Roche & Cie

The French Government’s Action Plan to Foster Investment and Business Growth

13 Sep 2017

During the presentation of the government’s action plan for investment and business growth, Prime Minister Edouard Philippe in the presence of Bruno Lemaire, Minister of the Economy, reminded that the government ” committed to a policy of gradually lowering the corporate tax rate”.

The corporate tax rate will decrease from 33.33% to 25% by 2022 and the 3% contribution on distributions will be eliminated for amounts paid in 2018.

The Corporate Tax (IS) will not be replaced by any permanent substitution fee.

Corporate tax reduction table

20182019202020212022
Trajectory voted by the previous majority28% for the first 500.000 € of profits (all companies) and 33.3% beyond28% for companies with sales below € 1 billion and 33.3% for others.28% for all companies
New trajectory28% for the first 500.000 € of profits (all companies) and 33.3% beyond31% for all companies (1)28%26,5%25%

(1) The 28% rate continues to apply for the first 500,000 euros of profits.

SMEs will continue to receive special support:

  • for companies with a turnover of less than € 7.63 million, the reduced rate of 15% of the € 38,120 of profits will be preserved over the five-year period;
  • the immediate transition from 2018 to the 28% rate for the first 500,000 euros of profits will enable SMEs to benefit from a large reduction in corporate income tax.
  • The Government also recalled that the CICE will be abolished for salaries paid from 2019 onwards and replaced by a permanent reduction of employer contributions.

The CICE will see its rate drop from 7% to 6% for salaries paid in 2018 and will be eliminated in 2019. It will be replaced by a stable employer contribution relief:

  • 6 points on wages below 2.5 SMIC;
  • supplemented by a 4.1 point improvement in SMIC4, ie a total of 10.1 points, which amounts to eliminating any general burden at this level in order to reinforce the effectiveness of the measure on low-skilled employment .

In 2019, companies will benefit both from the CICE for wages paid in 2018 and from reductions in social security contributions.

The Government will introduce a single flat-rate levy of around 30% on capital income and the ISF will be replaced by a capital property tax.

  1. The single flat-rate levy shall apply in particular to interest, dividends and capital gains on the sale of securities.
    The advantageous tax regimes for savings products (Livret A, life insurance below € 150,000 in total loans and employee savings schemes) and the PEA will nevertheless remain unchanged, in order to penalize neither modest households nor investment in shares. Taxpayers with an interest (mainly households not subject to income tax) will still be able to opt for taxation at the progressive income tax rate.
  2. The future tax will concern net real estate assets in excess of € 1.3 million, such as the current ISF. Its rate will be the same as that of the ISF. As for the ISF, the principal residence will benefit from a 30% abatement and the buildings used to run the taxpayer’s business will be exempt.

Beyond these first decisions, the Government will launch the preparation of a broad action plan for the growth of enterprises.

This action plan will be based on a draft law but will not be limited to it.

Measures that will enable our entrepreneurs and businesses to be informed and supported in the evolution of their framework and the use of new tools at their disposal will also be at the heart of the process.

From October, the government will launch a process of participatory construction of the action plan with companies and a broad stakeholder dialogue that will involve economic, social and political forces at the national and regional levels.

6 key points were identified:

  • Creation, growth and transmission
  • Business Financing
  • Simplification and security of relations between companies and the administration
  • Conquest of the international
  • Digitization and innovation
  • Initial and Continuing Education

Cabinet Roche & Cie, Chartered english speaking accountant in Lyon, France.
Specialist in Real estate and non-résidents taxation.