Tax news in the light of the 2022 Finance Act

As every year, a new finance law is adopted, setting out the new rules for taxation.

On 30 December 2021, the Finance Act 2022 was amended.

What new features does this law bring us?

 

• For individuals

This new law is characterised by a strong desire to promote economic growth, which was strongly affected by the COVID19 pandemic. The aim here is to restore a balance to public finances. This is reflected through these main measures :

 

• A reduction in income tax: the brackets of the progressive income tax scale are revalued to take into account the consequences of inflation.

Thus, a revaluation of 1.4% will be applied for the 2021 income.

 

• – Reinstatement of the tax credit for personal services: the services eligible for this tax credit, which were abolished by a decision of the Council of State in 2020, are reinstated. The scope of this credit has also been clarified and now includes home-based activities.

 

– The progressive exemption from the taxe d’habitation continues: households still subject to the taxe d’habitation will benefit from an exemption of up to 65%.

 

– Maintaining the increased deduction limit for donations to the most disadvantaged: the applicable rate remains 75% for all donations of €1,000 or less for 2021 income.

 

– The extension of MaPrimRénov: this scheme, which supports the energy renovation of housing, is maintained but will only be applicable to housing older than 15 years.

 

• – Strengthening the fight against domestic violence: the 2022 Finance Act creates new tax credits to strengthen measures to combat domestic violence and prostitution..

 

• The creation of a commitment income for young people: this income is intended for people under 26 years of age who are not in employment or training and will only take effect from March 2022. An allowance of €500 will be paid only if they complete 15 to 20 hours of training or support over a period of 6 to 12 months.

– Improving the standard of living of students: grants based on social criteria have been increased by 1%.

 

• For businesses

 

The main measures for businesses are as follows:

• – Lower corporate tax: in line with the 2018 reform, corporate tax is lowered to 25% for all companies subject to corporate tax (except for the reduced rate for SMEs, which is maintained at 15%).
• – Extension of the state-guaranteed loan: the loan granted during the COVID19 crisis to support the bank financing of companies is extended until 30 June 2022.
• – The increase in the amount of the exemption ceilings in case of transfer of a sole proprietorship: in case of transfer of a business worth less than €300,000 for a sole proprietor, the tax exemption was total. However, for a business worth between €300,000 and €500,000 the exemption was only partial. The 2022 Finance Act raises these ceilings to €500,000 and €1,000,000 respectively.
• – Extension of the deadlines for the option to choose the tax regime for micro-businesses: in case of submission to the micro-BIC regime, the option for the simplified or normal real regime can be made until the deadline for filing the income tax return, i.e. May or June of the following year (instead of February 1st of the year).

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