Production taxes: VSEs and SMEs stand to gain from the abolition of the CVAE

In 2024, the government plans to completely abolish the CVAE (contribution sur la valeur ajoutée des entreprises), a production tax that was originally scheduled to disappear in 2023. VSEs and SMEs will be the primary beneficiaries of this reform: they will receive more than a fifth of the financial gain generated by the abolition of the CVAE.

Production taxes weigh on the competitiveness of French companies

Production taxes borne by French companies are higher than in neighboring European countries, weighing on their competitiveness.

According to a document issued by the Direction Générale des Entreprises (DGE), production taxes levied on French companies in 2021 represented 5.6% of their added value, compared with an EU average of 2.9%. They represent just 1.1% of added value for German companies, 1.9% for Spanish companies and 3.1% for Italian companies.

These production taxes include the contribution économique territoriale (CET), which groups together the cotisation sur la valeur ajoutée des entreprises (CVAE) and the cotisation foncière des entreprises (CFE), as well as payroll and labor taxes, the contribution sociale de solidarité des sociétés (C3S) and property taxes.

The CVAE, according to the Direction Générale des Entreprises document, is "a source of several economic distortions ". First of all, it is paid by each company in the same group, which can encourage companies to seek optimization by splitting up a subsidiary " in order to decouple the rate set by a sales threshold from the base, which is added value ".

What's more, the CVAE scale depends on sales. As a result, for the same added value, the tax rate can vary considerably, going from simple to double and thus disadvantaging " sectors downstream from long value chains ".

The third and final point emphasized by the DGE is that " highly capital-intensive " companies, particularly " those in industry with a strong need to renew their production facilities", are penalized by the non-deductibility of depreciation.

Savings of 9.3 billion euros for businesses

To remedy these " economic distortions ", the government has planned, as part of the 2023 Finance Bill, to abolish the CVAE. In his campaign programme for the presidential elections, Emmanuel Macron referred to a total abolition of the CVAE from 2023, to the tune of 7 billion euros.

However, the inflationary context and the various measures taken by the government to preserve the purchasing power of the French have led it to delay the reform: while the CVAE is still destined to disappear, its abolition will finally take place over two years. An initial reduction of 4.1 billion euros will be applied next year, before total abolition in 2024.


For businesses, which had already benefited from a €10 billion cut in production taxes under the 2021 stimulus plan (including a 50% reduction in the CVAE), the elimination of the CVAE will represent a total saving of €9.3 billion.

530,000 companies will benefit directly from the disappearance of the CVAE, the majority of them very small businesses and SMEs. In all, they will derive more than a fifth of the financial gain from this measure, with the industrial sector being the big winner, with more than 25% of the total gain. This will be followed by the trade sector, with 18.3% of the gain, and the specialized, scientific, technical and support activities sector, with a 15.2% share.

On the other hand, local authorities are less than delighted by the abolition of the CVAE. Inter-municipalities rely on this source of financing, which brought in 5.6 billion euros in 2021. Compensation is planned, but elected representatives are still unaware of the amount and terms.