FRANCE LAW AND PRACTICE Contributed by: Michael Doumet, François-Xavier Naime, Guillaume Nataf, Léna Sersiron, Eléonore d’Anthonay, Nella Picou, Pauline Celeyron and Magalie Dansac Le Clerc, Baker McKenzie Paris
8. Other Review/Approvals 8.1 Other Regimes Sanctions Regime The French sanctions regime applies to all of the fol - lowing: • French nationals; • foreign nationals when in France; • French legal persons; and • foreign legal persons when conducting activities in France. These natural or legal persons are required to comply with the sanctions regime applicable in France, which can include specific trade restrictions (eg, prohibition from carrying out transactions with certain entities or on certain products) and the freezing of assets, which prohibits the provision of any assets (eg, mon - ies, real estate, IP rights) to a person subject to sanc - tions measures. Non-compliance may trigger several sanctions – notably, up to five years’ imprisonment and a fine between one and two times the amount of the infringement (multiplied by five for legal persons). Banking and Financial Authorisations The projected transaction may need to be notified to and possibly receive prior authorisation from the French Banking Supervisory Authority or the French Financial Market Authority. Generally, these require - ments apply under the following circumstances: • the targeted entity is a regulated entity (eg, a credit institution or a payment institution); and • the contemplated transaction impacts, directly or indirectly, the shareholding or the effective control of the regulated entity. Both parties to the transaction (ie, the buyer and the seller) may be required to notify or seek the supervis - ing authority’s prior approval.
impact is uncertain at this stage due to the complex political environment in France at the moment. Though uncertain, a final outcome is expected early in 2026. Direct Tax French tax law distinguishes between tax-transparent and non-tax-transparent companies. Transparent companies are not personally liable for corporate investment tax (CIT) but must calculate a taxable income, with shareholders paying CIT/income tax based on their shareholding. Non-resident com - panies holding transparent French companies are, in principle, liable for CIT/income tax in France (on their share of the profits). Non-tax-transparent companies are subject to CIT in France. CIT is generally levied at a standard rate of 25%. Companies owing more than EUR763,000 in CIT are subject to a 3.3% surcharge, bringing the effective tax rate (ETR) to 25.825%. French resident companies are subject to CIT on a domestic basis. Non-resident companies are subject to CIT only on profits attribut - able to France (eg, French permanent establishment or French-source rental income and real estate capital gains). A temporary non-deductible CIT surcharge applies to the first financial year (FY) closed as from 31 Decem - ber 2025 by companies or tax consolidated groups having a French-source turnover of at least EUR1 billion. The surcharge is assessed on the average amount of CIT due for the FY and the preceding FY, at a rate of 20.4% for companies or groups with turno - ver between EUR1 billion and EUR3 billion, and at a rate of 40.2% for those with turnover exceeding EUR3 billion (with a tax rate smoothing mechanism to avoid threshold effects). This contribution may also continue to apply under slightly different conditions for the next FY (under discussion by the French Parliament). VAT VAT is charged on the supply of goods and services, with a standard rate of 20% (alternative rates of 10%, 5.5% or 2.1% apply, depending on the nature of the transactions). VAT can be offset or refunded if incurred for business purposes. VAT applies to French or for -
9. Tax 9.1 Taxation of Business Activities
The below rules may change with the finance bill for 2026 currently being discussed by parliament. Its
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