course states that there are no tax conventions for VAT and no international double taxation in this context.
📌 A business selling to other businesses may experience VAT as neutral because its business customer can recover it, whereas a business selling to individuals faces consumers who cannot recover VAT.
📌 A taxable person acts as such only when the transaction relates to their economic activity; a television seller’s sale of an unrelated building is outside that activity, while a property-trading company’s building sale is within it.
Examples of supplies of services include:
The course lists these exemptions:
📌 Unfurnished residential rentals are exempt from VAT with no option to elect VAT, while unfurnished professional-office rentals are exempt but may opt for VAT.
📌 A furnished, equipped office supplied ready for use is subject to VAT.
In the VAT circuit, businesses collect, deduct, then remit.
A professional sale of non-buildable land is exempt from VAT, with an option to elect VAT, whereas a sale of buildable land is subject to VAT as of right.
A professional sale of a building less than five years old is subject to VAT on each transaction, whereas a building more than five years old is exempt with an option to elect VAT.
For buildable land, VAT may be calculated on the total sale price when VAT was recoverable on acquisition, or on the margin when VAT was not recoverable, such as when the land was bought from a private individual.
An exempt activity is within the scope of VAT and is carried out by a taxable person, whereas an out-of-scope activity is not subject to VAT.
Bare residential rentals are exempt with no option to charge VAT, while bare office rentals are exempt but may opt for VAT.
A non-buildable plot is exempt with an option for VAT, a buildable plot is subject to VAT by right, a building less than five years old is subject to mandatory VAT on each transaction, and a building more than five years old is exempt with an option.
VAT on the total sale price applies when input VAT was recoverable on purchase, whereas VAT on the margin applies when no input VAT was recoverable, such as a purchase from a private individual.
VAT on the margin is available only if the property's legal nature is unchanged between purchase and resale; if it changes, VAT applies to the total sale price.
For VAT purposes, France means metropolitan France, Corsica, Monaco, internal waters, airspace, and subsoil; EU member states form the intra-community zone, while countries outside the EU are third countries.
For a good shipped from France, French VAT applies regardless of the destination; for a good arriving in France from another EU member state, the course places the delivery at the member state of departure; and imports from third countries are subject to French import VAT.
For an intra-EU business-to-business supply to be exempt, the customer must provide its intra-community VAT number and the supplier must fulfill its reporting obligations for the exchange of goods; the supplier must verify the number.
For distance sales to EU consumers, a seller whose relevant sales are below €10,000 per year charges French VAT, while above €10,000 the VAT rate is that of the consumer's country.
For cross-border services, a business customer accounts for VAT in its own country through reverse charge, while a private customer is charged VAT by the supplier at the rate applicable in the supplier's country under the course's general rule.
📐 Formula - The deductible VAT coefficient is the product of the admission coefficient, the taxable-person coefficient, and the taxation coefficient: .
Unbuilt land is distinguished by buildability; existing buildings by age.
| Rental type | VAT treatment | Option |
|---|---|---|
| Unfurnished dwelling | Exempt | No option |
| Unfurnished professional office | Exempt | Option possible |
| Furnished dwelling | Generally exempt | No option |
| Para-hotel rental | 10% VAT if 3 of 4 services are provided | Not stated |
| Furnished equipped office | VAT applies | Not stated |
| Structure | Salary | Dividends |
|---|---|---|
| SAS | Employment income; deductible company expense | Not deductible for the company |
| SARL | Manager compensation; subject to income tax and social contributions | Above 10% of share capital, treated as remuneration in the source |
Take a 62-question practice quiz on French Business Taxation, with every answer explained.
1. What distinguishes a single-member company from a multi-member company?
2. A company member contributes €20,000, and the company later cannot pay its debts. What does limited liability generally mean for that member?
Memorize the key concepts of French Business Taxation with 88 flashcards.
How many members does a single-member company have?
One member.
How are members’ debts limited in a limited-liability company?
To their contributions.
What predominates in a partnership?
The members’ personal characteristics.
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