Taxation: the 10 measures that await you in 2020!

You can find the complete file on theAssemblée Nationale website.

Passed at the end of September, the Finance Bill 2020 will come into force from January¹ next year.

Like every year, it brings its share of good (and bad) news, for individuals and businesses alike. Income tax cuts for low-income taxpayers, the abolition of the taxe d'habitation for everyone on their main residence, the refocusing of the crédit d'impôt transition énergétique (energy transition tax credit), reductions in corporate income tax and sponsorship for large companies, etc., are just some of the topics covered.

However, all these tax changes must be fully anticipated to avoid any unpleasant surprises.

What's new for private customers?

• Income tax for low-income households to fall 

If you're taxed at the 14% rate, there's good news waiting for you on your payslip from the end of January 2020! This rate has been lowered to 11%, and will be directly integrated into the calculation of the withholding tax from January 2020. 

• Say goodbye to your taxe d'habitation!

A tax often perceived as unfair, the abolition of the taxe d'habitation was one of candidate Emmanuel Macron's campaign promises. It will be completely abolished for 80% of the most modest households in 2020. For the wealthiest 20%, the rate will be frozen in 2020 (so you're sure not to see it increase). The government plans to reduce it by 30% in 2021, and by 65% in 2022, before it disappears altogether by 2023.

• CITE disappears and becomes a bonus 

The energy transition tax credit (CITE) will be transformed into a flat-rate bonus in 2020 for low-income households, and in 2021 for households with intermediate incomes (up to the eighth income decile). For households with modest or very modest resources, this aid will be paid out from January 2020 by the Agency in the form of a contemporary work bonus.

• The most polluting drivers will be fined!

In 2020, you won't want to drive a big car! From now on, the car malus will apply from 110 grams of CO2 emissions. Its ceiling will be raised to €12,500. All existing malus will be merged in 2021. 

• The contribution to public broadcasting decreases...by €1!

Among the tax cuts, you'll note the €1 reduction in the CAP! This year, the government has decided to disconnect its evolution from inflation.

What's new for companies?

Companies are also concerned by the 2020 budget, and in several ways:

• Corporate income tax continues to fall!

Good news for corporate taxation: the corporation tax will continue to fall over the coming year, for all companies! Companies with annual sales between €0 and €38,120 will be taxed at the reduced rate of 15%. All those with higher sales will be taxed at 28%. 

• Fewer companies will be able to waive payment of the TICPE

From 2020, only companies in the road haulage sector will be eligible for the TICPE refund. It is proposed to reduce this partial TICPE refund by 2 centimes per liter. All others, without exception, will be required to pay the rebate, in order to finance the energy transition. At the same time, the PLF for 2020 implements the gradual elimination of reduced TICPE tariffs for non-road diesel (GNR).

• Corporate philanthropy becomes less tax-efficient for large companies 

Whereas in the past, sponsorship of a project recognized as being in the public interest entitled the donor to a tax reduction of up to 60%, as of January^1, 2020, the applicable deduction will be reduced to 40%. The 60% rate remains applicable only in the case of a project to help people in difficulty (meal distribution, housing assistance, help with access to healthcare, etc.). 

• Creation of a special department dedicated to supporting companies in their recruitment needs

Matching job supply and demand has been a recurring issue for several years. Companies experiencing difficulties in recruiting will now be able to contact a special counter at Pôle Emploi. More resources will be made available to help them achieve their objectives. Companies in the new economy (IT, big data, robotics, etc.) are the first to be affected. 

• Short-term contracts to be taxed more heavily 

A bonus-malus system will be introduced to encourage companies to hire on permanent contracts. The greater the number of employees who register with Pôle emploi after working for a company, in relation to its workforce, the more it will pay in employer contributions to unemployment insurance; the lower the number, the less it will pay in contributions.