Explainer: who pays France’s CFE business tax and what exemptions?

The cotisation foncière des entreprises (CFE) is a local tax on businesses, including micro-entreprises (also known as auto-entrepreneurs). We look at how it works, who has to pay and when.

The CFE is levied by communes on businesses and self-employed people based on their business income from two years prior and on the property value of their registered workplace.

It is used to help fund communes, local authorities and chambers of commerce.

How does the CFE work?

If you have a business, or are registered as a micro-entreprise (auto-entrepreneur), you must register your activity before January 1 during the first year of its existence on impots.gouv.fr.

Note that neither the social security collection agency Urssaf nor the business registration body INPI will register your activity for you.

If you move your business address, you will need to modify the registration. You can do this here.

Registration is mandatory, however you will have nothing to pay during the first year of activity.

During the second year of activity you will receive a CFE tax bill in November.

Since the CFE is normally calculated using business income from two years prior, your first CFE statement will instead use 50% of the business income from the first year of activity.

You will have nothing to pay if you earn less than €5,000 a year.

If the tax is less than €3,000 you have until December 15 to pay. If it is more, you pay 50% on December 15 and the remaining 50% on June 15 of the following year.

You can pay it in your professional space on impots.gouv.fr.

How is the tax calculated?

The tax thresholds are set nationally, however the CFE is determined by communes. Typically, the CFE is in line with taxe foncière - where that tax is higher, so is the CFE.

The CFE takes the valeur locative cadastrale or theoretical rental value of your workplace to determine the tax. This value is also used to calculate the taxe foncière.

The valeur locative cadastrale is then multiplied by the tax rate determined by the commune.

This rate can vary significantly based on a number of factors including access to public services and even local politics.

Do I have to pay the CFE if I do not own the workplace?

Yes, even if you work in a co-working space, you must still pay the CFE.

Do I have to pay the CFE if I work from home?

Yes. Even if you already pay taxe foncière on the property you must still pay the CFE.

The tax does not depend on the size of your home office, but rather the valeur locative cadastrale multiplied by the commune’s CFE tax rate.

Who is exonerated from paying the CFE?

A long list of business categories are exempt from the CFE.

On registering your activity, you will find out if you are exempt. However, the exemptions include:

• Agricultural workers
• Professional drivers who have two or more cars
• Fishermen
• Teaching establishments
• Artists
• Independent bookshops

Are there any reductions available for the CFE?

• Tradespeople can earn a 25% reduction for each person that they employ, up to a maximum of 3 (75% reduction).
• People in Corsica have a 25% reduction

For more information on the cotisation foncière des entreprises contact your local tax centre or visit impots.gouv.fr.

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