Among the main measures set out in the Finance Act for 2023 are a reduction in the corporate income tax rate, and a change affecting transfers of sole proprietorships that have opted for corporate income tax. Here's a closer look at 4 new tax measures.
Revaluation of the ceiling for benefiting from a reduced corporate income tax rate of 15%.
Corporate income tax is levied on the profits made during the year by SMEs operating in France. The standard rate is 25%. However, companies meeting a certain ceiling can benefit from a reduced rate of 15%. The French Finance Act for 2023 has raised this ceiling to reflect rising prices. Previously set at 38,120 euros, it is now 42,500 euros.
Companies can therefore claim a reduced corporate income tax rate of 15% if :
- recorded a profit of less than 42,500 euros in 2023,
- sales of less than €10 million excluding tax,
- their capital is fully paid-up and at least 75% owned by individuals.
ℹ️ As an SME, you are eligible for a reduced rate of corporation tax, subject to certain conditions. Since January 1, 2023, this reduced rate applies to a larger share of your profits. Find out if you're eligible 👉 https://t.co/aBiS6GZezD pic.twitter.com/M2f4UHiHm5- CCI Ouest Normandie (@CCIOuestNormand) January 20, 2023
In the absence of a specific entry into force date provided for by law, this new ceiling applies to the taxation of results for financial years ending on or after December 31, 2022.
Assimilation of transfers of sole proprietorships to transfers of corporate rights
The law of February 14, 2022 in favor of self-employed professional activity modified the legal and tax status of the individual entrepreneur. The text introduced a single status for entrepreneurs, resulting in a de facto separation between personal and professional assets.
Article 23 of the French Finance Act clarifies the situation of sole traders who have opted to be assimilated to a one-man limited liability company (EURL). From January 1, 2023, sales of sole proprietorships subject to corporate income tax will be treated as sales of corporate rights. The rate applicable at the time of sale is 3%. It is raised to 5% if the sole proprietorship sold has a predominantly real-estate activity.
CVAE tax rate halved
The cotisation sur la valeur ajoutée des entreprises is a local tax payable by companies with annual sales in excess of 500,000 euros. Along with the cotisation foncière des entreprises (CFE), it is one of the components of the contribution économique territoriale (CET).
Article 55 of the Finance Act for 2023 provides for the abolition of this tax over 2 years. The assessment due for 2023 will be halved, and companies will no longer be liable for the CVAE as of 2024.
Extension and adaptation of the JEI regime
Young innovative companies (JEI) are eligible for tax and social security exemptions. This scheme has been extended for 3 years, i.e. for companies created before December 31, 2025. The age requirement for qualifying as a JEI has been modified. Instead of 11 years, it is now less than 8 years.