French Legislature Considering 2021 Finance Bill

by Ulrika Lomas, Tax-News.com, Brussels

10 December 2020

France's Senate is considering the country's 2021 Finance Bill, following approval in late November by the National Assembly.

The Bill includes numerous recently announced corporate tax reliefs. The Senate is expected to sign off on the legislation no later than December 8, 2020.

The National Assembly backed the inclusion of new Article 3h, which would increase the annual turnover threshold for small companies to qualify for the 15 percent concessionary rate of corporate tax to EUR10m, from EUR7.63m, with effect from January 1, 2021.

In addition, new Article 2b sets new withholding tax bands and rates for non-resident individuals' employment income for 2021, as follows:

• income up to EUR15,018, zero percent;
• income thereafter up to EUR48,563, 12 percent (or eight percent for recipients situated in overseas French departments); and
• income above EUR43,563, 20 percent (or 14.4 percent for recipients in overseas French departments).

As announced by the Government in early September, the 2021 Finance Bill will halve the burden of three local level taxes. These are the company value-added contribution (CVAE) and the businesses property contribution (CFE), which collectively make up the Territorial Economic Contribution (CET), and also the property tax on buildings (TFPB).

Currently, companies whose CET liability is greater than three percent of their added value can apply for CFE tax relief. The Finance Bill reduces the cap to two percent.

The Finance Bill also includes proposals to introduce a VAT group regime, enabling groups of companies to be represented by a single entity for VAT purposes and disregard (for VAT purposes) transactions between members.

Additionally, a further seven low-yield taxes will be abolished by the 2021 Finance Bill, following the repeal of 26 such taxes in 2019 and 20 in 2020.

The French Government has additionally said that it intends to lower corporate tax to 25 percent by 2022, beginning with a cut to the rate to 27.5 percent for large companies and to 26.5 percent for companies with a turnover of less than EUR250m (USD293m) from 2021.

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