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Value Added Tax
- Excluded from any postponement for payment so far, subject to the exceptional measures mentioned below.
- For companies facing practical difficulties to compute the exact amount of VAT due, one-shot possibility to declare and pay based on an estimate (e.g. 80% of VAT paid during the previous month).
- For companies facing a decrease of their turnover due to the Covid-1 crisis, possibility to declare and pay in April, as regards March 2020, an instalment equal to (i) 50% of February VAT if the activity has stopped since mid-March or if the decrease of turnover can be estimated to at least 50%, or to (ii) 80% if the turnover has decreased to a lesser extent.
- Reduction of the VAT rate from 20% to 5.5% for domestic supplies, intra-community acquisitions and imports of masks, protective clothing and personal hygiene products. For imports, this rate applies since 26 April 2020. For domestic and intra-community supplies, this rate applies retroactively to 24 March for masks and protective clothing and to 1 March for personal hygiene products.
Corporate Income Tax
- Extension of deadline for CIT payments (deferral or suspension) without penalties. For companies and groups with more than 5,000 employees or with consolidated sales in excess of EUR 1.5 billion in France, this is subject to compliance with the following conditions (i.e. liability commitment):
- They must commit not to make distributions nor to buy-back their own shares between 27 March 2020 and 31 December 2020. Distributions within the group remain possible when they aim that supporting a French company in meeting its commitments to its creditors. In addition, payment of dividends by foreign subsidiaries to French companies would not jeopardize the request for deferral requested by the latter.
- They must not have their registered office, their place of effective management or a subsidiary without economic substance in a non-cooperative State or territory for tax purposes (these States are Anguilla, Bahamas, Fiji, Guam, British Virgin Islands, American Virgin Islands, Oman, Panama, American Samoa, Samoa, Seychelles, Trinidad and Tobago, Vanuatu).
- A company which does not take these commitments or infringes them will be required to pay immediately the corresponding taxes together with late payment penalties (5% penalty + late payment interest at the rate of 0.2% per month starting from the standard liability date).
- Possibility to apply for CIT rebates for companies in distressed financial situation due to Covid-19
- Deadlines to file 2019 CIT returns for companies closing their tax year on 31 December should be postponed from 20 May 2020 to 31 May 2020
Social Security Contributions or Payroll Tax
- Extension of deadline, for payment of social security contributions and payroll tax due in March, April and May. For companies and groups with more than 5,000 employees or with consolidated sales in excess of EUR 1.5 billion in France, this is subject to compliance with the conditions of the liability commitment (see above).
- Cancellation of social security charges for all companies with less than 10 employees affected by an administrative closure decision during the lockdown. The details of this exemption remain to be specified by the government, but it should relate to the payroll taxes due for the months of March, April and May 2020.
- Postponement to 30 June of the deadline for filing the DAS2 form (instead of 15 May).
Other relief measures
- Possibility to apply for corporate real estate contribution (CFE) and company value-added contribution (CVAE) rebates for companies in distressed financial situation due to Covid-19
- Acceleration of the payment of tax authorities outstanding debts (tax credit for research expenses, VAT credits, etc.) and of invoices awaiting payment by the State, local authorities and government agencies upon request
- Creation of a business solidarity fund:
- It provides for a monthly allowance to small companies with fewer than 10 employees (excluding those belonging to a group of companies), with 2019 turnover of less than EUR 1 million and an annual taxable profit of less than EUR 60,000 for the last financial year closed.
- The allowance is allocated provided that they have been affected by an administrative closure decision or suffered a decrease of at least 50% of their turnover for the month for which the aid is requested, compared with the previous year.
- This monthly allowance is equal to the declared loss of turnover for the month, within the limit of EUR 1 500.
- An additional allowance ranging from EUR 2 000 to EUR 5 000 may also be allocated when it is established that the companies concerned are at risk of bankruptcy.
- This allowance should be neither taxable nor subject to social security contributions.
- Partial activity mechanism:
- The companies concerned by this mechanism compensate:
- employees paid above the minimum wage: up to 70% of their gross salary (approximately 84% of net salary); and
- employees paid at the minimum wage or less: up to 100%.
- The companies are then fully reimbursed by the State for salaries up to EUR 6,927 gross monthly (i.e. 4.5 times the minimum wage).
- The eligible companies are those concerned by the obligation to close down an establishment, facing a decline in activity/supply difficulties, and which are not able to put in place the necessary preventive measures to protect the health of employees (teleworking, barrier gestures, etc.).
- The French Ministry of Labor has announced that, as from 1 June 2020, companies will have to contribute to the wages of their employees maintained on partial activity, except in certain sectors (hotels, restaurants, etc.) where partial activity will continue to be fully compensated by the State (within the above-mentioned limit).
- No new tax audits will be launched.
- For ongoing tax audits, no procedural documents should be sent by the tax authorities, unless they would be statute barred otherwise. Companies may differ replies to document requests and conference call proposals by tax inspectors.
- Procedural deadlines are frozen between 12 March 2020 and 24 June 2020 (1 month after the current estimated end of the health state of emergency period) both for the taxpayers and the tax authorities, and more generally in all areas of law.
- Forced collection of public debts (including tax debts) is suspended during the state of health emergency period increased by 3 months.
- State guaranteed loans mechanism (“PGE”):
- This mechanism concerns loans granted by credit institutions and is available until 31 December 2020.
- The state guaranteed loan can represent up to 25% of the company’s 2019 turnover or two years of payroll for innovative companies or companies created since 1 January 2019.
- No repayment will be required in the first year; the company may choose to amortize the loan over a maximum period of five years.
- For companies and groups with more than 5,000 employees or with consolidated sales in excess of EUR 1.5 billion in France:
- This is subject conditions related to the distribution of dividends or share buybacks and presence in non-cooperative states and territories (see above).
- In any case, the State guarantee will only cover 70 % or 80 % of the loan.
- For all other companies, the State guarantee covers 90 % of the loan.
- On the part of the loan not covered by the State guarantee, the bank must not take any guarantee or security.
For additional information please refer to the COVID-19 Tax Hub.