The French draft Finance Bill for 2025 (“DFB25”) was unveiled on 10 October 2024. It includes major corporate tax measures such as a temporary exceptional corporate income tax (“CIT”) contribution for large companies, a tax on share buybacks.
The implementation of the exceptional and temporary CIT contribution would apply for the two fiscal years ending on or after 31 December 2024 to companies subject to corporate income tax in France with a total revenue on a standalone or a tax group level of at least €1 billion.
The tax base will be equal to corporate income tax (‘CIT’) computed on the basis of all taxable income, before offsetting tax reductions, tax credits and tax receivables of all natures.
The rate of this contribution would vary depending on the revenue realized by the taxpayer in France and the fiscal year concerned:
A smoothing mechanism is provided for taxpayers whose turnover slightly exceeds the thresholds.
The abolition of the CVAE should once again be postponed and the maximum rate applied in 2024 (0.28%) be maintained for three additional years:
Inspired by the US mechanism, France plans to introduce a tax on share buyback, and more specifically a tax on subsequent capital reductions.
In particular, it would apply to capital reductions through cancellation of shares resulting from a company’s shares buy back, carried out on or after 10 October 2024.
The companies targeted by this new tax would be those headquartered in France with standalone or consolidated revenue (excluding tax) in excess of €1 billion over the last fiscal year.
The rate of this tax is currently set at 8% and it would not be deductible for tax purposes.
The DFB25 supplements the ‘Pillar 2’ system of worldwide minimum taxation of groups by transposing the administrative instructions published by the OECD to specify or clarify the application of these new rules.
These provisions concern in particular the methods for determining the deduction based on substance, the rules for applying and apportioning the domestic minimum top-up tax, and the methods for applying the transitional safe harbor provisions.
Order 2023-393 of 24 May 2023 reforming the rules governing mergers, spin-offs and partial transfers of assets was intended to make it easier to carry out such transactions within the European Union.
In particular, it introduced a new case of merger or spin-off without exchange of shares and a new definition of partial demerger.
The DFB25 makes the technical adjustments that will enable these new transactions to benefit from the CIT tax free regime. Tax law is now aligned with recent developments in commercial law.
These measures would apply retroactively to transactions registered with the commercial court as from July 1st, 2023.
The DFB25 transposes European Directive 2023/2226 (EU) on the automatic and compulsory exchange of information in the field of taxation with regard to digital assets (Directive DAC8).
Like previous DAC directives, this text aims to establish an exchange of information on crypto assets by introducing reporting obligations for crypto asset service providers.
These service providers will be obliged to collect and report information identifying transactions relating to these digital assets, the accounts used and their holders.
