CFE 2026: French Local Business Tax, Exemptions and Filing Guide

Short answer — The Cotisation Foncière des Entreprises (CFE) is a local tax due by any business that carries out a professional activity in France, regardless of its legal status or tax regime. In 2026, CFE is still based on the rental values of real estate assets used by the business, with rates varying by municipality. This guide covers calculation, exemptions, CVAE and payment deadlines.

What is CFE?

CFE is established by Article 1447 of the French General Tax Code (CGI). Since 2010 it replaced the business tax (taxe professionnelle) and is due by any person (individual or legal entity) who carries out a non-salaried professional activity on 1 January of the tax year.

CFE liable parties:

• Craftspeople, traders, liberal professionals
• Companies (SARL, SAS, SA, etc.)
• Micro-business self-employed (unless exempt)
• Associations with profitable economic activity

CFE exempt parties:

• Employees with non-salaried activity without premises
• Public establishments and local authorities
• Agricultural activities (subject to property tax)
• Certain regulated activities

Tax base and rental values

CFE is calculated on the rental value of real estate assets used by the business on 1 January of the tax year. This rental value corresponds to the theoretical annual rent the property could generate on the market.

Assets taken into account:

• Commercial premises and offices
• Warehouses and workshops
• Industrial machinery and installations (if > €500,000 in value)
• Vehicles used on site (delivery vans, for example)

Excluded assets:

• Leased assets (if costs borne by the owner)
• IT and office equipment
• Inventory and merchandise
• Passenger transport vehicles

Exemption for businesses without premises: businesses using no real estate may benefit from a CFE exemption, subject to application. They then pay a minimum CFE.

CFE rates by municipality

The CFE rate is set by each municipality or intermunicipal public establishment (EPCI). It varies considerably by territory:

Rates are available on the Direction Générale des Finances Publiques (DGFiP) website or from the relevant municipality.

Important: in Paris, CFE is merged with the household waste collection charge (TEOM) since 2015. The combined rate includes both levies.

Exemption for Young Innovative Enterprises (JEI)

Young innovative enterprises (JEI) can benefit from a full CFE exemption for 7 years, subject to conditions:

Eligibility conditions:

• Company created less than 8 years ago
• Sum of R&D personnel costs > 15% of personnel costs
• Alternative: Young Innovative Enterprise label issued by a competent body
• Turnover < €10 million or balance sheet total < €2 million
• Independent company (no > 25% stake held by another company)

Procedure: the exemption is not automatic. The company must apply to the business tax office (SIE) before 1 January of the year of application, using form n° 1447-M-SD.

Exemption for micro-businesses (self-employed)

Micro-business self-employed under the micro-social scheme are exempt from CFE as long as their turnover remains below the exemption threshold. This threshold is the same as for the VAT exemption:

Threshold exceedance: exceeding the threshold for 2 consecutive years automatically switches the self-employed to standard CFE. Standard CFE implies taking into account actual rental values.

Urban enterprise zone (ZFU) exemption

Businesses located in an Urban Enterprise Zone (ZFU-TE) can benefit from a CFE exemption for 5 years:

• Years 1 to 3: full exemption
• Years 4 and 5: progressive exemption (respectively 60% and 40%)

Conditions:

• Workforce < 50 employees
• Turnover < €10 million
• Location in ZFU perimeter before 31 December 2025
• Activity mainly carried out in the zone

Verification: the list of ZFU municipalities is available on the ANAH website and updated annually.

New business exemption

Businesses created in 2026 benefit from a first-year CFE exemption, subject to application. This exemption is automatic for new businesses created during the year.

Procedures: the application is made via form n° 1447-M-SD attached to the initial CFE return (form n° 1447-C).

Seasonal activity exemption

Businesses operating only part of the year (ski resorts, agriculture, festivals) can request partial or full exemption, proportional to the activity period.

CVAE overview

CVAE is the other component of the contribution économique territoriale (CET), alongside CFE. It is due by businesses whose turnover exceeds €500,000.

CVAE calculation:

• Rate: 0.75% of the added value produced
• Floor: 0% (businesses with negative or very low added value)
• Ceiling: 0.75% × 60% of turnover excl. VAT

Progressive CVAE abolition

The 2026 Finance Act confirms the progressive abolition of CVAE started since 2021:

This progressive abolition represents significant savings for SMEs, especially those with high added value.

In 2026, the CVAE rate is therefore 0.42% for businesses exceeding the €500,000 turnover threshold.

Payment deadlines

CFE is payable annually in a single instalment (no monthly payments unlike property tax). In 2026, deadlines are:

Monthly payment: businesses can opt for monthly CFE payment, with 10 monthly instalments (January to October). The option is tacitly renewed each year.

Online filing on impots.gouv.fr

The CFE return is filed via form n° 1447-C (rental value declaration) and n° 1447-M (request for capping, exemption or relief).

Filing steps:

1. Connect to the professional space on impots.gouv.fr
2. Access "Manage my real estate assets" section
3. Declare or update rental values
4. Check the rate applied by the municipality
5. Automatic calculation of CFE due

Automatic declaration: for businesses already declared in previous years, DGFiP sends a pre-filled tax notice. The business must verify and correct it if necessary before 15 June.

Capping of CFE based on added value

Businesses whose CFE represents more than 3% of their added value can request capping. This mechanism limits CFE to 3% of added value.

Form: capping request via form n° 1447-M-SD.

Calculation:

CFE due (after exemptions) / Added value = ratio %
If ratio > 3%, capping request possible
Capped CFE = Added value × 3%

This mechanism benefits capital-intensive businesses (real estate, machinery) but with low added value.

Permanent establishments

CFE is due in each municipality where the business has a permanent establishment (offices, warehouse, point of sale). For multi-site businesses, CFE is due in each municipality of establishment.

Distribution in case of multiple registration: a business may be registered with the Trade Register (RCS) in only one department but operate in several. It will pay CFE in each department.

Businesses without a fixed address

Show business, fairground or itinerant businesses pay CFE at the place of their main activity. The rental value is determined based on the locations.

Rental of real estate

When a business rents a property, it is liable for CFE on the rental value of that property. The owner only pays property tax if the occupant is exempt or if the lease contractually provides for it.

Lease clause: in practice, commercial leases often include a clause for passing on CFE to the tenant. Check your leases.

Request for correction

If you notice an error on your CFE notice, you can request a correction from the SIE within 3 years of the notice date.

Accepted correction reasons:

• Error on the surface area or nature of the premises
• Incorrect municipal rate
• Forgotten exemption
• Double taxation (same premises declared twice)

Rental value audit

DGFiP may audit the rental value used to calculate your CFE. Tax services can:

• Request justifications on the premises characteristics
• Proceed with a revaluation of the rental value
• Initiate a rectification procedure with a 30-day response period

Hayot Expertise advice: we recommend systematically verifying the consistency between your CFE declaration and the reality of your premises. An overvalued rental value generates excessively high CFE for several years.