• Service: Tax, Global Indirect Tax, Global Mobility Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 11/7/2013

France - Update on tax legislation; changes to original proposals 

November 7: Tax proposals in legislation currently pending before the French Parliament would generally implement the government’s initial package of the 2014 Finance Bill. However, there are changes to the government’s initial tax proposals.

Included in the pending legislation are measures to:

  • Increase the rate of a corporate income tax surcharge for “large corporate taxpayers”
  • Limit interest deduction on loans between related parties
  • Impose a surcharge on companies paying salary to an individual of an amount over €1 million
  • Repeal a planned reduction of the “reduced VAT rate”
  • Revise a tax credit regime for employers with an apprenticeship program
  • Modify the ability of small and medium size enterprises to claim “temporarily” the tax losses of foreign branches or subsidiaries
  • Amend the individual income taxation of capital gains realized on the sale of shareholdings

Other measures have been removed from the tax package as it is currently moving through the legislative process, including a proposed special tax mechanism that would be triggered when taxpayers attempt to transfer risks and functions to another jurisdiction.

KPMG observation

Tax professionals in France have observed that the legislation continues to be subject to changes and revisions, as the Assemblée nationale considers these and other tax proposals.

For example, a proposal to impose an “eco-taxe” on trucks using non-toll roads in France has been suspended, and it is possible that an increase to the overall tax treatment of securities income (that would be implemented with a standardization of social contribution surcharges) may not appear in the final version of the law. Yet, given current budgetary constraints, any change to one tax proposal possibly could result in an increase in another type of tax if additional revenue is needed for budgetary purposes.

Read more details about the legislation in a November 2013 report [PDF 270 KB] prepared by tax professionals in France.

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