October 2, 2019 CarolineAUPOIX 0 Comments

  • CORPORATE INCOME TAX

Article 11 of the FDP: Continuation of the corporate tax (CIT) reduction path

The downward trend in the rate normal of the IS, initiated since the finance law for 2018, continues.

The Finance Bill for 2020 plan as well as:

  • for companies whose turnover is less than €250 million, the standard corporate tax rate will be reduced to 28% for financial years beginning on or after January 1, 2020, to 26.5% for financial years open as from 1 January 2021 and finally at 25% as from 1 January 2022 ;
  • for large companies with a turnover of is equal to or greater than €250 million, the projected decline trajectory is the next one:
    • for financial years beginning on or after January 1 to 31 December 2020, IS at a rate of 28% up to €500,000 profit. Beyond that, the standard rate of 31% will apply;
    • for financial years beginning on or after January 1 to 31 December 2021, a rate of 27.5% (and not 26.5%) for all of their taxable profit.
    • for financial years beginning on or after 1 January 2010. By January 1, 2022, the standard corporate income tax rate would be reduced to 25% for all employees. companies.

The reduced rate of 15%, reserved for companies with a turnover of less than €7,630,000 and whose capital, fully paid up, is at least 75% owned, directly or indirectly, by natural persons, would remain applicable on the portion of profits not exceeding €38,120.

Article 49: Adjustment of the Research Tax Credit (RTC)

The Government plans to lower the rate used to calculate incoming operating costs in the CIR database.

Currently, these are estimated at 50% of the costs of research staff, to which 75% of the depreciation charges are added.

While recognizing the effects favourable to the CIR for the attractiveness of the region and business innovation, the PLF plans to reduce the rate of recognition of personnel costs by 50 to 43 % (based on the recommendations of a report by the Court of Auditors from July 2013).

The share of the costs of operation based on depreciation would remain unchanged.

Article 50: Adjustment of the tax reduction in favour of sponsorship for large companies

According to a report by the Court of Justice of the European Communities accounts dated November 2018, the amount of the tax reduction in favour of of sponsorship had increased tenfold in 13 years, reaching €902 million in 2017, mainly for the benefit of very large companies.

The Government plans to reduce the tax reduction rate for payments from 60% to 40%. above €2 million.

However, some payments would remain, regardless of their amount, eligible for a tax reduction at the rate of 60%: payments made for the benefit of non-profit organizations that carry out the provision of free meals to people in difficulty, who contribute to to promote their housing or provide free care to people who are people in difficulty.

  • FIGHT AGAINST AGGRESSIVE TAX OPTIMISATION

Article 13: Strengthening the fight against so-called "hybrid" tax measures

PLF 2020 transposes the provisions of Directive 2016/1164 of 12 July 2016 known as "ATAD 2", which are part of the OECD's work on erosion control (BEPS) and aim to put an end to certain optimization practices multinational companies limiting the taxation of their profits by means of so-called "hybrid" devices, i.e. devices based on differences existing between States in the legal qualification of instruments financial, entity or payment allocation rules.

Such hybrid devices may result in (i) a deduction in a State without taxation (ii) by a deduction in each of the two (iii) by a lack of taxation in both States.

In order to fight against the aggressive tax optimization that may result from these situations, the measure proposed by article 13 of the 2020 FDP would allow the State, depending on the nature of the hybrid device, either to refuse to deduct the charge or to to include the payment in taxable income.

Article 12: Compliance with European law on withholding taxes and deductions applicable to non-resident companies

The purpose of this article is to draw conclusions from the judgment of 22 November 2018 (Case C-575/17 Sofina SA, Rebelco SA and Sidro SA) by which the Court of Justice of the European Union (ECJ) held that, with regard to withholding tax on dividends, the difference in treatment between loss-making non-resident companies and loss-making resident companies constituted a restriction on the free movement of capital not justified by a difference in situation objective.

This article provides for the possibility for foreign companies in a loss-making situation to obtain the temporary return of sums withheld or deducted at source. The the return of these companies to a profitable situation would definitively make it possible to the deductions and deductions concerned.

