Finance bill: summary of the main measures

The Minister for Economy and Finance, and his Minister Delegate, who announced together the France Relance fiscal stimulus package, recently presented the Draft Finance Bill for 2021.

The primary measures, most relevant for businesses, are laid out below :

1. Adjustment of the TEC cap according to the value added

The ceiling on the territorial economic contribution (CET) cap is to be lowered to 2% of its added value (instead of the current 3%).

2. Tax neutralisation of the step-up for companies conducting a free revaluation of their assets

The Bill allows the taxation of the latent capital gain for depreciable capital assets to be placed on a deferral regime. For non-depreciable fixed assets, a tax deferral regime is to be introduced until future disposal of these assets.

3. Spreading of the taxation of capital gains on the sale and the leaseback of buildings

A sale-leaseback transaction is carried out when a company that owns a business property transfers it to a lessor, and simultaneously becomes a lessee.  The leasing contract is accompanied by a purchase option which allows the transferring company to take over the property.

A tax deferral system was introduced in the amended Finance Act for 2009. Article 6 of the 2021 Draft Finance Act aims to restore this system. Thus, the deferral of taxation would be done in equal parts during the term of the leasing contract.

4. Adjustment of the Crédit Impôt Recherche (CIR) and Innovation Tax Credit (CII)

Article 8 standardises the procedures for taking into account expenditure arising from research operations that are entrusted to third-party organisations for the calculation of the CIR. The doubling of the base rate, that had been introduced for research operations entrusted to public bodies, is to be eliminated.

The more generous CIR rate applicable to expenditure incurred in Corsica will be reduced from 50% to 35%, bringing it more in line with the European regulations on State aid.

5. Deferred application of the proposed VAT changes for e-commerce

In 2017, the EU council adopted new rules, which made it easier for online businesses to comply with their VAT obligations; these rules will now apply from 1 July 2021, instead of from January 2021.

6. Abolition of the requirement to register certain corporate deeds

In order to simplify procedures for companies, certain deeds including the registration of share capital increases/decreases will no longer have to be registered.

 

This list is not exhaustive and our team remains at your disposal to explain the ramifications of these proposed measures in more detail.

 

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