An income tax return is a key set of documents for any business subject to a “régime réel,” which includes the simplified tax assessment regime and the normal tax assessment regime. A return makes it possible for the tax authority to determine the amount of tax to be paid and serves as a reference for third parties wishing to assess a company’s financial health. This article covers the key elements of a business income tax return, including what a return is, how it works, what it consists of, how it’s submitted, and which forms to complete depending on your situation.

What’s in this article?

• What is a business income tax return?
  
• What is the purpose of a business income tax return?
  
• Are business income tax returns mandatory?
  
• What does a business income tax return contain?
  
• How to fill out a business income tax return
  
• How to submit a business income tax return
  
• When should a business file its income tax return?
  

What is a business income tax return?

An income tax return is a set of mandatory documents that a business must provide to the French tax authority annually so taxes can be calculated. Created at the close of the fiscal year, it includes many key tax documents, including an income statement, balance sheet, and profit and loss statement. These documents summarize a company’s economic activities and financial situation for the past year.

What is the purpose of a business income tax return?

An income tax return makes it possible for the government to determine the business’s taxable income and calculate the amount of tax due. The documents included in the tax return also serve as verification that the company is in compliance with current regulations.

More than just a formality, a business income tax return is an analytical tool for businesses and their partners. This detailed report provides the company with a comprehensive overview of its performance over the past year. It allows the business to track its evolution from one year to the next, assess its profitability, and make informed strategic decisions.

The tax return also demonstrates the company’s financial health to third parties, including banks, investors, partners, customers, and shareholders. For example, when a business applies for a loan, the bank can use a business income tax return to evaluate the business’s repayment capacity. When a business is trying to raise capital, it might be required to share its tax return with potential investors and partners to justify the business’s valuation and support negotiations. A business must give permission for a third party to view its income tax return.

Are business income tax returns mandatory?

Business income tax returns are mandatory for all businesses subject to the normal or simplified tax regime. Sole proprietorships subject to the basic VAT (value-added tax) exemption regime—benefitting from reduced tax and accounting obligations—are exempt from this requirement.

What does a business income tax return contain?

A business income tax return contains an income statement and supplementary tables detailing the various accounting elements for the fiscal year. The dossier’s contents vary depending on the tax system, tax regime, and business income category. Here are the main components of a business income tax return.

Income statement

Businesses subject to corporate income tax (impôt sur les sociétés, IS) must complete form no. 2065-SD to report their earnings. Businesses subject to income tax (impôt sur le revenu, IR) and whose declaration falls within the category of industrial and commercial profits (bénéfices industriels et commercial, BIC) must submit form no. 2031-SD. Form no. 2035-SD is specifically reserved for self-employed professionals and others earning noncommercial profits (BNC) subject to IR.

Civil real estate companies (SCIs) not subject to IS must fill out form no. 2072-S-SD to report property income (revenus fonciers, RF). Farm operators subject to income tax in the category of agricultural profits (bénéfices agricoles, BA) must provide form no. 2139-SD if they’re subject to the simplified tax regime, or form no. 2143-SD if they’re subject to the normal tax regime.

Supplementary tables

It should be noted that a business subject to the normal tax assessment regime is required to provide more information in the supplementary tables than a business subject to the simplified tax assessment regime. For either regime, a business must provide the following:

• Balance sheet showing assets and liabilities
  
• Income statement
  
• Statement of fixed assets, depreciation, and capital gains and losses
  
• Provisions and statement of receivables and payables
  
• Value added
  
• Composition of share capital
  
• Breakdown of subsidiaries and any shareholding
  

The table below summarizes the forms and attachments you need to submit depending on your situation.

How to fill out a business income tax return

Drafting a business income tax return can be complex. It requires a thorough understanding of financial data and tax regulations. A business income tax return must be based on the results of the previous fiscal year. The business must also verify the consistency, accuracy, and reliability of the data submitted; any error can result in fines, penalties, or a tax adjustment.

A business can use bookkeeping software to automatically generate a business income tax return, or use the services of a certified accountant to ensure the documents submitted are compliant. Examples of business income tax returns are available for free on the French tax authority’s website.

Stripe Revenue Recognition is a powerful tool that provides a complete view of your revenue, generates automatic accounting reports that comply with regulations, and allows you to compare your financial situation over different periods. With Stripe, you can simplify your accrual accounting process, audits, and end-of-month close without engineering resources.

How to submit a business income tax return

Businesses must submit their business income tax returns electronically to the appropriate corporate tax office (service des impôts des entreprises, SIE). Three electronic filing methods are available:

• Electronic Form Exchange (Échange de formulaires informatisé, EFI), used mainly by small and medium-sized enterprises (SMEs) to file their tax return themselves on the tax portal.
  
• Electronic Data Exchange (Échange de données informatisé, EDI) involves transmitting tax returns via approved internal accounting software, meaning software capable of communicating with the tax authorities' servers. This method is particularly popular with large companies.
  
• Electronic Data Exchange by Remote Transmission of Tax and Social Data (Échange de données informatisé par télétransmission des données fiscales et sociales, EDI TDFC), whereby businesses delegate the production and transmission of their business income tax return to a certified accountant who’s authorized by the Public Finances Directorate General (Direction générale des Finances publiques, DGFiP) and who has approved accounting software.
  

When should a business file its income tax return?

The tax return filing deadline is dependent on the closing date of the business’s fiscal year. For businesses whose accounting periods close December 31, the deadline is the second business day after May 1 of the following year. Businesses whose accounting periods close on a different date have 3 months from the closing date to file their tax returns.