Legal news

When did the obligation to file a tax return come into force?

The obligation to file a tax return for taxpayers subject to the controlled tax return system has been in force since 30 April 1950. Taxpayers must file an annual tax return, the content of which is determined by decree (Article 97 of the General Tax Code).

Inheritance tax returns will gradually be filed electronically, with the obligation to file and pay electronically from 1 July 2025. The deadline for taxpayer’s resident in France is 15 June and 15 July for non-resident taxpayers.

For financial institutions, the deadline for submitting the required information is brought forward to 15 July from 2025.

What is the statute of limitations for tax returns in France?

The statute of limitations for tax returns in France is generally three years. This period is set out in Article L. 169 of the French Tax Procedure Code (LPF).

However, this period can be extended to ten years in cases of tax fraud or insufficient taxation revealed by legal or administrative procedures. In addition, the statute of limitations for associations that do not file their tax return is six years.

When does the tax limitation period start to run?

The limitation period for tax returns begins to run on 31 December of the year in which the tax return was or should have been filed.

This rule is interpreted in case law as a ‘three-year limitation period for the offences referred to in Articles 1741 and 1743 of the General Tax Code, which only runs from 31 December following the date on which the tax return was or should have been filed’.

Med venlig hilsen / Kind regards
Cabinet Nicolas BRAHIN
Advokatfirma i NICE, Lawyers in NICE
Camilla Nissen MICHELIS
Assistante – Traductrice
1, Rue Louis Gassin – 06300 NICE (FRANCE)
Tel : +33 493 830 876 / Fax : +33 493 181 437
Camilla.nissen.michelis@brahin-avocats.com
www.brahin-avocats.com

How do you calculate your tax based on the income tax scale?

The progressive income tax scale is used to calculate tax. It consists of several brackets, each with its own tax rate. Find out how to calculate your tax.

What changes with the 2025 Finance Act?

The income tax scale has been increased by 1.8% for each step to neutralise the impact of inflation on household taxation.

How do you calculate your income tax?

Income tax is calculated on the basis of net taxable income in three main steps:

1. Divide your net taxable income by the number of family units with children,
2. Apply the progressive income tax scale applicable to the income in that year to this result,
3. multiply the result by the number of family supplement units to calculate the amount of tax due

Tax scale: the steps to calculate your income tax

The tax on your income in 2024, which you declare in 2025, is calculated in increments according to your income.

Example: For a single person with a net taxable income of 32.000 EUR in 2024, the family allowance is a proportion, so the operation is 32.000 EUR/ 1= 32.000 EUR.

To calculate his/her tax, this result must then be subjected to the scale that applies to income received in 2024:

– Income bracket up to 11.497 EUR taxed at 0% = 0 EUR
– Income bracket from 11.498 EUR to 29.315 EUR taxed at 11%: i.e. (29,315 – 11,497) x 11% = 1.959.98 EUR
– Income bracket from 29.316 EUR to 32.000 EUR taxed at 30%: i.e. (32,000 – 29,315) x 30% = 805.50 EUR.

This single person’s marginal tax rate is 30%, but not all of his income is taxed at 30%. The total result is 0 + 1.959,98 + 805,50 = 2.765,48 EUR.

To find out how much tax the single person has to pay on their income, multiply this amount by the number of family units the single person has: 2.765,48 EUR x 1 = 2.765,48 EUR.

Another example : A married couple with two minor children with a net taxable income of 55.950 EUR in 2024.
The couple has three shares (two shares for the couple and half a share for each child), so the taxable income of 55.950 EUR is divided in three = 18.650 EUR.

To calculate their tax, this amount is subject to the income tax scale:
– Income bracket up to 11.497 EUR taxed at 0% = 0 EUR
– Income bracket from 11.498 EUR to 18.650 EUR taxed at 11%: i.e. (18,650 – 11,497) x 11% = 786,83 EUR.

As this family has three family benefit shares, this result must be multiplied by the number three. The couple’s income tax is therefore 786,83 EUR x 3 = 2.360,49 EUR.

As their income tax is below the threshold of 3.248 EUR it is entitled to a discount (see section below), which is calculated as follows: 1.470 EUR – (2,360.49 x 45.25%) = 1.470 EUR – 1.068,12 EUR = 401.88 EUR or, rounded up, 402 EUR.

The tax amount after applying the discount is therefore: 2.360,49 – 402 = 1.958,49 EUR.

What are the adjustments to the net tax payable?

The amount you pay in income tax may be adjusted according to your situation:

– cap on the family tax allowance,
– tax breaks for modest incomes,
– tax reductions and deductions,
– contributions on high incomes.

Ceiling on the family allowance

The tax benefit of the family allowance (i.e. the number of tax units in your household) automatically increases with the level of declared income.
To reduce the impact of this tax benefit on high incomes, the family allowance is capped with a maximum benefit for each additional half share.

