TLDR: Foreign maritime or air navigation companies may be exempt from corporate tax in France on profits derived from the operation of foreign ships or aircraft, provided that a reciprocal and equivalent exemption is granted to French companies. This exemption is governed by Article 246 of the French Tax Code (CGI) and diplomatic agreements. Specific rules apply to Belgian companies.
General exemption subject to reciprocity
Article 246 of the Code général des impôts (CGI) provides that profits earned in France by foreign maritime or air navigation companies from the operation of foreign ships or aircraft are exempt from corporate tax. This exemption is subject to the existence of a reciprocal and equivalent exemption granted to French companies of the same nature. The precise terms, including the taxes concerned, are set out in diplomatic agreements and decrees specific to each country, countersigned by the Minister of Economy and Finance.
Inclusion of profits in the French taxable base
Profits earned by French maritime or air navigation companies in countries that have granted reciprocal exemption are included in the taxable base for corporate tax due in France by these companies. This provision aims to balance tax treatment between States.
Special case of Belgian companies
Maritime or air navigation companies whose effective management seat is located in Belgium are not taxable in France on profits derived from the operation, in international traffic, of ships or aircraft, even if they have a permanent establishment in France. This rule has applied since 1 January 1976.
Exclusive taxation in France for French companies with an establishment in Belgium
Conversely, French maritime or air navigation companies whose effective management seat is in France are taxable exclusively in France on profits derived from the operation, in international traffic, of ships or aircraft carried out through a permanent establishment located in Belgium.
Legal framework and application
The exemption is strictly governed by the CGI and international tax treaties. Practical arrangements (diplomatic agreements, decrees) vary depending on the partner countries. No exemption is granted without prior verification of reciprocity and equivalence of tax treatments.
Limits and exclusions
The exemption does not apply to profits not related to the operation of foreign ships or aircraft. Furthermore, it is limited to countries that have entered into a reciprocity agreement with France. Companies must prove their eligibility in accordance with legal criteria.
Examples of countries concerned
Belgium is explicitly mentioned as a partner country for which specific rules apply. Other countries may be concerned, but their inclusion depends on the existence of diplomatic agreements in accordance with Article 246 of the CGI.