Relaunching France: improving France’s long-term competitiveness
In early September 2020, it is not surprising that the French government is launching a fiscal stimulus package, France Relance, with the intention of supporting the economy in response to COVID-19.
France Relance’s objective is to build the France of 2030, in a sustainable manner, which will allow France to consolidate itself more as a robust and attractive economic environment on a global scale. This will mainly be facilitated by an investment of 100 billion euros (1/3 of the annual state budget), of which 40% will be financed by the EU.
One of the three main objectives of the package is to regain the country’s competitiveness and foster higher levels of economic growth. As VSEs and SMEs represent 1/3 of economic activity in France, particular emphasis is placed on enhanced support for these companies, which will essentially result in investments of 25 billion euros.
As part of the plan to regain France’s long-term competitiveness, four main areas would be addressed:
- Business Taxation
- Corporate financing
- Investment in digital technology
- Technological sovereignty
The reduction in corporate taxation aims to increase the competitiveness of companies and encourage industrial companies to expand in France.
The confirmed reduction in production taxes would concern both the territorial economic contribution, made up of the CVAE and the CFE, and the property tax on built buildings:
- CVAE would be halved for all companies
- The CFE and the property tax on industrial establishments would be rethought, in order to reduce them by half as well, by reducing the rental value used as the basis of assessment
- The CET ceiling would be lowered to 2% of its added value (instead of 3% currently).
France Relance also aims to restore the investment capacity of VSEs and SMEs, following the reduction in economic activity that ensued during the initial quarantine period. The package will facilitate this thanks to:
- Public guarantee of selected funds and investments, the most relevant for the national long-term sustainable recovery project, which will receive the France Relance label
- State guarantee to support investments made by VSEs and SMEs through the granting of participatory loans by banking networks
Investment in digital technology
For the future, in order to improve the competitiveness of VSEs and SMEs, France Relance has been designed to support these companies in their digital transition in the form of investment aid in the technologies of the future. This would replace the exceptional deduction mechanism provided for in the CGI.
The COVID-19 epidemic has highlighted the industrial and technological dependence of the French economy, as well as the need to strengthen national production and the support of certain strategic industries in France.
The following sectors have been strategically selected to benefit from this investment support:
- Food industry
- Industry (metals and alloys, industrial raw materials, intermediate products, chemicals, etc.)
For example, in order to boost the agricultural sector and its environmental performance, the tax credit for organic farming would be renewed and a tax credit with high environmental value would be put in place.
Likewise, to further strengthen France’s technological sovereignty, within this component of France Relance , measures have been designed to maintain and relaunch R&D in companies, in order to preserve the skills, jobs and competitiveness of companies. French. For example, the employment of private R&D personnel would be supported by opening up the possibility of making them available on a temporary basis in public laboratories, 80% of the costs being borne by the State.
The technical details of most policies relating to France Relance will be spelled out in the 2021 finance bill. The package aims to support the existing industry in France, as well as provide additional incentives for companies to do so. establish, in an effort to further consolidate France as an attractive economic landscape that will benefit from the economic advantages of its membership of the EU.
For more information on the France Relance plan , please consult https://www.gouvernement.fr/france-relance or send an email to our team at [email protected] if you wish to know more about the ramifications of the package .
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