It also plans to extend the exemption from withholding tax on dividends for dividends for companies in judicial liquidation, provided for in Article 119 quinquies of the CGI, to all other income and profits subject to withholding or deduction at source now covered by the temporary return mechanism.

The draft article draws the consequences of the decision of 10 July 2019 (Company Cofinimmo, n° 412581) by which the Conseil d'État ruled that the system of return of the withholding tax provided for in Article 115 quinquies of the CGI contrary to the freedom of establishment, if a company with its registered office in a Member State of the European Union or party to the Space Agreement is not allowed to prove that the benefits that it has carried out in France have not been disinvested outside France.

Finally, it specifies the rate applicable in terms of withholding tax or withholding tax for a certain amount of number of devices following the adoption of Act No. 2019-759 of 24 July 2019 creating a tax on digital services and modification of the trajectory of corporate tax reduction.

  • VALUE ADDED TAX

Article 8: Reduction of the VAT rate on certain housing social rental properties as part of the housing investment pact social

VAT rate reduced from 10% to 5,5 % :

  •  on the self-supply and self-supply of social rental housing financed by an assisted integration rental loan ("PLAI housing"), i.e. social housing corresponding to the lowest income thresholds;
  • in the priority areas of the policy (QPV) under a renovation agreement, on the self-supply and self-supply of other social rental housing eligible for a State subsidy (so-called "PLUS" housing), as well as on self-supply of improvement and transformation work, development or maintenance work, in particular residentialisation work and requalification, relating to such dwellings or dwellings PLEASE;
  • on operations to redeploy the offer of housing outside these areas and the operations acquisition-improvement to create PLUS and PLAI housing.

The rate reduction would apply also to buildings already started and financed, provided that they are completed on or after December 1, 2019.

Finally, the article updates the scope of the reduced VAT rate applicable to the other segments of the social housing policy, in particular housing structures temporary or emergency (centres accommodation and social reintegration, drop-in health care beds, reception beds medicalized, therapeutic coordination apartments, nursing homes emergency).

Article 9: Clarification of the VAT system for organisations collective investment in transferable securities (UCITS)

This is a revision of the scope of the VAT exemption for the services of management of the mutual funds referred to in g of paragraph 1 of Article 135 of Council Directive 2006/112/EC of 28 November 2006 on the common system of VAT.

Indeed, the f of the 1st of the article 261 C of the CGI currently reserves the exemption for certain categories of funds investment funds listed restrictively by reference to the provisions of the monetary and financial code as well as to debt securitisation funds.

The new system would aim to align national legislation with the principles determined by law European by specifying the characteristics to be met by the funds so that the management benefits of these funds are exempt from the VAT.

Thus, would be included in the scope of the exemption all types of funds, without distinction according to form under which they are constituted, provided that they cumulatively meet four conditions identified by the ECJ in its case law:

  • be a collective investment,
  • operate according to the principle of the distribution of risks,
  • be subject to state control, and
  • have a return on investment subordinated to the performance of the investments, with the holders having to bear the risk linked to the fund.

The list of these organizations would be specified by decree.

Article 53: Transposition of Directive (EU) 2017/2455 of 5 December 2017 on the VAT system for electronic commerce

The provisions of the Directive (EU) 2017/2455 of 5 December 2017 on electronic commerce shall apply from 1 January 2021.

This Directive provides for the following to be laid down a single turnover threshold of €10,000 for all Member States of the European Union for distance selling intra-Community trade in goods. From this threshold, taxation will take place in the country of the final consumer.

This threshold will therefore be common with the threshold applicable since 1 January 2019 to the provision of services of telecommunications, radio and television broadcasting and services supplied by electronic means to non-taxable persons by providers not established in the Member State of consumption of these services.

In order to allow taxable persons to to declare and pay VAT on these transactions, the one-stop shop system of VAT will be extended to intra-Community distance sales of goods and to all services for which VAT is due in a given country. other Member State than the one where the service provider is established (OSS).

