What is CFE?

CFE is a local tax that applies to companies (legal entities) and individuals carrying out business activities on a regular basis. This tax applies regardless of the company's field of activity, legal status or tax regime.

CFE is calculated for all assets used by the company in the course of its activities. In other words, real estate is subject to property taxes.

CFE and company value added contributions (CVAE) are territorial taxes (CET). This tax replaced the previous business tax in 2010.

Which companies are affected by CFE?

Any company registered in France and holding a SIREN number is responsible for paying the CFE. This tax also applies to companies with one founder (SASU, EURL, individual entrepreneurs [EI, EIRL]) and self-employed workers with Auto-entrepreneur status.

Since 2015, Auto-entrepreneurs are subject to this tax.

However, some Auto-entrepreneurs may benefit from tax exemption depending on their activities or turnover achieved.

Professionals benefiting from automatic exemption:

• Farmers,
• fishermen,
• athletes,
• artists,
• artisans,
• Vendeur à domicile indépendant,
• and others.

In addition, there are possibilities for temporary exceptions that relate to:

• All Auto-entrepreneurs, for the year corresponding to the start of their activities. However, the CFE must be paid the following year.
• Auto-entrepreneurs who have chosen to withhold income tax (prélèvement libératoire de l'impôt sur le revenu). They enjoy a temporary exemption from the CFE during the year of establishment of their activities, as well as for the following two years.
• Specialists who have achieved zero turnover. However, they must pay the CFE as soon as their first bill is issued.
• Auto-entrepreneurs who own premises located in the Defense Zone (ZRD), Urban Free Zone (ZFU) or Rural Revitalization Zone (ZRR). They can receive a full exemption for 5 years, followed by a partial exemption for 9 years.
• And others.

Calculation of CFE for Auto-entrepreneur

When calculating CFE, two elements are taken into account:

• The cost of real estate used by the Auto-entrepreneur in carrying out its activities.
• The CFE rate is set annually by the municipality or EPCI (Public Institution for Intermunicipal Cooperation).

Briefly, the CFE amount is calculated using the formula:

Calculation base (base) x CFE rate applied by the municipality

The minimum tax base varies depending on the turnover achieved by the professional.

The CFE rate varies by municipality.

When to submit a declaration?

In the year of its formation, a company must file a 1447-C-SD return (known as the initial return) to take advantage of the full CFE exemption.

The return must be sent to the tax department by December 31st so that tax items can be set for the following year.

Companies responsible for CFE are not required to declare their tax base annually.

On the other hand, the 1447-M-SD declaration must be made by the company in one of the following situations:

• The company requests an additional exception: for example, land use planning, live performance, or a young innovative company.
• The company wishes to inform about the modification of elements known to the administration, in particular:
  — Increasing or decreasing the area of the room.
  — Change in the number of employees (tax credit, reduction in the number of craftsmen, etc.)
  — Change of tax element (power or number of installations)
  — Exceeding the threshold of 100,000 euros in turnover (for real estate transactions for rent).
  — Termination of activity or closure of an enterprise or institution.

The declaration must be sent to the tax office (SIE), on which the company depends, before the 2nd working day following May 1st. Due May 3, 2022 for CFE Class of 2023.

How to pay for CFE?

Payment can be made directly online on the tax website until December 15.

If the amount exceeds €3,000, you will need to make a deposit online before June 15th. However, there are rare cases when an Auto-entrepreneur is forced to pay such a sum.

To take advantage of the temporary exemption during the first year of operation, the Auto-entrepreneur must file the initial CFE return by December 31 of the year corresponding to the start of his operation.

CFE Tax Infographic

Source : https://entreprendre.service-public.fr/vosdroits/F23547