Corporate income tax takes up to a third of a company's profits.
There are legal ways of limiting the amount of cash you have to cut, and the magic formula can be summed up in two words: tax optimization.
From reduced taxable profits to total exemption from corporation tax, we give you 10 tips to keep the wealth created by your company out of the clutches of the taxman...
Investment = Fixed asset?
Review your classics. In certain cases, the law allows you to write off your investments as deductible expenses, such as research and development expenditure or the purchase of equipment. But even when investments are classified as fixed assets, it is possible to adjust the depreciation period to reduce corporation tax. Based on the tax authorities' rates, opt for the shortest period to accelerate depreciation and rapidly reduce taxable profit. Ideally, you should depreciate the entire amount on a declining-balance basis.
A deficit doesn't have to spell disaster for your company!
It can be used to reduce taxable profit for a future year... or even a previous year. This is the carry-forward or carry-back mechanism. In this way, a loss can exempt you from corporate income tax for several profitable years, subject to a ceiling of one million euros (for a carry-back, with a possible increase for a carry-forward). A large deficit in one year, due to major investments for example, may give rise to a tax credit via carry-back, or to an exemption over several subsequent years via carry-forward.
Be careful, and you'll be a double winner!
Provisions are not only a way of cushioning a blow to your company, they are also a way of reducing your taxable profit, and therefore your corporation tax. But be careful: the amounts set aside for provisions must meet certain conditions if you don't want to incur the wrath of the tax authorities. They must relate to deductible expenses, be the subject of a precise estimate of the risk provisioned for, and concern a probable loss resulting from events that took place before the closing of the accounts.
In particular, think about provisions for expenses, which are easy to anticipate. You cannot, however, set aside provisions for redundancy... But in this specific case, you can reduce your corporation tax by taking out specific insurance, the premium for which can be deducted from taxable income.
More in your pocket, less in the State's!
By increasing your income as a business owner, you also automatically lower your taxable profit. To keep the operation worthwhile, make sure that the levels of deductions do not turn this trick into a whitewash.
Kill two birds with one stone with supplementary pensions!
Their contributions are tax-deductible, so you can increase your employees' income at no cost to you.
What's in it for you? Offer your employees a more attractive remuneration package to attract and retain them.
Give to your employees rather than to tax agents.
This is the advantage of employee savings schemes (PEE, PERP, Perco, etc.) when topped up by profit-sharing. Payments - up to a ceiling of €3,000 to €6,000 per employee, depending on the scheme - are not subject to corporation tax or social security charges. So much money that boosts employee remuneration, without weighing on your cash flow. A win-win situation.
Finance your investments with tax credits!
Innovation, research, family, apprenticeships, business development, training for company directors, CICE... There are a multitude of tax credits that can be applied to corporate income tax. So many opportunities to seize to develop your company at a lower cost, rather than paying corporate tax with no "return on investment"...
Be rewarded for your entrepreneurial daring!
By locating your company in a disadvantaged or rural area, you can benefit from a corporate income tax exemption. Setting up your company in a ZAFR (zone d'aide à finalité régionale) entitles you to total exemption from corporation tax for the first two years, then a sliding scale over the following three years.
Tax-free rental investment is not just for individuals!
While the Pinel law is reserved for private individuals, the Girardin scheme is of interest - in every sense of the word - to companies wishing to reduce their corporation tax. The deal: the purchase of a new home in the French overseas departments and territories before December 31, 2017 gives rise to a total reduction of the investment amount on taxable income for the year of acquisition. Any deficit can be carried forward or back, promising one or more years of tax reduction or even exemption.
The Girardin scheme is, however, subject to conditions concerning the rental of the property acquired (bare rental as a principal residence for 6 years, rent and tenant income ceilings).
Make a donation and the State will give it back!
Finally, it will reimburse you in the form of a corporate income tax reduction of between 40% and 90% of the value of the donation, if it meets the conditions set by the tax authorities.
Buy a cultural asset considered a national treasure? 40% tax deduction.
Make a donation to a charity ? 60%.
Contribute to the public purchase of a national treasure? 90%!
What's in it for your company? The benefits in terms of image, especially if you build communication around your charitable or sponsorship operation. Donations can also take the form of providing an employee, ideal for keeping a staff member busy during slack periods...