In addition, with regard to the sales of imported goods from third countries or third territories to the European Union, the Directive provides for the creation of a new operation taxable for low value shipments (less than €150) from countries or territories outside the European Union (distance selling of goods imported) and the establishment of a single window to report this operation and be exempt from VAT otherwise due on the importation of these goods.

The Directive provides that the electronic interfaces (e.g. websites of online sales, platforms) will be liable for VAT when they facilitate distance sales of imported goods of less than €150 or they facilitate domestic deliveries or distance sales intra-Community trade in goods made through them by a seller not established in the European Union. They will also be subject to the keeping a register to be kept for 10 years to enable States to members where these supplies are taxable to verify that the VAT has been properly acknowledged.

In order to make it fully effective the system relating to the VAT accountability of the electronic interfaces for online sales and to improve VAT collection on importation, it is also planned to make VAT payable to import the interface that facilitates sales of imported goods in from third countries to consumers in France, at the place of the person designated as the actual consignee of the goods on the import declaration.

Article 54: Better traceability of packages transiting through logistics warehouses

The fight against fraud in the VAT in e-commerce therefore requires better traceability of flows physical. This is why PLF 2020 plans to establish for the benefit of the administration a right of communication exercised directly with the warehouses and logistics platforms, allowing to track the flow of imported goods and to clearly identify the person liable for VAT.

Article 55: Creation of a list of operators of non-cooperative platform

In the logic of "name and shame" introduced by law on the fight against fraud in the October 23, 2018, PLF 2020 wishes to allow the publication on the Internet of the list of platform operators considered as non-cooperative because they are not repeatedly failing to comply with their tax obligations on the French territory, including as third party declarants.

The objectives are to ensure full tax cooperation of platform operators, and to inform citizens, with a view to transparency and cleaning up the situation competition in the digital sector.

Article 60: Simplification of VAT recovery at import from companies

The purpose of this article is to finalize, as of January 1, 2022, the unification of the declaration and recovery of value added tax (VAT) due by the companies.

The VAT due on importation by companies would be managed as common law VAT, i.e. declared, paid and deducted from the Directorate's tax department General Public Finance Department (DGFiP) to which the company liable for payment is subject, like the rest of the VAT. It is in line with the law of for 2019, which has provided for a similar provision, as from 1 January 2010. January 2021, for VAT due on leaving oil warehouses.

The rules relating to control or recovery would be unified (guarantee of the debtor, jurisdiction of the courts, level of penalties, etc. ). From the adjustments in relation to ordinary VAT law would, however, be maintained in order to take into account the specificities of imports.

It is also foreseen that VAT due on termination of suspensive regimes is subject to the same measures of simplification.

On the other hand, the VAT due on import by non-taxable persons would remain perceived as today, by the customs administration.

  • ECOLOGICAL TAXATION

Article 17: Rationalisation of the gas tax system inbred

Article 17 provides for the full integration of this product into the scope of the internal tax of consumption on natural gas (TICGN) whereas it is now, according to the use for which it is intended, either of this tax (fuel use) or of the domestic consumption tax on energy products (TICPE) (use fuel).

In addition, it simplifies the application of the TICGN exemption for biogas when the latter is injected into the grid and thus mixed with natural gas of non-originating origin renewable. The latter will now be applied on a flat-rate basis by a full rate reduction. In the case of direct supply of biogas by the producer to the end customer, the exemption will apply under the same conditions as today.

Finally, in order to avoid any overcompensation of production costs, economically inefficient and incompatible with European State aid law, it provides that the remuneration for cogeneration installations benefiting from a purchase contract or an additional remuneration for the electricity produced takes into account the existence, moreover, of an exemption from TICGN.

Article 18: Recasting of motor vehicle taxes

  • Increase in the penalty scale on 1 January 2020 CO2 provided for in Article 1011 bis of the CGI;
  • Implementation, in the first half of 2020, of the switches to the new European methods for determining emissions of CO2, and
  • Recast on January 1, 2021, with yield constant, all vehicle taxes levied with the aim of simplification, strengthening their environmental coherence and to secure their performance.

