Corporate income tax - Definition - Tax regime

1. A ministerial instruction dated January 21, 1997 (13.G.1.97) sets forth the main aspects of the tax regime applicable to headquarters in France.

The headquarters must be directly controlled by an international company or group. It can either be set up as a permanent establishment of a foreign company or a subsidiary, or as a separate department of an existing French entity.

2. The headquarters' activities must involve providing administrative, management, coordination, auditing, advertising and data processing services. Where services are provided to third parties, any resulting income will be taxed under normal French rules.

The headquarters must mainly act on behalf of international group companies or foreign permanent establishments of French companies. Its activities may well extend to providing services worldwide.

3. The special tax regime is granted through a ruling to be negotiated on a case-by-case basis with the French tax authorities. If the ruling is granted, the headquarters will not be taxed on the actual profits it ought to make were it to invoice its services at the full market price, but will be subject to French corporate income tax on a deemed profit basis (i.e. cost plus) in a range of between 6% and 10% of its operating expenses, according to the previous practice of the French authorities.

4. The corporate tax rate applicable is the normal 33 1/3% rate plus the additional 10% surcharge.

Requests for a tax ruling should be addressed to the DVNI (Direction des Verifications Nationales et Internationales).


The content of this article is intended to provide a French guide to the subject matter. Specialist advice should be sought for your specific circumstances.

For additional information contact Claire Acard on +33 (1) 55.61.10.85 or enter text search: "ARCHIBALD ANDERSEN Profile". The members of ARCHIBALD ANDERSEN Association d'Avocats (S.G. Archibald and Arthur Andersen International) are registered with the Hauts-de-Seine Bar.