Who this is for: This guide is for anyone running a business in France, including micro-entrepreneurs and foreign-owned French companies, who wants to understand the CFE: what it is, who pays it, and why a company with no premises is usually not exempt.
The CFE (cotisation foncière des entreprises) is a local business tax that surprises many new company owners, particularly those who assumed that a business with no shop or office would have nothing to pay. It is one of the two components of the French local economic contribution (CET), alongside the CVAE, and it lands on almost every business operating in France, including foreign-owned ones.
What the CFE is
The CFE is a tax levied by local authorities and based, in principle, on the rental value of the property your business uses. A company with substantial premises pays on that value. The catch is that where a business uses little or no property, it does not escape the tax; instead it pays a minimum contribution set by the commune, based on turnover bands.
How it fits with the CVAE
The CFE is one half of the contribution économique territoriale (CET). The other half, the CVAE, is being phased out, but slowly: the phase-out was pushed back and the CVAE now runs until 2030, with the rate stepping down along the way. For a small or newly established business the CVAE is usually irrelevant, since it only bites above a turnover threshold, but it is worth knowing the CET is still two taxes rather than one.
Who pays it
The CFE is generally due by anyone carrying on a non-salaried professional activity in France on 1 January of the tax year. That includes companies such as an SAS or SARL, sole traders, and micro-entrepreneurs, and it applies regardless of whether the owners are French or foreign. Businesses with very low turnover benefit from relief: a business whose turnover in the reference year is €5,000 or less is exempt outright. Since the reference year is two years back, the 2024 figure is what determines a 2026 exemption.
The minimum base and how much it is
Where the property-based value is low or nil, the commune applies a minimum base. For 2026 the legal range under article 1647 D of the tax code runs from about €247 to €7,669, depending on your turnover band, with each commune free to set its own figure inside the band that applies to you. The turnover used is that of the year two years before the tax year, so your 2026 CFE is based on your 2024 turnover. The practical consequence is that even a consultant working from home, or a foreign-owned holding with no French office, will often still owe a CFE on the minimum base — though there are exceptions depending on the nature of the activity and the specific circumstances, so it is worth confirming your own position.
Note: The minimum-base amounts and turnover bands are set each year and vary by commune, so treat any figure as indicative and confirm the current bracket for your location.
The first-year exemption
There is meaningful relief at the start:
- The year the business is created is exempt. No CFE is due for the calendar year of creation.
- The following year (N+1), the taxable base is reduced by 50%.
- You must file the initial CFE declaration (form 1447-C) to put the authorities on notice, typically by the end of the year of creation.
The timing trap
Year | What is due |
Year of creation | Nothing. The CFE does not apply |
N+1 | CFE due, but on a base reduced by 50% |
N+2 onward | Full CFE, using turnover from two years earlier |
The trap is that the first real bill arrives in December of N+1, long after the business was set up, and it arrives silently in your online account rather than in the post. A great many first CFE penalties are simply a missed notification rather than a refusal to pay.
When and how it is paid
The CFE is generally paid once a year, with the balance due in December, through your business tax account on impots.gouv.fr. There is no paper bill sent automatically; you retrieve the notice from your online space, which is a common reason people miss it in their first full year of liability.
Common mistakes
- Assuming no office means no CFE. The minimum base usually still applies.
- Forgetting the initial 1447-C declaration in the year of creation.
- Missing the December deadline because no paper notice arrived.
- Overlooking the low-turnover exemption where it genuinely applies.
How Expand CPA can help
Expand CPA is a Franco-American accounting and tax advisory firm with offices in Paris, New York and Tel Aviv. We handle the CFE for French companies and foreign-owned businesses, file the initial declaration, confirm whether an exemption or reduced base applies, and make sure the annual payment is not missed. If you have just set up in France, we can make sure the CFE is one less thing to be caught out by. See also our guide to creating a subsidiary in France, or get in touch. The French government’s overview of the tax is on economie.gouv.fr.
Disclaimer: CFE rules, minimum-base amounts and exemptions are set annually and vary locally. This article is general information only, not tax advice. Please consult a qualified adviser about your situation.
Frequently Asked Questions
Do I owe CFE if I work from home with no office?
Usually yes, on the minimum base set by your commune, unless the low-turnover exemption applies to you.
Is the first year exempt?
Yes. The year the business is created is exempt, and the following year’s taxable base is reduced by 50%.
When is the CFE paid?
Generally in December, through your online business tax account. No paper bill is sent automatically.