Article 19: Partial refund of domestic tax of consumption on energy products (TICPE)

Evolution of the repayment partial domestic consumption tax on energy products (TICPE) on diesel fuel granted to persons engaged in the activity of road freight transport. This additional contribution should make it possible to a better participation of road freight transport in financing the infrastructure it borrows; it would bring in €70 million in 2020 and then €140 million. M€ then, which will be added to the overall volume of ICTPE allocated to AFITF (1 140 M€).

Article 20: Increase of the tax on airline tickets to for the benefit of the Agence de financement des infrastructures de transport de France (AFITF)

This article amends the rules the allocation of the tax revenue, mentioning as the second assignee AFITF up to a maximum of €230 million, without calling into question the allocation of its produced €210 million for the Solidarity Fund for Development (SDF) managed by the French Development Agency.

It also plans to increase the tax rates to ensure the financing of these two assignees.

However, in order to take into account the takes into account the specific situation of certain territories whose isolation is mainly based on air transport, the rate increase is for passengers boarding flights on flights operated on connections between mainland France and Corsica, to or from overseas departments or local authorities and for passengers travelling on public service routes financed by solidarity national.

  • TAXES LOCALS

Articles 47 and 48 of the 2020 FDP aim to promote local trade in rural areas and centres cities in medium-sized cities

The proposed mechanism would concern municipalities that have signed an ORT agreement and whose income per consumption unit is lower than the national median.

It would allow communities to to deliberate in order to establish, in favour of commercial or industrial companies existing on their territory on 1 January 2020 or created from from that date, and until 2023, partial or total exemptions of business property tax (CFE), property tax on properties (TFPB), and/or contribution on the added value of companies (CVAE).

A similar system is planned which would concern small commercial activities (companies with less than eleven employees and less than €2 million in annual revenue) - including the activity of craftsmen registered in the Trade and Companies Register - in the most fragile rural areas (small municipalities with ten municipalities) shops or less and not integrated into an urban area), this system will support the action of elected officials mobilized to support rural life. It concerns new and existing companies and is open to commercial franchises to allow all types of businesses, whatever their mode of operation, to benefit from the exemptions.

  • MISCELLANEOUS

Article 56: Generalization of electronic invoicing in business-to-business relations (from 2023 in principle)

Article 57: Possibility for tax administrations and customs authorities to collect and use publicly available data on websites of social networks and platform operators

Article 51: Creation of a flat-rate tax on fixed-term contracts known as usage contracts

Article 80: Refocusing of assistance to creators and business buyers on its target audience

The system of exemptions from contributions and social security contributions from business creators and purchasers would be refocused on the initial target audience, i.e. creators and business owners giving rise to a new economic activity.

In addition, the benefit of ACRE would be extended to the collaborating spouse so that the declaration of activity of the spouse is not an obstacle to the creation of activity because of the cost of social security contributions to be paid. Thus, when the spouse practices under the as a collaborating spouse, he/she will be able to benefit from ACRE's scheme which will apply to the couple's total income, in the same conditions for the spouse and the entrepreneur. The rights of the joint collaborators will thus be strengthened.

Article 15: Reduction and better distribution of the tax for Chamber of Commerce and Industry (TCCI) expenses

Article 59: Obligation of electronic declaration and remote payment of the special tax on insurance agreements and contributions related

Inefficient tax expenditures

In order to simplify legislation and to contain the budgetary cost of derogatory tax measures, PLF2020 proposes to remove some of the tax expenditures that appear currently inefficient or underutilized, in particular:

  • Excluding profits from the use of previously uncultivated land used for crops approved for the determination of taxable income relating to holdings located in the French Overseas Departments (DOM);
  • income or tax reduction on companies equal to 40% of the amount of money spent by companies to purchase a national treasure;
  • the exemption from VAT relating to the implementation of agricultural land value in the French overseas departments;
  • the exemption of results from of operations in a concerted development zone;
  • exemption from registration fees for acts of incorporation and dissolution of bathtub and shower companies and craft cooperative societies, as well as acts of interest to companies mutual and rescue services for workers and mine employees.

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