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As the June 16 deadline looms, French businesses and self-employed professionals face a crucial date to avoid penalties on their Cotisation Foncière des Entreprises (CFE) tax. This local business tax, based on income or property value, plays a significant role in municipal financing and directly affects a broad spectrum of enterprises, from sole traders operating out of a single desk to large corporations.
What is the CFE?
The CFE is a local tax levied by French communes and applies to most businesses generating more than €5,000 annually. Uniquely, it considers either the value of the property where the company operates or its income, beginning from the second year of activity.
Self-employed professionals are also subject to this tax, regardless of whether their business occupies an entire office or a single workspace at home.
Advance Payment Requirement
Businesses that paid €3,000 or more in CFE in 2024 must make an advance payment on their 2025 tax bill by June 16, 2025—failure to do so results in an automatic surcharge of 5% on their tax amount.
Unlike many other tax payments, no separate demand notice is sent for this advance payment. Taxpayers must proactively check their due amount on their “Professional” account at the official tax portal.
Those with direct debit agreements will collect the payment automatically on or shortly after June 16.
Who Is Exempt?
Businesses with a CFE bill under €3,000 last year are exempt from the advance payment and can settle their full bill in December without penalties.
Implications for Business Cash Flow and Compliance
This advance payment requirement places additional cash flow management pressure on businesses, especially SMEs and sole traders operating with tight margins. The lack of notification for the deposit amount increases the risk of missed payments, inadvertently triggering penalties.
Tax advisors recommend businesses:
- Regularly monitor their online tax accounts to track amounts due.
- Set up direct debit payments to avoid late penalties.
- Plan cash flows to accommodate these biannual payment obligations.
Conclusion
The French CFE tax mechanism exemplifies how local taxes, though less discussed internationally, can significantly impact business finances and operational planning. As France continues to balance municipal revenues with business vitality, awareness and compliance with deadlines like June 16 are critical to avoid unnecessary financial burdens.
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