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December 30th, 2013, France voted into law its Finance Act for 2014 and the Corrective Finance Act for 2013. The following document summarizes the most significant measures affecting corporate taxpayers and businesses.




1 - Limitation on deductibility of interest accrued to related parties


The tax deduction of interest accrued to related parties is not allowed if the taxpayer cannot justify that the lender is liable to CIT on interest that amounts to at least 25% of the CIT which would have been due had the lender been a French tax resident.


2 - Mandatory provisions of accounting statements and consolidated accounts in case of Tax Auditarties


Obligation to communicate analytical and consolidated accounts upon a tax audit for taxpayers whose threshold amount exceeds of €76,2 million (service provider) or have a total gross asset of at least €400 million.


3 - Strengthen of transfer pricing rules and disclosure of foreign tax rulings


Taxpayers will have to include into their Transfer Pricing documentation the rulings issued by foreign Tax Authorities in favor of related group entities. Whenever the turnover of the company exceeds €400M the TP documentation has to be presented to the Tax Authorities within six months after the deadline of the submission of all the tax returns.


4 - Increase rate of the CIT surcharge


for large corporate taxpayers from 5% to 10, 7%. The effective maximum CIT rate stands at 38%.


5 - Extension of the deadline for paying balance of CIT


to May 15th of each fiscal year, for all companies closing at December 31st 2013. This means it will be the same date as the deadline for filing the yearly CIT return.


6 - Solidarity contribution tax borne by companies, on high earnings paid to employees


Introduction of a ‘solidarity’ tax of 50% levied on individual earnings over €1 million per year paid during 2013 and 2014. This tax is limited to an amount equal to 5% of the company’s turnover over the years concerned. Companies must pay this tax by April 30th 2014 and 2015 for remunerations granted for 2013 and 2014.


7 - Apprenticeship program


Claiming the benefit of the Apprenticeship tax credit, now limited to a one year period (and not three), will be available only for companies that have apprentices participating in specific degree or training programs.


8 - Cancellation of the possibility for PME to temporarily deduct tax losses of foreign branches or subsidiaries.


9 - Amendment of the personal income tax treatment of capital gains


realized on the sales of shareholdings, providing a tax allowance of up to 65% (85% for capital gains of sale of shares by managers of small and medium companies) depending on the length of the time the shares were held.



Updated January 2014 - The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as at the date it is received or that it will continue to be accurate in the future. No individual or company should act on such information without appropriate professional advice after a thorough examination of the particular situation


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