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12 December 2017

French Parliament approves first Amending Finance Bill for 2017

Executive summary

The French Parliament has approved the first Amending Finance Bill for 2017. The first Amending Finance Bill for 2017 also was validated by the French constitutional court (Conseil constitutionnel) and published in the French Official Journal on 2 December 2017. The first Amending Finance Bill for 2017 aims at introducing additional contributions to the French corporate income tax (CIT) in order to finance part of the future refunds related to claims on the 3% distribution tax.1

On 8 December 2017, administrative guidelines were released, providing clarifications on the application of these two additional contributions.

Detailed discussion

The first Amending Finance Bill for 2017 provides for the creation of two contributions as follows:

  • Entities subject to CIT with revenue exceeding €1 billion would be subject to a 15% "exceptional contribution" on CIT due; and
  • Entities subject to CIT with revenue exceeding €3 billion would be subject to a 15% "additional contribution," resulting in a global exceptional surtax of 30% on CIT due.

The main clarifications provided by the French administrative guidelines are the following:

  • Only the revenue related to business activities carried out in France (either through a French company or through a French permanent establishment) should be considered in order to determine whether a company would fall within the scope of the above described contributions.
  • Available foreign tax credits which have not been utilized to offset CIT or the Social Contribution can be offset against the additional contributions introduced by the first Amending Finance Bill for 2017, under the conditions and within the limits set forth in the relevant double tax treaty.

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ENDNOTE

1.  See EY Global Tax Alerts, French Government issues draft Amending Finance Bill for 2017, dated 2 November 2017.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young Société d'Avocats, Paris

  • Eric Verron
    eric.verron@ey-avocats.com
  • Xavier Dange
    xavier.dange@ey-avocats.com

Ernst & Young LLP, French Tax Desk, New York

  • Frédéric Vallat
    frederic.vallat@ey.com
  • Mathieu Pinon
    mathieu.pinon1@ey.com
  • Audrey Teurlings
    audrey.teurlings1@ey.com

Ernst & Young LLP, Financial Services Desk, New York

  • Sarah Belin-Zerbib
    sarah.belinzerbib@ey.com

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ATTACHMENT

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Document ID: 2017-5024

 
 

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