French PM Rules Out Extension Of ISF Measure For SMEs

by Ulrika Lomas, Tax-News.com, Brussels

19 June 2009

In a closing speech of the annual “Planète PME” conference, held by the Confédération Générale des Petites et Moyennes Entreprises, the General Confederation of Small and Medium-size Enterprises (SME), France’s Prime Minister François Fillon ruled out any plans to increase the total amount by which taxpayers may reduced their wealth tax or ISF by investing in companies with fewer than 250 employees.

Designed to increase the capital of SMEs, the “ISF-PME” initiative enables taxpayers who invest in SMEs to reduce their wealth tax by up to EUR50,000. According to the French Prime Minister, however, increasing this limit to EUR100,000 would only result in a marginal increase in available capital, since few taxpayers would be affected.

Confirming that the government is examining a proposal to extend the current measure to medium-size enterprises, with up to 5,000 employees, Prime Minister Fillon nevertheless expressed his concern that to do so might be to reduce the finance available for SMEs.

During his speech, Fillon also confirmed the government’s intention to abolish the controversial annual minimum corporate income tax or IFA within three years. Previously levied on all businesses, 230,000 companies, realising a turnover of less than EUR1.5m, will be exempt from the tax this year, while nearly all SMEs will become exempt next year as the threshold rises to EUR15m.

Emphasising the government’s commitment to a global reduction in the tax burden borne by French businesses, Prime Minister Fillon reassured those present that the local business tax or “taxe professionnelle” will not be replaced by another increase in charges for businesses.

Improving the competitiveness of French businesses and boosting the French economy will be at the heart of the 2010 Finance Law, Fillon added.

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