As a result, the tax reduction linked to the family allowance is limited to :
– 1.791 EUR for each additional half share,
– 896 EUR for each additional quarter share.

To find out if you are affected by the family allowance cap, the tax authorities make the following two calculations and compare them:
– tax calculated on the basis of two shares minus the cap on the family allowance,
– tax calculated based on the actual number of shares.

If the second calculation is lower than the first, you get a cap and have to pay the tax from the first calculation.

Tax relief for low-income earners

Decote is a system that reduces the tax payable by taxable households with modest incomes.

To benefit from this mechanism, your gross income must not exceed the following limits in 2025 (tax return for 2024):
– 1.964 EUR for a single, divorced or widowed person,
– 3.248 EUR for a married couple subject to joint taxation.

The discount applies automatically. The discount is obtained by deducting 45.25% of the gross tax amount from the fixed amount of 889 EUR for single taxpayers or 1.470 EUR for jointly taxed taxpayers.

Tax reductions and deductions

Tax reductions and deductions are deducted from your gross tax. Tax benefits, also known as tax niches, are generally limited to 10.000 EUR. This overall cap is the same for all taxable households.
Certain tax benefits are excluded, such as donations to organisations that serve the public interest or expenses for institutions for dependent persons.

The contribution for high incomes

The extraordinary contribution for high incomes is added to income tax. It applies to taxable households with a reference income above the following thresholds

– 250.000 EUR if you are single, widowed, separated or divorced,
– 500.000 EUR if you are married or in a registered partnership and subject to joint taxation.

The rate of this tax varies according to your household situation and your income according to a progressive scale:

Med venlig hilsen / Kind regards
Cabinet Nicolas BRAHIN
Advokatfirma i NICE, Lawyers in NIC
Camilla Nissen MICHELIS
Assistante – Traductrice
1, Rue Louis Gassin – 06300 NICE (FRANCE)
Tel : +33 493 830 876 / Fax : +33 493 181 437
Camilla.nissen.michelis@brahin-avocats.com
www.brahin-avocats.com

From March 2025, all self-employed entrepreneurs will be on the same footing: The VAT exemption threshold will be set at €25,000, regardless of their sector of activity. Does this mean they will have to change their business status?

From 1 March 2025, the VAT exemption threshold for self-employed entrepreneurs will be drastically lowered to €25,000, regardless of the sector they work in.

This reform, introduced after François Bayrou used Article 49.3 of the Constitution to push through the 2025 budget on Monday 3 February, has French micro-entrepreneurs scratching their heads.

Microentrepreneurs benefit from an exemption that allows them not to charge VAT to their customers, which is a significant advantage over businesses subject to VAT.

A sudden drop in the exemption threshold
Before we go any further, a quick reminder: micro-entrepreneurs, formerly known as auto-entrepreneurs, are self-employed individuals who are subject to a simplified tax and social security regime. Until now, the VAT exemption has been dependent on their activity:

– 85,000 EU for commercial and craft activities;
– EUR 37,500 for services and professional activities.

Below these amounts, they benefited from a VAT exemption, which meant they did not have to collect VAT or pay it to the state. But this model is about to be shattered. In a few weeks, the exemption threshold will drop to €25,000, regardless of activity.

Cabinet Nicolas BRAHIN
Advokatfirma i NICE, Lawyers in NIC
Camilla Nissen MICHELIS
Assistante – Traductrice
1, Rue Louis Gassin – 06300 NICE (FRANCE)
Tel :   +33 493 830 876      /    Fax : +33 493 181 437
Camilla.nissen.michelis@brahin-avocats.com
www.brahin-avocats.com

Regulation (EU) 2023/1114 of the European Parliament and of the Council of May 31, 2023 on MiCA (Markets in Crypto-Assets), Règlement (UE) 2023/1114 du Parlement européen et du Conseil du 31 mai 2023 sur les marchés de crypto-actifs, adopted by the European Parliament and the Council on May 31, 2023, came into force on December 30, 2024.
It establishes a harmonized framework for the regulation of crypto-assets within the European Union, including Bitcoin.

I. Objectives and scope of the MiCA regulation

The main aim of the MiCA regulation is to protect consumers and ensure financial stability, while combating money laundering and the financing of terrorism.
It establishes a specific normative framework for crypto-assets, including Bitcoin, distinguishing three main categories:

• Utility tokens, which provide access to a specific product or service;
• Tokens referring to one or more assets often associated with property rights or underlying assets; and
• Electronic currency tokens (stablecoins) that are directly linked to a fiat currency or a basket of fiat currencies.

Although Bitcoin does not fit into any of these categories directly, it is nevertheless subject to some of the regulations established by MiCA.

