The Ministry of Finance has published a bill to ease the restrictions on the preferential corporate tax rate (5%) for SMEs. The bill, which was published in the Official Journal on 7 May 2018, and the adoption by Parliament, will enter into force on 1 January 2019.
Under current rules, restrictions apply so that related sole proprietorships and companies are not eligible for the preferential rate, including for sole proprietorships where family members own their own sole proprietorship, for sole proprietorships where the owner or family members own more than 50% of another company, and for companies where the same person or persons holds more than 50% of each company.
Under the proposed changes, the income of non-profit companies will generally be subject to a ordinary corporate tax rate of 15%. However, these companies may apply a 0% corporate income tax rate on income directly allocated to the financing of public interest activities.
Moreover, non-profit companies of a certain size can take advantage of the corporate income tax for certain small businesses. In particular, non-profit companies are subject to a reduced corporate tax rate of 5% if they fulfill the following two conditions: (i) their average number of employees does not exceed 10 and (ii) their taxable income during the tax period is a maximum of EUR 300,000.
