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French Temporary Tax Cleared By Constitutional Court

by Ulrika Lomas, Tax-News.com, Brussels

30 November 2017


France's Constitutional Court has ruled that a proposed temporary additional tax on large companies, recently approved by parliament, does not breach the country's constitution.

The court considered the constitutionality of the tax after members of parliament challenged the manner in which the measure was passed, as well as the legality of the tax itself.

In its ruling, issued on November 29, the court said that the tax was not "confiscatory" or discriminatory against the companies in question, and was in conformity with the French constitution.

The amendment, approved by parliament on November 14, 2017, effectively increases the corporate tax from 33.3 percent to 38.3 percent for companies with turnover in excess of EUR1bn (USD1.2bn) and to 43.3 percent for companies with turnover in excess of EUR3bn.

The temporary surcharge will apply for financial years ending between December 31, 2017, and December 30, 2018.

The measure is intended to raise an additional EUR5bn in revenue, which, when combined with proposed spending cuts, will allow France to meet its 2.9 percent of GDP budget deficit target for 2017.

The French Government is facing a bill of around EUR10bn to refund companies that paid a surtax ruled illegal by the country's Constitutional Court on October 6, 2017.

TAGS: court | tax | budget | corporation tax | transfer pricing | France

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