The French government on 2 November 2017 announced details of proposed “exceptional surcharges” to corporate income tax that would be intended at partly offsetting an estimated €10 billion in lost revenue as a result of a decision of the French Constitutional Court that held the 3% tax on distributions was unconstitutional.
The proposed surcharges are expected to raise approximately €5 billion in revenue.
The proposed surcharges would apply to French companies subject to corporate tax, and having gross revenue exceeding €1 billion. The surcharge provisions could also apply to French branches of foreign companies if they meet the conditions in terms of revenues. For French corporate tax groups, the €1 billion threshold would be applied at the level of the French tax group. It is anticipated that at present, approximately 320 corporate groups could be subject to the surcharge measures.
With the surcharges, the overall maximum rate of corporate tax could be roughly (taking into account the 3.3% existing surcharge that would be expected to apply to most of these taxpayers) for the financial years closed between 31 December 2017 and 30 December 2018, as follows:
Tax credits or reductions, as well as tax receivables of any nature, would not be allowed as offsets against the exceptional or additional contributions. Both contributions would be payable at the time for paying the balance of the corporate income tax. However, an installment or estimated payment equal to 95% of both contributions, based on an estimate of the amounts due, would be payable at the same time as the last payment of the corporate income tax installment and, for taxpayers with a financial year ending on 31 December 2017, the payment would be due on or before 20 December 2017. Interest for late payments would generally be due if the installment was underestimated by at least 20% and was at least €1.6 million.
The proposal is expected to be submitted to the French Parliament so as to be considered and voted on in the next few weeks. Thus, payment of the installment to these surcharges would need to be made according to the dates mentioned above.
For more information, contact a tax professional with Fidal* in France or with KPMG in the United States:
Gilles Galinier-Warrain | +33 1 55 68 16 54 | firstname.lastname@example.org
Patrick Seroin | +1 (212) 954-2523 | email@example.com
* Fidal is a French law firm that is independent from KPMG and its member firms.
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