Roche & Cie

Focus on the Finance Bill for 2017

29 Sep 2016

Besides the introduction of withholding tax on income and tax measures to lower corporate and income tax on income already announced, discover the finance bill project and its new measures.

Measures for Businesses and Companies

  1. Lower the tax rate on companies
2017the taxation of profits of all SMEs will move to 28% in 2017. Up € 75,000 of profit (without returning to the current reduced rate).
2018A rate of 28% will apply on the first € 500,000 of profit of all companies.
2019Extension of the 28% rate to all SME profits, intermediate and large sized companies (ETI / GE) whose turnover is less than € 1 billion.
2020Generalization of the rate to 28%.

Strengthening of the CICE

The CICE will be streghten (rate from 6 to 7%), which will represent in 2017 a new relief over € 3 bn for companies

  1. The depreciation rules for passenger vehicles should be changed.

Amortization of less polluting vehicles (carbon emissions strictly below 60 g / km) would be made deductible for the portion of their purchase price which would not exceed € 30,000 (instead of € 18,300 currently). Conversely, the deductibility of amortization of other vehicles would be strengthened.

  1. The tax exemption on profits device and local taxes for young innovative enterprises would be extended until 31 December 2019.

Note conversely the deleting the following taxes

  • Sludge tax
  • Annual tax on medical laboratories
  • impairments of software
  • tax credit for the expenses of commercial prospecting,
  • optional exemptions from local taxes for biogas companies.
  1. operators liable to the tax on commercial surfaces (Tascom) at the increased rate (because of commercial surfaces exceeding 2,500 m²) would be required to pay a deposit during the year in which the reference turnover

Measures for private individuals

  1. The Finance Bill introduces mainly the withholding of income tax from 2018.
    The reform will apply to all earned income (wages and self-employed, replacement income, property income) and pensions.

For salaries and similar income, tax will be collected by the company or organization paying the income, which apply the tax rate provided in an automated manner by the tax authorities.

The 20% reduction of income tax for the middle class and the development of the tax reduction for personal services have already been announced.

  1. The tax reduction “Pinel” and the tax credit for the energy transition (CITE) would be extended for one year, until 31 December 2018 for the “Pinel” and until 31 December 2017 for the CITE.

The tax reduction for purchase of housing in students’ and seniors’ residences should be extended.

Regarding tourist residences, a tax cut would be created for energy refurbishment, renovation or adaptation of the disabled, voted in general meeting. The tax reduction would equal 20% of the works selected within the limit of € 22,000.

  1. Pursuant to Article 885 V Bis of the General tax code, the wealth tax of the debtor resident for tax purposes in France is reduced of the difference between:
  • firstly, the total of this tax and the taxes due in France and overseas on income and products of the previous year, calculated before deduction of the only tax credits representative of a tax paid to abroad and deductions;
  • On the other hand, 75% of total net revenues worldwide of business expenses from the previous year, after deducting only categorical deficits which imputation is authorized by Article 156 of the GTC, as well as income exempt from income tax and goods subject to a withholding tax realized during the same year in France or outside France.

The capping of the wealth tax thus limits the amount of this tax and income taxes for the previous year to 75% of these revenues. If this percentage is exceeded, the difference found is subtracted from the wealth tax due; this surplus is not due to other charges or returnable.

The Government stresses that some taxpayers reduce their taxable income by capitalization of investment income in a proxy asset holding company ( “cash box”).

An anti-abuse clause will be introduced to redress these abusive cases in which the interposition of holding companies is primarily intended to optimize the cap while the contributory capacity of the taxpayer increased by including the use of certain types of debt.

The revenues were used to fund the lifestyle without being included in the cap will then be reintegrated in the calculation thereof.

  1. Increase of € 1 of the TV license fee

Increase the amount of the contribution to public broadcasting from 1 € in metropolitan France and overseas is expected.

In 2017, the (CAP) will amount to € 139 in France and 89 € in the overseas territories.

  1. Extension to eight years from the benefit of impatriates regime

To enhance the attractiveness of the country and to encourage the installation in France of senior executives, Article 121 of the LME law of 4 August 2008 has introduced a new special tax regime for “impatriates “codified in section 155 B of the CGI.

This specific tax system provides, exemption from income tax on their expatriation bonus until 31 December of the fifth year following the year of their taking office in France.

The specific tax regime for expatriate is extended until 31 December of the eighth year.

  1. Finally, will be deleted:
    • The deduction of the total income of major repairs borne by bare owners,
    • The reduction of inheritance tax or gift because of the number of children of the donee or heir.

The draft budget was recorded today as President of the National Assembly under the number 4061.

Consult the press release