France Update: Finance Act 2023: some novelties to remember for individuals and companies

THE FINANCE LAW FOR 2023 WAS DEFINITIVELY ADOPTED AND PUBLISHED IN THE OJ ON 31 DECEMBER 2022.

It contains very few new tax measures for both individuals and businesses. Nevertheless, some novelties caught our attention.

Let’s start with individuals:

First of all, in order to neutralize the effects of inflation on the level of taxation of taxpayers, the income tax scale, as well as the thresholds and limits associated with it, are revalued by 5.4%.

In addition, the ceiling of the tax credit for childcare for children under 6 years of age is raised, from €2,300 to €3,500.

Finally, while the abolition of the housing tax will be definitively acquired for all in 2023 for the main residence, the taxation of vacant housing and second homes is increasing: from this year, the rate of the tax on vacant premises, applied to the rental value of the vacant property (calculated as in terms of housing tax) will be 17% in the 1st tax year and 34% in the following years.

With regard to the tax on second homes, it should be recalled that the municipalities on which the tax on vacant housing applies can vote an increase from 5% to 60% of the housing tax if the dwelling is used as a second home. Finally, the scope of these taxes is expanding and should make it possible to include tourist municipalities located in “tense” areas of less than 50,000 inhabitants.

With regard to companies:

The legislator slightly increases the corporate tax ceiling to the reduced rate of 15% for SMEs. It should be recalled that as an exception to the standard corporate tax rate of 25%, companies with a turnover not exceeding 10 million euros during the tax year or period, benefit from a reduced rate of 15% on part of their taxable profit.

Since 2002, this rate was applicable on €38,120 of taxable profit, it will be applicable to €42,500 of taxable profit from 1 January 2023.

Other good news, the CVAE (Contribution on the Added Value of Companies) is abolished over two years: thus the contribution due for 2023 is halved and companies will no longer be liable from 2024. The minimum contribution is also halved, to €63. It should be noted that the €500 relief provided for small businesses is correspondingly reduced to €250. Finally, the abolition of the CVAE leading correlatively to the abolition of the Territorial Economic Contribution (“CET”), only the Business Land Contribution (“CFE”), based on the rental value of property liable to property tax, continues.

Ginestié Magellan Paley-Vincent, France, a Transatlantic Law International Affiliated Firm.  

For further information or for any assistance please contact france@transatlanticlaw.com

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