Application for exemption from business property tax (cotisation foncière des entreprises)

All self-employed professionals on January 1st of the tax year are liable for the CFE (cotisation foncière des entreprises), regardless of their activity or the legal status of their company. However, certain businesses may apply to their local business tax office for an exemption, particularly if their sales do not exceed a certain ceiling.

What is the "cotisation foncière des entreprises"?

The cotisation foncière des entreprises is a local tax payable by businesses. It is part of the Contribution économique territoriale (CET), which also includes the Cotisation sur la valeur ajoutée des entreprises (CVAE).

CFE is based on the rental value of property subject to property tax. If a company owns premises or land in several communes, it is liable for CFE in each of these communes.

Who has to pay for it?

All businesses are subject to CFE, whether they are companies or sole proprietorships, including micro-businesses.

More broadly, all individuals who carry out a self-employed professional activity on a regular basis must pay the Cotisation Foncière des Entreprises, whether or not they are of French nationality, whatever their activity and whatever legal status they have chosen to carry it out.

To be subject to CFE, the activity must be carried out on a professional basis, be of a habitual nature and be self-employed.  

How is the CFE calculated?

The CFE tax rate is set by the municipality or local authority. This rate is voted each year.

The amount of the CFE also depends on the tax base, which is established on the basis of the rental value of property subject to property tax, and used by the company on a professional basis during the year N-2 of taxation. For the 2021 CFE calculation, the assets used in 2019 are taken into account.

In concrete terms, for companies with business premises, the CFE amount is obtained by multiplying the tax rate by the tax base.

For home-based entrepreneurs, the calculation is different. Instead of referring to the rental value of the property used, the tax authorities apply a minimum base, calculated on the basis of sales generated in year N-2. For each sales bracket, a different minimum base therefore applies, which, multiplied by the tax rate, gives the total amount of CFE.

Please note: the tax authorities make a distinction between the year a company is created and its first activity. So, if you set up your business in 2019, but only recorded your first sales in 2020, the tax authorities will consider that your business was only created in 2020.

You will therefore pay no CFE in 2020. In 2021, by way of exception, your information for 2020, i.e. for the year N-1 and not N-2, will be taken into account, and your tax base or minimum base (depending on whether you operate from premises or from home) will be reduced by 50%. Only in 2022 will you pay your CFE at the full rate.

There are also special cases. For example, the CFE tax base is reduced by :

  • 30% for industrial plants ;
  • 75% for craftsmen with 1 employee, 50% for 2 employees and 25% for 3 employees, provided that the remuneration for the work is greater than half the sales including VAT;
  • 25% for companies based in Corsica, on the share collected by municipalities or municipal groupings with their own tax system.

Who can apply for CFE exemption?

A number of companies are eligible for CFE exemptions, based on their sales, the location of their business, the nature of their activity, or in the event of financial difficulties. Exemptions may be partial or total.

Temporary exemptions

The following companies are temporarily exempt from CFE:

  • Companies in their 1st year of business, whether this is the year of creation or the year in which the 1st sales figure was recorded;
  • Companies setting up or expanding establishments: this 3-year exemption is optional and decided by local authorities;
  • Under certain conditions, companies located in a "bassin d'emploi à redynamiser" (BER), a "quartier prioritaire de la politique de la ville" (QPPV) or a "zone de restructuration de la défense" (ZRD).

Permanent exemptions

The following companies are permanently exempt from CFE:

  • Companies with annual sales excluding tax of less than €5,000;
  • Microentrepreneurs engaged in artisanal activities, provided that manual labor is predominant, that they do not use facilities likely to be considered a significant part of their remuneration, that the capital employed is low, and that they do not speculate on raw materials, which excludes bakers, pork butchers and butchers;
  • Approved magazine publishers and press agencies;
  • Self-employed door-to-door salespeople if their remuneration is less than 16.5% of the annual social security ceiling;
  • Sub-letting or rental of bare buildings for residential or other use, where sales are less than 100,000 euros excluding tax;
  • Under certain conditions, private educational establishments ;
  • Sportsmen and women ;
  • Art photographers and artistic professions such as draughtsmen, sculptors, engravers and painters if they only sell the production of their art, as well as authors, composers and dramatic and lyrical artists;
  •  Nurses and midwives.

The full list of activities eligible for CFE exemption is available on the Bulletin officiel des finances publiques - impôts. Exemptions must be applied for by sending a request to the relevant Service des Impôts des Entreprises (SIE) as soon as you receive your tax notice. Please note: CFE notices are not sent by post, but are made available on the professional area of the website.

Sample letter requesting exemption from business property tax (cotisation foncière des entreprises)