Following a March 2025 ruling by France's highest administrative court, companies that incorrectly benefited from reduced corporate tax rates based on individual rather than group-wide turnover calculations have been given until 20 May 2026 to file corrected returns without facing penalties or interest charges.
The French tax administration announced penalty relief for companies on 14 April 2026, that incorrectly claimed a reduced corporate income tax rate, following a landmark decision by the Council of State in March 2025.
On 13 March 2025, France’s highest administrative court ruled in case No. 481,538 (TDA Company) that businesses must consider their entire group’s turnover when determining eligibility for the reduced tax rate—not just individual company revenues.
The reduced corporate income tax rate of 15% applies to a portion of profits up to EUR 42,500 annually for companies with a turnover below EUR 10 million. However, the Council of State clarified that this threshold must be calculated using the consolidated turnover of all companies within a group, regardless of whether the group files consolidated tax returns.
The court’s reasoning drew on European Union case law, noting that legislators intended this tax benefit exclusively for genuinely small businesses. Companies belonging to larger groups have access to resources and support unavailable to independent competitors of similar size, making them ineligible for the preferential treatment.
Companies that wrongly applied the reduced rate for fiscal years 2023 and 2024 must file amended tax returns by 20 May 2026—the deadline for online filing of 2025 results.
The tax authority has guaranteed that corrections made before this deadline will incur no penalties or late payment interest. Officials have also indicated they will favourably consider requests for payment plans to settle any additional corporate income tax owed.
This relief measure allows affected businesses to rectify their tax positions without facing the financial penalties typically associated with incorrect filings.
