The system of small business rates in France is called the Cotisation Foncière des Entreprises (CFE).
The tax is payable by all those who pursue a remunerative activity on an habitual basis, whether or not it is a professional activity.
In translation, that means business owners and landlords of furnished accommodation pay it, unless specifically exempt. The letting of unfurnished accommodation is not considered to be a professional activity, so is exempt.
The amount payable is derived from the value of the real estate you use to run the business, or the rent you pay if you are a tenant.
Even though you may work from home you are still liable for the tax on the basis of the work/office space you occupy, which may be minimal if you only work from a desk, eg 2m2.
The level of the rates payable is determined locally, but within parameters set by central government, revised upwards each year in line with inflation.
Most smaller councils set the minimum rate towards the lower end of each range if the rateable value of the space used is small. This is particularly the case if you work from an office in your home, when only the lowest local rate is likely to apply.
This year, unlike in 2020, the government have granted no reduction in the rates payable by certain businesses due to Covid.
There are six rate bands, depending on the turnover of the business, as follows:
< €5,000 | €0 |
> €5,000 < €10,000 | €223 - €534 |
> €10,000 < €32,600 | €223 - €1,061 |
> €32,600 < €100,000 | €223 - €2,229 |
> €100,000 < €250,000 | €223 - €3,716 |
> €250,000 < €500,000 | €223 - €5,307 |
> €500,000 | €223 - €6,901 |
The reference year used for determining the turnover figure is two years prior to the year of imposition, so for 2021 it will be based on your turnover for 2019.
Exemptions and Relief
There is a system of rates relief in place, some permanent and some temporary, and some at the discretion of the local council. The main ones likely to be of most interest to readers are:
The tax is not payable in the first year of the business, and payable at the rate of 50% in the second year;
If your turnover is less than €5,000 you are not liable for the tax;
Artisans who work alone or within a family business (although not butchers or bakers);
Agricultural activities;
Artists/authors;
Certain business activities in development zones;
The letting of unfurnished accommodation is also exempt (up to €100K)
The rules for landlords of furnished accommodation are slightly complex, but many owners escape the tax.
The specific exemptions that apply on a national basis are:
Where your turnover is less than €5,000 a year;
Non-periodic lettings of a main or secondary residence, provided the owner occupies the property outside the letting period;
Lodgings let at a reasonable rent as the principal residence of the occupant.
In addition, subject to no contrary decision of the local council where the property is located also exempt are:
Owners of a chambre d'hôte or classified gîte accommodation (meublé de tourisme);
Letting of all or part of the main or secondary residence where the property is not a classified meublé de tourisme;
In both cases, the property must be part of your 'habitation personnelle', whether main or secondary residence, ie, a property you use when not otherwise let.
Some local councils will exempt both, whilst others only classified accommodation, whilst others grant no exemption. In many areas, responsibility for such a decision lies with an inter-communal council. A decision either way is not necessarily permanent.
In order to benefit from these reliefs all new business creations and newly registered landlords need to return a declaration to the tax authority which they will receive as part of the formalities of business/landlord registration.
Payment
The tax is collected via the national tax authority, who this month have sent out tax notices to all businesses. They also collect a small management charge on behalf of the councils and themselves, which is added to the rates payable.
This year the tax is payable by 16th December, and can also be paid monthly by prior registration, although it is too late to do so for this year if you have not already opted for monthly payment.
To pay on-line this year, if you have not done so, you need to create an account on the website of impots.gouv.fr, in the section 'Votre espace professional''.
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