We present below a summary of the main measures of the finance act for 2023 concerning companies. The presentation is divided into four chapters which are:
- Determination of tax results and corporation tax calculation;
- VAT;
- Local taxes;
- Various measures.
I – Determination of tax result and corporation tax calculation
Calculation of the tax result
Averaging of public subsidies: From 2023, subsidies paid by bodies created by the institutions of the EEC can benefit from the same tax treatment of averaging as subsidies paid by a public body.
Extension of the deduction for the acquisition of works of art: Companies that acquire original works by living artists or musical instruments may deduct an amount equal to the acquisition price of such works or instruments from the taxable result of the fiscal year during which the acquisition was made and the following four fiscal years, in equal fractions.
This plan is extended until December 31st, 2025.
Extension of the staggering of the taxation of equipment subsidies:
In the case of sums paid to companies within the framework of the energy saving certificate scheme (aid contributing to an overall objective of ecological transition), the staggering of the taxation of subsidies will be carried out as follows:
- For the creation and acquisition of depreciable fixed assets, the subsidy is added to the profit at the same rate as the depreciation;
- For the creation or acquisition of a non-depreciable fixed asset, they are reported in equal fractions to the taxable profit for the years during which this fixed asset is inalienable under the terms of the grant contract or, in the absence of an inalienability clause, for the benefit of the ten years following that of the award of the grant.
Calculation of corporation tax: Increase in the ceiling for the application of the rate of 15%. The application ceiling for the reduced rate for “PME” is raised from €38,120 to €42,500. This new ceiling applies to financial years ending on or after December 31st, 2022.
Tax credits
Cultural sector tax credits: The tax credits in favor of film or audiovisual production companies as well as the tax credit for theatrical performances of dramatic works or live shows have been modified. If you are concerned by these amendments, do not hesitate to contact us and we will provide you with all the details of the legal texts.
Restoration of the tax credit for energy renovation: The finance act for 2021 had introduced, for very small businesses and small and medium-sized businesses, a tax credit in favor of the energy renovation of buildings for tertiary use allocated to their activity. This system has not been in effect since December 31st, 2021.
This tax credit is reinstated for expenses incurred between January 1st, 2023 and December 31st, 2024, for the energy renovation of their tertiary buildings.
The tax credit is equal to 30% of the cost price excluding tax of the expenses. The total amount of the tax credit cannot exceed a ceiling of €25,000 (for the entire period of application of the tax credit).
Extension of the tax credit for executive training: The application of this tax credit is extended until December 31st, 2024.
Temporary solidarity contribution
A temporary solidarity contribution applicable to companies in the oil, coal, refining and gas sectors is instituted for the first fiscal year beginning on or after January 1st, 2022.
Agricultural profits
Deduction for precautionary savings: The annual ceiling of the deduction for precautionary savings and the thresholds of the profits retained for the application of the ceiling are reassessed each year by applying the monthly consumer price index. These provisions apply to income tax due for the year 2023 and subsequent years.
The deduction system is extended until the financial years ending on December 31st, 2025.
The “exit glyphosate” tax credit and the tax credit for agricultural businesses with high environmental value (HVE) certification, have been extended until December 31st, 2023.
Exemption from property tax for rural buildings assigned to agricultural use by a company exclusively formed between associated farmers: In order to benefit from the exemption, these buildings, assigned to agricultural use on a permanent and exclusive basis, must only be used for the agricultural operations of the company’s partners.
This new case of exemption from property tax concerns groups of farmers to jointly construct the buildings necessary for their agricultural activity, in order to pool their investments.
II – V.A.T.
Rates
Extension of the scope of the 5.5% rate in the agri-food sector: The law organizes the consistency of reduced VAT rates in the agri-food and agricultural production sector.
Consequently, animal nutrition will be subject to the rate of 5.5% only for products intended for the consumption of animals which themselves produce food for humans. Products of agricultural origin, fishing, fish farming or poultry farming will be subject to the rate of 5.5%, provided that they are of a type normally intended for use in agricultural production.
These new rates concern deliveries for which the triggering event occurs from January 1st, 2023.
Masks, hygiene products: The application of the reduced rate of 5.5% VAT applicable to masks, protective clothing and products intended for personal hygiene adapted to the fight against the spread of Covid-19 is extended until as of December 31st, 2023.
Self-delivery of energy renovation work: These operations benefit from the reduced rate of 5.5% if the work contributes to improving the energy quality of residential premises completed more than two years ago.
Application of the reduced rate of 5.5% for charging infrastructure for electric vehicles:
This concerns the services of laying, installing and maintaining charging infrastructure for electric vehicles that meet the following conditions:
- The charging infrastructures are installed in residential premises and are intended for residents;
- The configuration of the charging infrastructure meets the technical requirements set by joint order of the ministers responsible for the budget and energy;
- The services are performed by a person meeting the qualification criteria defined by decree.
