France-Finance Bill for 2017

05 October, 2016

The government of France presented the Finance Bill for 2017 on 28 September 2016.

According to article 6 of the Bill the standard corporate income tax rate, currently set at 33.33%, will be reduced progressively to 28%. However, the 28% rate will apply to profits between EUR 38,120 and EUR 75,000 realized by small and medium-sized enterprises (SMEs) from 1 January 2017 and the 15% reduced rate currently applicable to the first EUR 38,200 of profits will remain applicable as present.

From 1 January 2018, the 28% rate will apply to profits up to EUR 500,000 for all companies and 1 January 2019, the 28% rate will apply to total profits realized by companies with turnover not exceeding EUR 1 billion (and to profits up to EUR 500,000 for companies with turnover exceeding EUR 1 billion).

From 1 January 2020, the 28% rate will apply to total profits for all companies.

According to article 7 of the Bill the final instalment of corporate income tax due on profits relating to the payment by large companies are expected to be higher than in the previous year are modified as follows:

companies with turnover of between EUR 250 million and EUR 1 billion will have to pay instalments totalling 80% instead of the current 75% of the estimated corporate income tax liability;
companies with turnover of between EUR 1 billion and EUR 5 billion will have to pay instalments totalling 90% instead of the current 85% of the estimated corporate income tax liability; and
companies with turnover exceeding EUR 5 billion will have to pay instalments totalling 98% instead of the current 95% of the estimated corporate income tax liability.

According to article 45 of the Bill the corporate income tax exemption and local taxes exemption regime applicable to new innovative enterprises (jeunes entreprises innovantes, JEI) are extended further to include such enterprises set up until 31 December 2019 .

The corporate income tax credit or individual income tax credit applicable to small and medium-sized enterprises for expenses relating to commercial prospection from France will be repealed for financial years commencing from 1 January 2017 in accordance with article 13 of the Bill.