The Main Measures of the French Finance Act and the Social Security Financing Act in Focus

VSE-SMEs: A new tax credit for energy renovation!

Between 1 October 2020 and 31 December 2021, your company can benefit from a tax credit of 30% for any costs for energy renovations of its premises with a limit of €25,000.

In order to qualify for the tax credit, the work must be carried out by a qualified professional recognised as a guarantor of the environment (RGE).
Your company can contact the FAIRE advisers via this website for information and advice on the eligibility of the work to be done and the conditions of the support.

Reduced corporate income tax rate: Updated terms and conditions

In France, SMEs can benefit from a reduced rate of corporation tax (IS) on a portion of their taxable income. Since 1 January 2021, the range of companies concerned has expanded.

As a reminder, in 2021, the standard rate of corporation tax in France is 26.5% (27.5% for large companies with a turnover of €250 million or more).

Here are the new conditions for being able to benefit from the reduced rate of 15% in France on the first €38,120 of taxable profit:

• Turnover excluding tax must be less than €10m (thus no longer €7.63m àNew rule);
• The share capital must be fully paid up;
• At least 75% of the company must be held continuously by individuals or by one or more companies that qualify for the reduced rate.

ZRR: Extended arrangement

By taking over or creating a business in a Rural Revitalisation Zone (Zone de Revitalisation Rurale) (ZRR), you can benefit from a temporary tax exemption on profits. This scheme, which was due to expire at the end of 2020, has been extended for two years.

The tax advantage consists of a total exemption from income tax for a period of 60 months, followed by a regressive tax relief period of 36 months from the start of the business: 75% of profits for 12 months, 50% during the following 12 months; 25% during the following 12 months.

Certain border territories with Belgium are classified as ZRRs, notably in the Aisne and the Ardennes.

COVID-19: New measures for exemption from social security contributions

The Social Security Financing Law for 2021 (LFSS) has introduced a new system of exemption from employers' social security contributions for SMEs with fewer than 250 employees most affected by the second wave of the COVID-19 epidemic.

The employers concerned are exempt from employers' social security contributions and contributions for sickness, maternity, invalidity and death, old age, family allowances, accidents at work and occupational diseases, FNAL, CSA and unemployment insurance.

Capital gains on the sale of business premises: Change!

Normally, capital gains on your company’s sale of assets (IS) are included in the profit or loss for the financial year. When the sale concerns business premises, a special regime applies.

If your company disposes of its premises no later than 31.12.2024 to a legal entity which undertakes to convert them into a residential building, the capital gain from such disposal will be subject to the reduced rate of 19%.

CET and CVAE: Discounts in sight...

Remember that the CET is made up of two taxes, the Corporate Property Tax (Cotisation Foncière des Entreprises) (CFE), which is based on the rental value of properties liable for property tax, and the Value Added Contribution (Cotisation sur la Valeur Ajoutée) (CVAE), which is payable by your company if it has a turnover above €500,000.

• For the year 2021, the CVAE is halved by reducing the tax rate by 50% and the amount of the minimum contribution;
• The CET ceiling rate is reduced from 3% to 2% of added value (Article 8 of the Finance Law for 2021).

Do you need more information on these provisions? Would you like to know whether you can benefit from these new measures? Our team of cross-border specialists is at your disposal to discuss this with you.