IS: the reduced rate of 15 % for SMEs, conditions and limits

The reduced corporate tax rate is 15%. It applies to the portion of profit up to €42,500; above that amount, the standard rate of 25% applies. To qualify, the company must have a turnover of €10,000,000 or less and fully paid-up share capital, at least 75% of which must be held by individuals.

A news item on impots.gouv.fr dated April 14, 2026, concerns companies belonging to a group: according to it, the relevant turnover figure is that of the entire group that owns the company. Further details are provided below.

This page describes the conditions and schedule. It does not address dividend taxation, holding company structures, or the calculation of each interim payment. It does not indicate whether your company meets the conditions: this must be verified based on your financial statements and shareholding structure.

The two rates

The standard rate is 25% of taxable income (%) for fiscal years beginning on or after January 1, 2022 (impots.gouv.fr). The €42,500 cap applies to fiscal years ending on or after December 31, 2022; it was €38,120 for fiscal years ending before that date (BOFiP BOI-IS-LIQ-20, version of June 21, 2023). Service-public.gouv.fr (information verified on February 17, 2026) indicates the standard rate of 25% of taxable income (%) and the reduced rate of 15% of taxable income (%) for the portion of profits up to €42,500.

The BOFiP (Official Bulletin of Public Finances) states that small and medium-sized enterprises subject to corporate income tax automatically benefit from the reduced rate when they meet the conditions. These conditions are set out in paragraph b of section I of Article 219 of the General Tax Code, as cited by the BOFiP.

The conditions

Revenue. The BOFiP defines it as the amount of revenue received, excluding taxes. It specifies that financial income is not taken into account. For an activity carried out both in France and abroad, only the portion generated in France is considered (BOFiP, § 40).

Ownership by a company. The 75% threshold (%) can be reached through a company that is itself at least 75% owned by individuals (service-public.gouv.fr). The BOFiP (French Official Tax Bulletin) excludes, for this calculation, holdings held by venture capital firms when there is no relationship of dependency with the company. The number of permitted ownership levels should be verified in the BOFiP before structuring the entity.

The proof. It is up to the company claiming the reduced rate to justify that it meets the conditions, and it must attach to its income statement a specific statement of the distribution of its share capital.

An exercise that does not last twelve months

For fiscal years of a duration other than twelve months, the BOFiP (French Official Tax Bulletin) adjusts the turnover figure pro rata temporis: it is multiplied by the ratio between 12 and the number of months in the fiscal year. The BOFiP (BOI-IS-LIQ-20-10, § 1) expresses the limit as €42,500 "per twelve-month period." The treatment of this limit for fiscal years of a different duration should be verified with the source before calculating the figure.

Companies belonging to a group

News from 14/04/2026 on impots.gouv.fr. It states that, according to the Council of State (decision no. 481 538 of March 13, 2025), the turnover to be taken into account to verify eligibility for the reduced rate is that of the entire group owning the company, whether or not this group is consolidated for tax purposes. It targets companies that wrongly benefited from the reduced rate for the 2023 and 2024 fiscal years. They must file amended tax returns, along with payment of the corresponding corporate income tax. The tax authorities indicate that no penalties or late payment interest will be applied for adjustments made up to May 20, 2026, and that requests for payment plans will be considered favorably.

This date has passed. For regularization after May 20, 2026, please contact your business tax office.

The BOFiP (BOI-IS-LIQ-20-10, version of 21/06/2023) also contains information on tax groups. Before relying on any text, verify with the source. If your company belongs to a group, or holds shares in a group, have your situation reviewed before filing your tax return.

Declare and pay

• The statement of results It is generally filed within 3 months of the end of the financial year. The information sheet refers to income statement form no. 2065. For a financial year ending on December 31, 2025, service-public.gouv.fr indicates May 20, 2026, including an additional 15-day period; this date has passed.
• The payment Payment is made in five installments: four quarterly installments and a final payment. Service-public.gouv.fr states: "Each installment payment is made on a fixed date: March 15, June 15, September 15, and December 15," and specifies that the deadlines depend on the fiscal year-end date. For a fiscal year that does not coincide with the calendar year, see the table in the information sheet.
• No deposit required if the IS is less than €3,000 (service-public.gouv.fr).
• The balance is equal to the tax due on profits for the financial year, less any advance payments made. It is due no later than the 15th of the 4th month following the end of the financial year: May 15th for a financial year ending on December 31st.

Reduced corporate tax rate for SMEs: a numerical example (fictitious profile)

Situation. Marc is the manager of a fictitious limited liability company (SARL) of which he owns all the fully paid-up capital. The fiscal year lasts twelve months. Turnover is €3,000,000 and profit is €120,000. The company does not belong to any group.

Issue. How much corporate tax does the company owe, and what difference does the reduced rate make?

Strategy. 15 % is applied to the share of profit up to €42,500, then 25 % to the remainder, after verifying the conditions: turnover less than €10,000,000, paid-up capital, ownership by a natural person.

Result. €42,500 × 15 % = €6,375; (€120,000 − €42,500) × 25 % = €19,375; ; Total IS: €25,750. Without the reduced rate, the tax would be €30,000 (€120,000 × 25 %). The difference is €4,250. This example does not calculate advance payments.

A second case. Another fictitious company closes its first 9-month fiscal year with €8,000,000 in revenue. The coefficient is 12/9, or 1.333. The adjusted revenue is €10,666,667. This exceeds €10,000,000: according to this pro-rata rule, the revenue requirement is not met, despite the actual figure being below the threshold.

These figures illustrate rules. They do not say what your company will pay.

Reduced corporate tax rate for SMEs: what changes depending on your situation

• Your shareholding : natural persons or companies, and their own associates.
• Belonging to a group : tax integrated or not, with the news from 14/04/2026 above.
• The duration of your exercise, especially for a first exercise.
• The nature of your recipes : the BOFiP specifies the calculation of the turnover of companies that manage their movable assets.
• The 2023 and 2024 fiscal years, if the reduced rate was applied in a group.

The rule depends on your situation. No results are guaranteed.