On foreign companies with real estate predominance
A company is considered to have a real estate predominance if the value of its real estate assets exceeds 50% of the value of all its assets.
Article 4 B of the French General Tax Code (Code Général des Impôts) provides that “the managers of companies whose headquarters are located in France and whose annual turnover exceeds 250 million euros are considered to have their tax domicile in France, unless they provide proof to the contrary. For companies that control other companies under the conditions defined in Article L. 233-16 of the French Commercial Code, turnover is understood to be the sum of their turnover and that of the companies they control.”
There are four pre-established criteria that emerge from this article :
- Nationality;
- Main profession;
- Main place of residence;
- Economic interest.
On net property income
According to Article 28 of the French General Tax Code, net property income is equal to the difference between the amount of gross income and the total property charges.
That is :
Net property income = Gross rent − (Management fees + Loan interest + Maintenance work + Property tax).
On corporate tax (« Impôt sur les société » or referred to as « IS » below)
In 2024, the corporate tax rate is set at 25% for all companies regardless of their turnover. However, a reduced rate is still applicable for certain companies.
The reduced “IS” rate of 15% concerns SMEs :
- Whose turnover excluding tax is less than 10 million euros ;
- Whose capital is entirely paid out and held at least 75% by individuals (or by a company applying this criterion).
Since January 1, 2023, this reduced rate applies to the share of profits up to 42,500 euros. Beyond that, the profit is taxed at the normal “IS” rate, i.e. 25%.
Calculation of the balance of corporate tax payable :
a) Taxable base = accounting result + tax reinstatements – tax deductions – remaining deficit to be imputed.
b) Gross “IS” = (share of profit x reduced rate) + (share of profit x normal rate) + (share of profit x special rates).
c) Balance to be paid = Gross “IS” – imputable tax receivables.
d) Corporate tax “IS”: Net property income x “IS” rate (25% in 2024).
Cabinet Nicolas BRAHIN
Advokatfirma i NICE, Lawyers in NICE
1, Rue Louis Gassin – 06300 NICE (FRANCE)
Tel : +33 493 830 876 / Fax : +33 493 181 437
www.brahin-avocats.com
