Despite the health crisis, industrial companies are set to benefit from lower production taxes and be relieved of a property tax burden. In a decision handed down on December 11, 2020, the Conseil d'Etat put an end to a wave of tax reassessments.
Property tax exemption for certain industrial companies
The decision handed down by the Conseil d'Etat on December 11 in a dispute between the tax authorities and GKN Driveline over the calculation of its property tax has set a new precedent. It renders inapplicable the 2013 ruling, which imposed penalties on companies owning certain equipment such as industrial furnaces, tanks, reactors or air handling units. Such equipment was previously included in the basis of assessment for property tax and the property tax on industrial establishments, just like real estate.
The Conseil d'Etat's decision means a return to the tax-exempt situation that prevailed before 2013. This change of direction, eagerly awaited by business leaders, is likely to give rise to numerous complaints.
A 10 billion euro cut in production taxes
In August, the French Prime Minister, Jean Castex, confirmed that the recovery plan unveiled a few weeks later would include substantial tax cuts for businesses. In particular, he denounced a "punitive tax system" for industry, which is higher in France than in the rest of Europe.
In the wake of statements made by the Minister of the Economy and Finance, Jean Castex has assured us that production taxes will be cut by 10 billion euros from 2021. More specifically, since January 1, the business value-added tax (CVAE) has been halved. The same applies to the cotisation foncière des entreprises (CFE) and the taxe foncière sur les propriétés bâties (TFPB). In addition, to avoid neutralizing part of the gains obtained thanks to these measures, the government has lowered the capping rate for the territorial economic contribution (CET).
Corporate income tax rate rises to 26.5%.
More good news for businesses: the corporate income tax rate continues to decline, and now stands at 26.5% for companies with sales of less than 250 million euros, and 27.5% for large corporations. With this measure, the government is seeking to boost the competitiveness of French companies. The aim is to reach a rate of 25% by 2022 for all companies.
Consequently, despite the Covid-19 crisis and the pressure on public finances, the government has maintained its course. Its announcements should benefit the majority of entrepreneurs, who need support more than ever in these difficult times.