This has been a recurring demand from the main employers' unions for several years now: the aim of reducing production taxes is to make companies more competitive by reducing the tax burden they face.
To this day, France remains the OECD's highest tax burden country. With this reform, the French government intends to lighten the tax burden on companies, to help them cope more easily with the difficulties caused by the Covid-19 crisis.
All of these measures are included in the Finance Bill (PLF) 2021. CVAE, CET, TFBP, CFE are all taxes that will be reduced from 2021.
Explanations.
CVAE refers to the contribution on the added value of companies. It is payable by companies and the self-employed with annual sales of over €500,000 and added value of over €152,000.
The "Plan de Relance" provides for a 50% reduction in the amount of the CVAE, for all companies previously liable for this tax. Many VSEs, SMEs and ETIs will therefore benefit from this relief on the portion of the tax due to the Region.
This measure concerns business property taxes. These are local taxes that all companies owning real estate are required to pay each year.
The CFE (Cotisation Foncière des Entreprises) applies to all companies and individuals engaged in a non-salaried professional activity, even on a part-time basis, whatever their legal status or the nature of their business. All companies with annual sales of less than €5,000 are exempt from CFE.
This contribution will also be halved in 2021.
At the same time, the TFPB (Taxe Foncière sur les Propriétés Bâties) applied to industrial establishments valued using the accounting method will also be halved in 2021. All companies previously liable for this tax will be affected, in respect of their industrial establishments. Any company not previously liable for this tax, and due to pay it for the first time, will also benefit from the lower rate.
You don't need to take any specific steps to benefit from this. The tax authorities will automatically adjust the calculation on the basis of your tax returns.
Communes and EPCIs with their own tax authority may deliberately choose to grant new establishments, or those making property investments, a full CFE exemption for 3 years.
This new exemption extends the current period during which business start-ups and expansions are not taken into account when calculating CFE.
CET stands for Territorial Economic Contribution. This local tax combines the above-mentioned CVAE and CFE. Its amount used to be capped at 3% of the value added created by the company.
From now on, these two taxes may not exceed 2% of the value added created by the company, so that all eligible companies can benefit from the reduction in the CVAE and CFE.
The aim of these tax relief measures is to improve business competitiveness and reduce production costs.
In this way, they will be able to increase their margins and maintain their operating performance as far as possible throughout the Covid-19 crisis. These measures are in addition to the many other aids and support schemes created in the course of 2020.
Written by our expert Paul LASBARRERES-CANDAU
January 13, 2021