II. Obligations for Bitcoin creators

1. Registration and licensing

Bitcoin creators, as actors enabling the management or facilitation of the use of Bitcoin within the EU (for example, exchange platforms or custody service providers), must obtain approval from a national competent authority before they can offer their services on the European market.
Approval provides a European passport, making it easier to offer services in all EU member countries.

2. Transparency and information

Bitcoin creators must ensure that information about the services they offer is transparent and accessible.

An information document, or “white paper”, must be drawn up, detailing:

• The characteristics of Bitcoin ;
• The risks associated with their use; and
• The costs and fees associated with Bitcoin transactions.

This document must comply with the transparency and information requirements of the MiCA regulation, which requires disclosure of all relevant information so that consumers can make an informed decision.

3. Anti-money laundering (AML)

MiCA requires Bitcoin creators to comply with anti-money laundering (AML) and combating the financing of terrorism (CFT) rules.

In concrete terms, this involves the obligation to track user transactions and set up a system for tracing crypto-asset transfers.

Providers must also verify the identity of their customers and report any suspicious activity to the relevant authorities.

4. Specific obligations for crypto-asset service providers (CSPs)

Crypto-asset service providers (CASSPs), such as Bitcoin exchange platforms or storage services, must meet strict requirements to operate legally in the EU. Among the points to watch out for:

Obtaining approval:

Check that PSCAs have obtained the necessary approval to offer exchange, storage or other Bitcoin-related services in the EU ;

Anti-money laundering rules:

Ensure that PSCAs comply with AML and CFT requirements;

Internal control and compliance:

Confirm that PSCAs must implement an internal control system to ensure compliance with regulatory obligations, particularly with regard to the security of user funds and risk management; and

European passport:

Verify that PSCAs can benefit from the European passport to offer their services throughout the EU once they have obtained their license.

5. Consumer protection and transparency

The MiCA regulation aims to guarantee consumer protection and ensure transparency in trading with crypto-assets, including bitcoin.

As such:

Publication of the white paper:

Bitcoin creators must publish a document detailing the risks, costs and implications of transactions.

Consumer information:

Ensure that consumers are fully informed of the risks involved in using Bitcoin and the costs associated with each transaction.

PSCA behavior:

PSCAs must act honestly, fairly and professionally in accordance with the standards of transparency and accountability imposed by MiCA.

6. Prevention of market abuse

Market abuse prevention rules applicable to crypto-assets must be observed, in order to combat market manipulation and fraud.

Bitcoin creators must ensure that transactions on their platforms are not used to manipulate prices or conduct illegal activities.

7. Transitional period and national adaptation

Service providers already registered under national regimes have a transitional period until July 1, 2026 to comply with the requirements of the MiCA Regulation.

Bitcoin creators will have to ensure that their practices comply with European requirements by this deadline.

In France, national adaptations are to be put in place to facilitate this transition, with enhanced registration requirements for crypto-asset service providers.

III. Combating fraud and tax evasion

MiCA is part of a broader framework to combat tax evasion.

Crypto-asset service providers must comply with specific reporting obligations and ensure that Bitcoin exchanges are transparent, with automatic exchanges of tax information between competent authorities.

The new tax obligations must be strictly complied with to avoid the risk of fraud.

Nicolas BRAHIN Avocat
Lawyer in NICE
Master’s Degree in Banking and Financial Law
Cabinet BRAHIN Avocats 1, Rue Louis Gassin – 06300 NICE (FRANCE)
MOB: +33 493 830 876 / Fax : +33 493 181 437
Email : nicolas.brahin@brahin-avocats.com
www.brahin-avocats.com

Article L. 320-1 of the French Internal Security Code, (sécurité intérieure “CSI”) sets out the principle of a total ban on lotteries: “games of money and chance are prohibited”.

According to Ordinance no. 2019-1015 of October 2, 2019 reforming the regulation of gambling and games of chance (régulation des jeux d’argent et de hasard), four criteria are required to qualify a lottery:

• The offer to the public;
• The expectation of a win, in cash or in kind;
• The intervention of chance in the designation of the winner(s), in the form of a draw (the most classic hypothesis);
• A subsidiary question relating, for example, to the number of reply forms received, or any process which, in general, makes chance predominate over skill or intelligence; and
• Any form of financial participation.

If these four criteria are met, the lottery is prohibited in principle. This prohibition was reiterated by the Paris Court of Appeal (Cour d’Appel de PARIS) in ruling no. 2003/01523 of November 14, 2003: “lotteries are therefore prohibited only when they cumulatively meet the following four conditions: an offer to the public, the hope of a win, the intervention of chance, a financial sacrifice in order to be able to take part in the game”.

Exceptions to the ban on lotteries

Unfair

Lotteries and gaming machines offered at fairs are authorized without prefectoral authorization, subject to certain conditions:

• Prizes must be in kind,
• The unit stake must not exceed 1.5 EUR and the value of the prizes must not exceed 45 EUR.

