The Government of France has embarked on a vast program of pro-business tax reforms, aimed at generating more solid, inclusive and sustainable growth. A progressive lowering of the rate of corporate tax (impôt sur les sociétés – IS) from 33.33% to 25% by 2022, in line with the European average.
As of January 1, 2021, significant and lasting cuts (€10 billion/year) to local taxes weighing on businesses’ industrial activity will be implemented in application of the French recovery plan. The cuts will include a 50% reduction in business value-added contribution (CVAE) and property taxes on industrial sites (built-up property tax and corporate property contribution (CFE)), and a reduction in the capping rate from 3% to 2% of the local
economic contribution based on value added. It will benefit all businesses liable for these taxes in France, regardless of their size or sector of activity. Learn more about investment attractiveness of markets HERE
“We will not ask for any condition to be attached to this tax cut, quite simply because we are only restoring fiscal equity between France and other countries in the European Union.” Bruno Le Maire, Minister for the Economy, Finance and the Recovery.
Transformation since 2019 of the competitiveness and employment tax credit (CICE) into a permanent reduction of health insurance contributions by 6% for salaries of up to €3,848 per month (2.5 times the statutory national minimum wage (SMIC), equating to €3,848.55/month according to the latest revaluation in January 2020). This measure has contributed to reducing labor costs in France; as a comparison, these costs are now lower in France (€10.54/hour) than in Germany (€11.24/hour).
The research tax credit (CIR), a flagship system that makes it possible to deduct R&D expenditure of 30% up to €100 million in expenditure, and 5% above this threshold, places France first among OECD countries for financing R&D (OECD, 2019).
France’s new economic stimulus plan, “France Relance” or “Relaunch France”, presented on September 3, 2020, supplements this widescale drive for reform in the areas of competitiveness, simplification and stability.
Source/Image Credit: Invest in France