Corporate income tax decrease
The Finance Act for 2021 confirms the path of the decease of French corporate income tax (CIT) rate for all companies, with differentiated decrease depending on turnover.
In 2021, the corporate income tax rate is fixed at
- 26.5% for companies with revenues of less than 250 M€ and
- 27.5% for large companies (revenues > or = 250 M€).
In 2022, the standard corporate tax rate will be lowered to 25% for all companies.
Note that the reduced rate of 15% is maintained for SMEs under certain conditions.
Production taxes decrease
To boost the competitiveness of companies, production taxes are reduced by 10 billion € over 2021. This is reflected by the articulation of the following 4 measures:
- The contribution on the value added of compagnies (“cotisation sur la valeur ajoutée des entreprises” “CVAE”) is reduced by half for all comapanies liable for this tax.
- The reassessment of the accounting valuation method used to calculate property taxes (business property tax (“cotisation foncière des entreprises - CFE » and property tax on built-up properties (“taxe foncière sur les propriétés bâties TFPB”)
- Lowering the cap on the territorial economic contribution (“plafonnement de la contribution économique territoriale – CET”) from 3% to 2% to ensure that all compagnies, including those eligible for this cap, benefit from the reduction in the CVAE and the CFE.
- The implementation of a measure allowing for a 3 year-extension of the CFE exemption in the event of the creation or extension of establishments, upon the decision of the local authorities.
Strengthening of companies’equity capital
The Finance Act for 2021ratified what was provided for int the Recovery Plan (“Plan de relance »), namely the strengthening of the equity capital of very small enterprises /SMEs and Mid-size compagnys (MSC) to enable them to continue to invest and develop.
This takes the form of solvency assistance in line with that provided for liquidity during the health crisis, in particular through French state-guaranteed loans (“prêts garantis par l’État »).
- 150 M€ are planned to offer a guarantee to investments labeled « France Relance » and thus aiming for a sustainable recovery of the French economy driven by SMEs and MSCs.
- French State will be able to grant a guarantee of up to 2 billion € to instruments for refinancing equity loans granted to very small enterprises, SMEs and MSCs by the banking networks, in order to facilitate companies’ access to these long-term instruments, which are similar to quasi-equity capital (“quasi-fonds propres »).
New aids for employment
Ø Exceptional assistance for the hiring of a young person under 26 years of age
The exceptional aid created in the 3rd Amendment to Finance Act for 2020, to facilitate and boost the hiring of young people will benefit from new credits. The goal is to have a total of 580,000 contracts benefiting from this, including about 100,000 in 2021, for a total cost of 1,1 billion €.
This new aid for hiring a young person is granted to companies that hire an employee under the age of 26, on a permanent or fixed term contract of 3 months or more, for a salary of up to twice the “SMIC”, for contracts concluded between August 1,2020 and January 31,2021. The amount of aid is a maximum of 4,000 € over one year for a young full-time employee.
Ø Exceptional assistance for hiring on work-study contracts (“contrat d'alternance”)
French Finance Act for 2021 continues to support the hiring of employees on work-study contracts in order to strengthen this tool for integration into the workforce, which is closely linked to the economic climate. This is reflected in the financing of aid dedicated to apprenticeships and professionalization for the first-year contract. The total cost of these two grants is 2 billion €, including nearly 1.5 billion € in credit-payments (“crédits de paiement ») for 2021.
As a reminder, the new aid for work-study hiring concerns contracts concluded between July 1, 2020 and February 28,2021. Their amounts, up to 8,000 € vary according to the age of the work-study student (“l'alternant”).