Methods for securing invoices issued in electronic form
Directive 2010/45/EU cites three examples of procedures or technologies to guarantee the authenticity of the origin, the integrity of the content and the readability of electronic invoices. These are the electronic signature, the reliable audit trail and the exchange of computerized data. The directive does not prohibit the use of other technologies or other procedures as long as they comply with the aforementioned conditions.
The Finance Act provides that documents issued or received on computer media must be kept on this same medium for the entire period during which they must be kept, i.e. in principle 6 years.
Anti-tax evasion measures
Record Keeping for Payment Service Providers: European Directive EU 2020/284 provides for the obligation for payment service providers to keep a register of cross-border payments and make it available to the administration.
Thus, keeping this register will be mandatory in France from January 1st, 2024.
Invalidation of the individual VAT identification number: The law creates new cases of possibility for the administration to invalidate the VAT identification number.
“VAT group” regime: The date on which the representative of the single taxable person communicates the list of its members annually has been brought forward from January 31st to January 10th, from January 1st, 2024.
III – Local taxes
Gradual abolition of the contribution on the added value of companies
First, the contribution payable by liable companies will be halved in 2023:
Rates are halved:
- For companies whose turnover is between €500,000 and €3,000,000, the rate of 0.25% is replaced by the rate of 0.125%;
- For companies whose turnover is between €3,000,000 and €10,000,000, the rates of 0.45% and 0.25% are replaced by 0.225% and 0.125% respectively;
- For companies whose turnover is between €10,000,000 and €50,000,000, the rates of 0.7% and 0.05% are replaced by the rates of 0.35% and 0.025% respectively;
- For companies whose turnover exceeds €50,000,000, the rate of 0.75% is replaced by the rate of 0.375%.
Other changes result from these rate changes:
- Relief => Companies whose turnover is less than €2,000,000 benefit from a relief of €250 (instead of €500);
- Minimum amount => the amount of 125 is replaced by the amount of €63;
- Capping => the rate of 2% is replaced by the rate of 1.625% in 2023 and then 1.25% in 2024.
CVAE is completely abolished in 2024.
Real estate tax
Overhaul of environmental quality criteria for the extension of property tax exemptions for social housing: The duration of the exemption is extended to twenty years when these constructions meet certain energy and environmental performance criteria.
IV – Various measures
Tax return for micro-entrepreneurs
To take into account the consequences, on certain sectors of activity, of the new health restriction measures taken, the law made it possible to reactivate measures of partial exemption from social security contributions in favor of the companies concerned by these measures.
Micro-entrepreneurs, eligible for the scheme, could deduct a certain amount of turnover from the turnover declared for the monthly or quarterly deadlines of the first and second quarters of 2022. The amounts deducted are the turnover achieved up to in February 2022 (provided they are eligible for that month).
Declarative regularization: For operators subject to the levy in discharge of income tax, social security and tax levies are normally the subject of a joint declaration. Consequently, the amounts of turnover or revenue deducted from the 2022 monthly or quarterly declarations will be reported in the 2022 income declaration (2042 C Pro), filed in 2023.
The 2042 C Pro declaration should include new headings thus making it possible to declare both the total turnover or receipts for 2022 and in a separate line the amount of turnover or receipts for 2022 deducted for the calculation of social contributions in 2022.
Details on the verifications of “VAT group”
Communication of the financial consequences of controls: Article L. 48 of the Book of Tax Procedures provides that the information on the financial consequences of any planned rectifications concerning VAT and the corresponding penalties relates, for the member of a single taxable person, to the amounts for which he would be liable in the absence of membership of this single taxable person, except for deliveries and services to another member of this single taxable person.
In practice, the implementation of this provision is complex. Consequently, the law simplifies the system by returning to common law: the tax administration must communicate to the audited member the financial consequences of the audit as they result from its belonging to a single taxable person.
Exception to the ban on repeat verification: This exception is supplemented by a new text concerning “VAT groups”.
Indeed, when the sole taxable person for VAT is made up of many members, the control carried out at the sole representative may reveal the need to carry out investigations at one or more other members who have already been the subject of a control relating to VAT for the same period. In particular, these may be checks that have become necessary through rectifications made at the level of the representative of the single taxable person having an impact on the members, in particular the modification of the deduction coefficient at group level.
Annual tax on heavy goods transport vehicles
The exemption for agricultural vehicles is extended:
- Beyond just harvests, to all transport of plant, animal or mineral goods necessary for an agricultural or forestry activity or which result from it (livestock, milk, effluents for example);
- Vehicles owned by operators even if they are used for the needs of another operation than their own, for example through an agricultural work or agricultural, rural and forestry work company.
All the team of French Business Advice is at your disposal to help you, so do not hesitate to contact us!
