CFE: the French business property contribution
CFE is a local tax owed by businesses for their establishments in France. Here is who owes it, how it is calculated and what to file, especially for an EU company opening premises in France.
What is CFE?
The business property contribution (CFE) is one of the two components of the territorial economic contribution, alongside CVAE. It is collected for municipalities and their groupings. It is set each year from the business’s situation on 1 January and notified through a tax notice.
Any business carrying on a non-salaried professional activity in France on a habitual basis is in principle liable, whatever its legal form or nationality, subject to certain exemptions.
Who is liable, including foreign companies?
CFE is due for each establishment located in France. An EU company that rents an office, a warehouse or premises there, or runs a workshop, may therefore be concerned. By contrast, simply holding stock with a third party does not have the same effects as premises at your disposal: the analysis must be made case by case (see our article on stock in France and VAT).
Exemptions to know about
- exemption in the year the business is created, provided the initial return is filed on time;
- exemption for businesses whose year N-2 turnover or receipts do not exceed €5,000;
- permanent or temporary exemptions for certain activities or areas.
How is CFE calculated?
The tax base depends on the establishment:
- with premises: the property rental value of the property subject to property tax used by the business (year N-2);
- without premises: a minimum base, set by the municipality within a legal range that depends on turnover.
The base is multiplied by the rate voted by the municipality and its inter-municipal body. Rates and minimum bases therefore vary from one municipality to another: two identical establishments do not pay the same amount in Paris and elsewhere. Under the rules in force, the minimum contribution falls within an annual range published by the authority.
Returns and deadlines
Exact dates are set each year: see the official page CFE on Service-Public Entreprendre (in French).
Common mistakes
- Not filing the initial return and losing the first-year exemption.
- Not declaring the closure or move of a premises and continuing to be taxed.
- Not checking the rental value or surface area used.
- Not paying the instalment when the threshold is exceeded: see penalties and surcharges.
- Forgetting that a notice sent to an outdated address can go unnoticed.
How Hanoutax helps
Hanoutax, a tax mandatary acting under a written mandate, can handle on your behalf the initial return and the change or closure returns, the check of the tax base and notices received, payment follow-up and deadlines, and the preparation of a correction or relief request where there is an error (see tax relief and claims). The scope is set by the power of attorney with the tax authorities.
CFE is also linked to CVAE and to property taxes, which partly rely on the same premises.
FAQ
Does a foreign company with no employees in France have to pay CFE?
If it carries on a professional activity in France on a habitual basis, for example with premises at its disposal, it may be liable even without employees. The situation must be analysed establishment by establishment.
Am I exempt in the first year?
Yes, a newly created business is exempt in its year of creation, provided it files the initial return 1447-C before 31 December.
What is the payment deadline?
The balance is due on 15 December. If the previous year’s CFE exceeded €3,000, a 50% instalment is due in mid-June.
Why is my CFE increasing?
The base may change with the rental value, and the rate is voted by the local authority. An undeclared change to your premises can also trigger a catch-up.
How do I challenge a CFE notice?
By a claim, in principle before 31 December of the year following collection. See tax relief and claims.
Does Hanoutax pay CFE for me?
Hanoutax prepares the returns, checks the notices and monitors deadlines under the mandate. Payment remains made by the company, as agreed.
Informational content, which does not constitute legal advice. The rules that apply depend on your situation.