TLDR
If you are a foreign company, your taxation in France mainly depends on the activities you carry out there and the location of your real estate assets. An exclusively real estate activity is in principle taxed where the properties are located. Your profits made in France may be deemed distributed and subject to withholding tax, subject to tax treaties and certain exclusions. Real estate capital gains may also fall under the levy provided for in Article 244 bis A of the CGI.
The territorial criterion
You are taxable in France for the transactions you carry out there when they constitute the regular exercise of a commercial activity. The connection therefore depends on the activity actually carried out in France, and not only on the registered office of your company.
If you do not carry out any activity in France other than a real estate activity and you own properties there, whether rented or not, the place of taxation is where those properties are located. If several locations are concerned, taxation is assessed by the tax office for foreign businesses.
When you carry out an activity in France without having an establishment there, the tax office for foreign businesses may also be competent according to the rules applicable to the place of taxation.
Profits made in France
The profits you make in France as a foreign company are deemed distributed, for each financial year, to shareholders or partners who do not have their tax residence or registered office in France. This classification is used in particular to determine whether withholding tax applies.
The profits concerned include the total amount of taxable or exempt results, after deduction of corporate income tax. However, this rule does not, by itself, provide the complete calculation of the taxation applicable to your real estate activity.
If you are a shareholder or member of a partnership that carries out an activity in France, you remain liable in France for corporate income tax on the portion of the result corresponding to your rights. This rule specifically concerns partnerships.
Withholding tax
Under the ordinary-law regime, the profits made in France by a foreign company are subject to the withholding tax provided for in Article 119 bis of the CGI, at the stated rate of 30%, subject to the applicable tax treaty.
If the results of your activities carried out in France are nil or loss-making, you are not subject to this withholding tax for the financial year or period concerned, even if you make a distribution. Conversely, if these results are profitable, you may be liable for the withholding tax even without an actual distribution.
You may request a new assessment when the amounts subject to withholding tax exceed the total amount of your actual distributions. The excess may then be refunded under the conditions provided for by Article 115 quinquies of the CGI.
Tax treaties and exclusions
The applicable tax treaty may modify the ordinary-law regime. If you have a permanent establishment in France, it may in particular provide for a different basis, a limitation of the taxable base, a reduction of the rate or an exemption from payment of the withholding tax. You must examine the treaty concluded between France and your state of residence, as the treatment cannot be determined generally.
Article 115 quinquies of the CGI also provides for an exclusion when you have your registered office in a Member State of the European Union or a party to the Agreement on the European Economic Area and are subject there to corporate income tax without the possibility of opting out, without being exempt from it and without benefiting from a specific exemption on the profits concerned. These conditions are cumulative.
Capital gains and other levies
Capital gains realized in France on real estate assets or corresponding rights are subject to the levy provided for in Article 244 bis A of the CGI. The same regime may apply to shares or interests in unlisted companies whose assets mainly consist of such assets or rights. This levy does not discharge the corporate income tax liability.
For profits made in France and deemed distributed under Article 115 quinquies, the contribution provided for in Article 235 ter ZCA is assessed on the amounts that cease to be available to the French operation.
The available sources do not make it possible to establish a general corporate income tax rate for all real estate activities of foreign companies. Nor do they make it possible to determine uniformly the treatment of each rental income, real estate disposal or capital gain without examining your structure and any applicable tax treaty.
Informational content, not personalized tax advice.