These lotteries may be organized by people engaged in itinerant activities.

Personal property

Lotteries of movable objects intended for charitable purposes, the encouragement of the arts or the financing of non-profit sports activities are authorized subject to prior prefectural authorization.

The granting of this authorization is based on several criteria.

• The applicant organization must be primarily dedicated to charity, the encouragement of the arts or a sporting activity; and
• Be non-profit-making.

The seniority of the organization may be taken into account to assess its reliability. Funds raised by lotteries must be used exclusively for specific charitable, arts promotion or non-profit sports activities, and not for operating costs or to cover a deficit. Lottery applications to finance actions for mutual or corporate groups are excluded.

Lastly, lottery issue capital, which corresponds to the total value of tickets issued, must match the needs of the planned actions, with a reasonable ceiling for organization costs, set at 15% of issue capital.

The amount of the issue capital must not exceed the ticket placement capacity, and for a first request, the capital must be low.
Subsequent requests may be considered for higher amounts if previous operations have been regular.

Lottery application procedure

File preparation

Applications for authorization are made using Cerfa form no. 11823*021.

The petitioner must provide the organization’s articles of association, indicating its philanthropic, artistic or sporting aims, as well as the financial statement for the last financial year, necessary if the issue capital exceeds 7,500 EUR, to assess the association’s management, its budgetary balance and the proportion of revenue earmarked for specific actions, and detailed information on the planned operation and the use of funds.

Consultation

If the issue capital exceeds EUR 30,000, the opinion of the Directeur Régional des Finances Publiques is required.

When the operation concerns areas supported by the public authorities, the opinion of the relevant deconcentrated departments must be sought.

Local authorities (mayors) may also be consulted, especially if the operation takes place in one or more specific communes.

Decision

The authorization is formalized by an order after full examination of the file.

The order specifies the destination of the funds and the organizational costs and sets out the penalties for failure to comply with legal and regulatory rules: up to 3 years’ imprisonment, a fine of 90,000 euros, confiscation of gaming machines and possible destruction.

Additional penalties include disqualification from holding certain public offices, confiscation of assets, public dissemination of the decision or closure of the establishments involved.

Post-event control

After the event, you check that the funds raised, and unsold tickets correspond to the authorized issue capital.

Lottery proceeds must be used for the intended purpose, and organizational costs must not exceed 15% of the issue capital.

In the event of minor irregularities, a warning is issued; in the event of serious or repeated irregularities, you inform the Procureur de la République (public prosecutor) and refuse any further authorization.

In the event of poor ticket sales, the issue capital will have to be adjusted for future requests.

Legal framework for lotteries with prizes

Commercial lotteries

Commercial lotteries, which often include gifts, are defined as commercial practices carried out by professionals with regard to consumers, with the aim of awarding a prize or an advantage by means of a draw.

These lotteries are governed by article L. 121-20 of the French Consumer Code (Code de la Consommation) and are not subject to the gambling regulations set out in the French Internal Security Code “CSI”.

Requirements and restrictions

Commercial lotteries must meet certain requirements to be considered legal.

They must not be unfair within the meaning of Article L. 120-1 of the French Consumer Code, which prohibits unfair commercial practices.

Free entry is no longer a condition of validity, and the obligation to reimburse entry fees has been abolished.

Traditional lotteries

The principle laid down in article L. 322-1 of the “CSI” is that “lotteries of any kind are prohibited”. This general prohibition includes lotos.

Article L. 332-4 of the “CSI”, which has taken over the provisions of article 6 of the law of May 21 1836, introduces a temperament to this prohibition by excluding from the provisions of articles L. 322-1 and L. 322-2 “traditional lotos, also known as ‘poules au gibier’, ‘rifles’ or ‘quines’.

Traditional lotos are authorized by article L. 332-4 of the French Code “CSI”. Traditional lotos do not require prior authorization, but must meet certain criteria:

• Organized in a restricted circle and for social, cultural, scientific, educational or sporting purposes; and
• Stakes must not exceed EUR 20, and prizes must be in kind, with no cash or reimbursement. However, non-refundable vouchers are permitted.

These lotos can take place all year round, without prior declaration, provided these criteria are met. Only associations may organize traditional lotos within this framework, as they pursue social objectives. Commercial projects seeking to make a profit in violating these rules are illegal.

Nicolas BRAHIN Avocat, Lawyer in NICE
Master’s Degree in Banking and Financial Law
Cabinet BRAHIN Avocats 1, Rue Louis Gassin – 06300 NICE (FRANCE)
MOB: +33 493 830 876 / Fax : +33 493 181 437
Email : nicolas.brahin@brahin-avocats.com
www.brahin-avocats.com

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