Roche & Cie

Tax reduction in 2017, announcements made by the Government on September 9, 2016.

13 Sep 2016

Friday, the economy minister, Michel Sapin, announced a series of tax measures including a reduction of one billion euros of income tax for 5 million households in 2017.

1 – The income tax

The “Pact of responsibility and solidarity” launched by the Government in 2014 has already led to a decrease in income tax. And a reduction of 20% is programed for 2017, under certain conditions.

Indeed, it will concern all single, divorced and widowed earning less than € 1,700 per month. This threshold will be doubled for couples and grossed up according to family responsibilities. Smoothing between 1,700 and € 1,900 net per month will prevent any threshold effect.

According to Bercy, this decrease will benefit to more than 5 million tax households allowing them an average gain of nearly 200 €.

2 – The corporate tax

The tax rate on corporations will be gradually reduced from 33.33% to 28% on all businesses by 2020, starting with small and medium enterprises (SMEs).

From 2017, the corporate tax rate will change to 28% for all SMEs up to € 75,000 of income (the corporate tax rate reduced to 15% up to € 38,120, is maintained).

Then in 2018, the rate of 28% will apply to all companies on the first € 500,000 of profit.

In 2019 the rate of 28% will be extended to all SMEs, intermediate sized companies (ETI) and large enterprises whose turnover is less than € 1 billion.

Finally in 2020 the rate of 28% will be extended to all the benefits of ETI and large turnover greater than € 1 billion (all businesses).

3 – Transformation of the tax benefit for expense services tax credit in person

The Government has also decided to transform the tax benefit for spending on home services tax credit for all households as of 2017. This additional support will represent a billion euros.

This will benefit 1.3 million households for a drop remains dependent on spending around 20% on average, for the benefit of modest people.

4 – CICE

In 2017, the “Pact of responsibility and solidarity” continues with the strengthening of the CICE. The tax credit will increase from 6 to 7%, or an additional relief for businesses of € 3.3 billion.

The government nevertheless somewhat modifies the road map that was fixed with the said agreement. He chose indeed to affect the tax cuts promised to the large (suppression of the final installment of the social solidarity contribution of companies – C3S) and to the benefit of small sized enterprises.