BUSINESS TAX - FRENCH TAXATION
Business tax (taxe professionnelle) is chargeable annually to corporate bodies or individuals habitually carrying on business in France as self-employed. Various exemptions are provided for. They may be permanent (activities carried on by the State, local authorities and public establishments, agricultural activities and organisations, private schools, certain small traders, press, etc.) or temporary (exemptions granted as part of the town and country planning, urban policy or to promote new or innovative companies).
The assessment base of the tax business consists in all cases of the rental value of fixed assets that are liable to real property tax and that are available to the taxpayer at the end of the last but one calendar year preceding the year of taxation. Since the removal of the salary part, which became final in 2003, this base has been completed by the only value of equipment and movable property, which have been available to the taxpayer for the same period of time. However, two categories of taxpayers are not taxed on their equipment and movable property and they are, on the one hand, sedentary taxpayers whose annual receipts do not exceed € 61 000 in the case of service provision and € 152 500 in the other cases and, on the other hand, those who receive professional income (bénéfices non commerciaux), trading agents, business agents, who employ less than five people and a re not liable to company taxation. For this second category of liable persons (professional income and equivalent), the second base component is a portion of the receipts (10 % before 2003, 9 % in 2003, 8 % in 2004 Thus established, the assessment base is further reduced. Such reductions may be limited to certain persons liable (small traders, reductions for enterprises carrying on part of their business outside France) or may apply to all persons liable (general relief of 16 %) or else decided by local authorities (relief on tax assessment base for press distributors). The tax is assessed in every municipality where the person liable has premises or land available to him. The amount of business tax is obtained by multiplying the base by the rates voted by each local authority receiving the proceeds.
Rates vary within the limits set by national law according to the decisions of the various local authorities or organisations. In addition to the amount of business tax itself, management costs received by the State (8 % of the amount of tax), additional taxes (relating to costs for chambers of commerce and industry and guilders) and possibly the national revenue-sharing amount as well as equipment special taxes to finance land-property public establishments may be added. All persons liable are subject to a minimum business tax corresponding to the amount of residence tax paid the year before for a reference dwelling used by the council. Several relief measures are provided for, such as reduced activity relief or capping the amount of tax in relation to the added value made by the enterprise during the year for which the business tax is payable. Reliefs are borne by the State.
Concerning the main relief, i.e. the one related to added value, the maximum rate is 3.5 % for enterprises whose turnover for the taxation year is less than € 21 350 000; 3.8 % for those whose turnover is between € 21 350 000 and € 76 225 000; and 4 % for those whose turnover exceeds € 76 225 000. The notion of added value with respect to business tax is different from the one applying to VAT: for the business tax capping, it is the difference between the production and the consumption of goods and services from third parties, with some reprocessing concerning aids and rentals. Lastly, the business tax due by enterprises whose turnover is higher than € 7 600 000 is at least equal to one time and a half the added value produced during the taxation year. Added value is determined as in tax capping. The additional taxation thus determined is a revenue for the State general budget. In 2002, the revenue of business tax amounted € 22.95 billion. In 2003, it amounted € 23.39 billion.