PRINCIPAL PROVISIONS INCLUDED IN THE FRENCH FINANCING ACT FOR 2017
The French finance law contains a large number of texts that are interesting for both companies and individuals. We describe below the main items that will be of interest to an individual or foreign company that has started a business in France, or is considering doing so.
Please note that this is a simple, quick description of each provision and that it is necessary to contact a French accountant in order to study them in detail.
Texts concerning individuals
Income Tax Reduction in relation to the 2016 tax
The rate of reduction is 20% for people whose annual tax revenue does not exceed €18 500 for a taxpayer living alone and €37 000 for a couple.
Reduction of taxes and tax credits:
- Extension to 31 December 2017 of the income tax reduction for rental investments named “Réduction d’impôt Pinel”,
- Extension to 31 December 2017 of tax credit for people who do work at home to save energy (Mainly insulation work and the replacement of heating appliances),
- Extension to 31 December 2017 of tax reduction for people who invest in furnished housing situated in residences for students, the elderly, or the disabled,
- New tax reduction for renovation of tourist residences. This concerns thermal insulation, heating equipment as well as work to facilitate access for people with disabilities.
Extension of the duration of the preferential tax regime for employees and managers from a foreign country to take up their duties in France. (Tax exoneration during eight years on their Incentives, on the share of remuneration related to their activity abroad and on certain patrimonial revenues.
Deduction of contributions paid abroad to pension and retirement plans during eight years for employees and managers from a foreign country to take up their duties in France.
Property income: A new deduction applies to leases entered into since 1 January 2017. The rate of deduction varies from 15% to 85% depending on the situation of the building and the tenant's resources. The owner must commit to rent for a minimum of 6 to 9 years, not to exceed certain rent ceilings and conclude an agreement with ANAH (National housing Agency).
Texts concerning companies
Gradual decrease in the corporation tax rate: For small and medium enterprises, the rate is currently 15% up to € 38 120 profit and 33.33% after this point. The new rates will now be:
|Corporation Tax Rate||15%||28%||33.33%|
|2017||Up to € 38 120||From € 38 121 to € 75 000||Over € 75 000|
|2018||Up to € 38 120||From € 38 121 to € 500 000||Over € 500 000|
|2019 and later||Up to € 38 120||Over € 38 120||n/a|
The ceiling for deducting depreciation on tourism vehicles is increased to € 30,000 for the least polluting vehicles.
Extension of tax exemptions to 31 December 2019 for companies which fulfill the conditions to be qualified "young innovative companies",
- Increase of the CICE rate to 7%. CICE is a corporate tax credit based on the total gross remunerations not exceeding 2.5 times the minimum wage,
- Extension to 2019 of the Tax Credit for companies engaged in arts and heritage restoration,
- The rate of tax credit based on expenditures made for the creation of video games is increased to 30% and the expenditure ceiling is increased from €3 to €6 million per year,
From 2017 all income from furnished renting, even if only exercised occasionally, fall under the BIC tax regime.
- With an authorization, enterprises established in the EEC territory can now carry out the “autoliquidation” of VAT on imports. This measure will particularly interest British companies based in France after Brexit,
- Deduction of VAT on petrol: Until 2016, only VAT on gas oil was deductible, VAT can now be recovered on gasoline used in vehicles. The deductible portion will increase gradually between 2017 and 2022.
- “PRIMES D’IMPATRIATION” (Impatriation bonuses) payed to employees and managers from a foreign country who have taken up their duties in France since 6 July 2016 are exempt from tax on wages from 1 January 2017 for a period of eight years.
It might be safe to assume that the provisions written in bold have been taken as a consequence of Brexit. If this is correct, we can conclude that English entrepreneurs continue to be welcome in France!