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France : new exceptional taxes targeting large companies


Last month, the French constitutional Court ruled that the 3 % tax on distributions of profits was not compatible with the French Constitution (Conseil constitutionnel, 6 octobre 2017, n°2017-660 QPC). The consequences of this decision are severe for the French State’s budget as taxpayers are entitled to claim approximately € 10 billion for the recovery of the unduly paid tax.

The French government has decided to finance half of those reimbursements through two new taxes:

  • An “exceptional” tax targeting companies subject to corporate income tax (CIT) whose turnover exceeds € 1 billion: the tax would be 15 % of the amount of the CIT;
  • A “surcharge” of the “exceptional” tax targeting corporations subject to CIT whose turnover exceeds € 3 billion: the tax would be 15 % of the amount of the CIT. It means that, for the latter corporations, the total amount of the taxes would represent 30 % of the CIT.

Those two taxes are provided in a dedicated budget bill introduced at the National assembly on 2 November (see the dedicated page on the Assembly’s website).

Regarding the technical aspects of those taxes, we are drawing your attention to the following points:

  • taxable year: the taxes would be based on the CIT due for the fiscal year (or fiscal years) ending as of 31 December 2017 and up until 30 December 2018;
  • amount of CIT to consider: the taxes would be based on the gross amount of CIT, i.e. before the application of tax credits or the discount of any tax debts. The amount of the CIT
    would be calculated using the normal CIT rate and the different rates provided by article 219 of the French Tax Code (FTC);
  • tax consolidated groups: the consolidating corporation would be liable to the two taxes that would be based on the amount of CIT calculated on the consolidated taxable income of the group (including the net consolidated capital gain). The turnover to take into account to determine whether or not a corporation is subject to one or both taxes should be the aggregation of member companies’ turnovers.
  • tax credits and reductions: tax credits and reductions would not be deductible from the amounts of either taxes. The latter rule may appear surprising in the case of foreign tax credits as both taxes could fall within the scope of tax treaties which could provide for such a deduction.
  • payment calendar:
    - 95 % of the estimated amount of the two taxes should be paid by anticipation: this upfront payment would be payable at the same date as the CIT last down-payment (corporations closing their fiscal year on 31 December would have an extended deadline set on 20 December for the anticipated payment of the two taxes);
    - the balances of the two taxes would be payable at the same date as the CIT balance.