The Finance Act for 2023 institutes a series of tax changes for companies and individuals. We present the main measures applicable.
For companies
Fraction of taxable profit revalued to benefit from the 15% corporation tax rate :
Currently, the reduced corporate income tax rate of 15% applies, up to a maximum of €38,120 in profits,
to companies with sales of up to €10 million, at least 75% of whose fully paid-up capital is held by individuals.
The ceiling for this reduced rate of corporation tax has been raised from €38,120 to €42,500.
In the absence of a specific entry into force date, this measure applies to financial years ending on or after December 31, 2022 (art. 1).
Revaluation of thresholds: tax regimes :
This includes :
- Micro-regime thresholds,
- Thresholds for the simplified BIC tax regime,
- Basic VAT exemption thresholds,
- Thresholds for simplified VAT returns.
All these thresholds are subject to triennial revaluation. The increases described below will apply for the period 2023-2025.
Phasing out the CVAE :
The abolition of the business value-added contribution (CVAE) is spread over two years. As a result :
- The CVAE payable by companies for 2023 is halved;
- The texts of the General Tax Code relating to the CVAE will be repealed as of January 1, 2024.
CVAE tax rate :
For CVAE due in 2022, the maximum tax rate is 0.75%:
- For companies with sales of less than €500,000, the tax rate is zero;
- For companies with sales of at least €500,000 but no more than €50 million, the tax rate varies according to sales.
For CVAE due in 2023, CVAE rates are halved. As a result, the maximum CVAE tax rate is reduced to 0.375%.
SME energy renovation tax credit reactivated:
The SME energy renovation tax credit is reactivated for expenses incurred between January 1, 2023 and December 31, 2024 (law art. 51; law 2020-1721 of December 29, 2020, art. 27, I amended).
Eligible VSEs and SMEs
The tax credit is open to industrial, commercial, craft, liberal or agricultural companies subject to corporation tax or personal income tax under the actual profit system.
The tax credit is reserved for small and medium-sized businesses as defined by the European Union.
Eligible buildings and work
Expenditure eligible for the tax credit is that incurred in the energy renovation of buildings or parts of buildings for tertiary use, provided that the construction of the building has been completed for more than 2 years on the date the work is carried out (law 2020-1721 of December 29, 2020, art. 27, I.2).
The tax credit applies to buildings owned or leased by companies and used for business purposes.
The tax credit applies to expenses incurred between October1, 2020 and December 31, 2021 and to expenses incurred between January1, 2023 and December 31, 2024 (law art. 51; law 2020-1721 of December 29, 2020, art. 27, I amended).
Work concerned
Expenses incurred for the purchase and installation of thermal insulation systems are eligible for the tax credit:
- in roof slopes or attic ceilings;
- on walls, facades or gables, from the inside or outside ;
- on flat roofs or roofs with a slope of less than 5%.
Also eligible for the tax credit are expenses incurred for the acquisition and installation of :
- a collective solar water heater or a collective solar system for the production of domestic hot water;
- a heat pump, other than an air/air heat pump, whose main purpose is to provide space heating;
- a single- or dual-flow mechanical ventilation system;
- biomass boiler;
- a heating and ventilation control or programming system.
Expenses incurred for connection to a heating or cooling network are also eligible.
Tax credit amount
The proposed tax credit is equal to 30% of the pre-tax cost of the expenditure, from which are deducted :
- aid received for energy saving certificates (c. énergie art. L. 221-1 to L. 221-13);
- public assistance received for operations qualifying for the tax credit.
The total amount of tax credit, granted for one or more financial years, that a company can benefit from, all eligible expenses included, cannot exceed, for expenses incurred from October1, 2020 to December 31, 2021 and between January1, 2023 and December 31, 2024, a ceiling of €25,000 (law 2020-1721 of December 29, 2020, art. 27, I.6 modified).
In practice, companies that have already benefited from the measure for expenses incurred between October 1, 2020 and December 31, 2021 and have reached the €25,000 ceiling are no longer eligible for the reactivated scheme.
VAT :
Under the French Finance Act for 2022, VAT is now payable on advance payments for the supply of goods. This obligation applies from January 1, 2023.
For transactions involving the payment of a deposit, VAT on the supply of goods will no longer be payable when the goods are delivered. This is contrary to European Union law.
As of January 1, 2023, VAT on the supply of goods will be payable as soon as the advance payment has been received by the supplier. This provision applies to advance payments received on or after January 1, 2023. This change will enable companies purchasing goods to deduct the VAT on their purchase earlier.
Please note:
If no down-payment is made, VAT on the supply of goods will still be due at the time of delivery.
For private customers
Revaluation of the 2022 income tax scale:
For income tax purposes in 2022, the limits of the brackets on the income tax scale have been adjusted in line with the average increase in consumer prices (excluding tobacco) expected for 2022, i.e. 5.40% (art. 2, I.2°.a).
Revaluation of thresholds, ceilings or allowances :
Certain thresholds and limits are revalued each year in the same proportion as the upper limit of the first bracket of the tax scale. These thresholds and limits are therefore raised by 5.40% for 2022 income tax.
- Maximum flat-rate deduction of 10% on salaries: €13,522 (compared with €12,829 in N-1);
- Ceiling for the 10% allowance on pensions: €4, 123 (compared with €3,912 in N-1);
- Exemption limit for luncheon vouchers: €6.50 (compared with €5.92 in N-1);
- Family quotient advantage resulting from an additional half-share: €1,678 (compared with €1,592 in N-1);
- Family quotient benefit resulting from an additional "single parent" half-share: €1,002 (compared with €951 in N-1);
- Limit on maintenance paid to a child over 18: €6,368 (compared with €6,042 in N-1).
Increase in the ceiling applicable to the tax credit for childcare expenses:
Taxpayers resident in France for tax purposes are entitled to a tax credit equal to 50% of the expenses actually incurred for the care of their children aged under 6.
This includes sums paid to an approved childminder, a collective childcare structure or an inter-school union.
Until now, these expenses were deducted up to an annual limit of €2,300 per dependent child, or €1,150 in the case of alternating residence.
For amounts actually incurred from January1, 2022, these ceilings are raised to €3,500 and €1,750 respectively .
Tax credit for employing an employee at home :
Starting with the income tax due for 2022 (i.e., as part of the 2042 tax return to be filed in spring 2023), taxpayers will be required to mention the eligible personal services activities for which the sums were paid.
