We offer you below a summary of the main measures of the finance law for 2024 concerning companies. In the next article, you will be able to discover the main measures concerning individuals.
Faced with the very large number of secondary provisions for the life of a company, we had to make a selection of articles. We also suggest that you contact us if you wish to obtain details on a measure that does not appear in this document.
I – Determination of tax result and calculation of corporation tax
1. Creation of a new category of innovative companies : YOUNG GROWTH COMPANY (JEC)
We remind the already existing regime of the “YOUNG INNOVATIVE COMPANY” (JEI): this status allows SME which incur research and development (R&D) expenses representing at least 15% of their costs to benefit from a certain number of tax and social security exemptions.
The companies concerned must meet the following conditions:
- Have less than 8 years of existence at the time of the request;
- Be truly new, that is to say not having been created as part of a concentration, a restructuring, an extension of a pre-existing activity or a takeover;
- Employ less than 250 people, have a turnover of less than 50 million euros and have a balance sheet total of less than 43 million euros at the time of the request;
- Their capital must be held for at least 50% by natural persons, one or more other JEI or associations or foundations recognized as being of public utility of a scientific nature, research and educational establishments, etc.;
- Carry out R&D expenses representing at least 15% of expenses.
Tax and social exemptions:
- Corporate tax: JEI (or JEC) can benefit from exemptions granted to new companies established in certain regional planning zones or to companies carrying out or creating an activity in an urban free zone. However, these companies no longer benefit from corporate tax exemption in their capacity as JEI for those created from January 1st 2024.
- Territorial economic contribution (CET) and property tax: they can be exempted for 7 years upon deliberation of the local authorities.
Please note: tax aid granted to companies placed under the JEI regime cannot exceed the “de minimis” aid ceiling set by the European Commission. - Employer social contributions: for 8 years maximum, the exemption covers part of the remuneration paid to researchers, technicians, research and development project managers, lawyers responsible for industrial protection and staff responsible for pre-competitive tests.
It is also open to corporate officers covered by the general social security system and participating in the R&D project as their main activity.
The exemption from employer contributions only concerns health insurance, maternity, disability, death, old age and family allowances.
YOUNG GROWTH COMPANIES (JEC): The criteria are the same as those of JEI but they must meet additional conditions to qualify them as companies with high growth potential (the conditions will be provided to you upon your request).
In return for these additional conditions, the required threshold for R&D expenses is lowered to between 5 and 15% of expenses.
2. Regional aids
The finance law provides for a new single zoning intended to gradually replace several existing zonings named France rural revitalization zones (ZFRR and ZFRR+).
Municipalities in metropolitan France whose population is less than 30,000 inhabitants and which are members of a public intermunicipal cooperation establishment whose population density is low are classified as ZFRR.
Municipalities classified in a ZFRR (as defined above) and members of an EPCI with its own tax system facing particular difficulties over a period of at least 10 years are classified as ZFRR+.
We will obviously be able to send you the list of municipalities classified ZFRR or ZFRR+ as soon as it becomes available (in the following months).
Exemption from tax on profits in ZFRR and ZFRR+:
To be eligible, companies must carry out an industrial, commercial, artisanal or professional activity.
To benefit from the ZFRR+ exemption measures, the company whose activity is created must belong to the category of micro, small and medium-sized enterprises.
To benefit from the exemption measures in ZFRR, the company must employ fewer than 11 employees and establish its head office in ZFRR as well as all of its activity and its operating resources.
Determination of the exemption: the exemption is total for 5 years, then partial for 3 years. For profits made during the 1st, 2nd or 3rd period of 12 months following this total exemption period, the profits are respectively taxed for 25%, 50% and 75% of their amount.
Optional and temporary exemption from CFE in ZFRR and ZFRR+:
Municipalities and EPCI with their own tax system may exempt from business property taxes (CFE), establishments (or extensions of establishments) carrying out an industrial, commercial, artisanal or non-commercial professional activity created by companies benefiting from the corporation tax exemption in the ZFRR and ZFRR+ zones.
Exemptions from social contributions:
Those associated with the ZRR are switched to the FRR zones.
Here’s the list of zonings extended:
- Priority development zones: extension until December 31st 2026;
- Employment areas to be revitalized: extension until December 31st 2024;
- The Priority Districts of the City policy and the Urban Free Zones – Entrepreneur Territory are extended until December 31st 2024;
- The schemes for regional aid zones (AFR) and investment aid for small and medium-sized businesses until December 31st 2027.
3. Over-depreciation for “clean vehicles”
Since January 1st 2024, companies subject to corporate tax or income tax according to a real tax regime can practice a deduction based on the cost, excluding financial costs, of the transformation of vehicles to thermal motors assigned to their activities in vehicles with battery or fuel cell electric motors.
This concerns vehicles whose total authorized weight is greater than or equal to 2.6 tonnes.
The deduction rate is 20 to 60% depending on the total weight of the vehicle.
Similar regimes are planned for boats using “clean energy” as well as for public works equipment or ski lifts in ski resorts.
4. Calculation of corporate tax
Certain tax reduction or credit measures are extended:
- Tax reduction for providing a fleet of bicycles: until December 31st 2027;
- Tax credit for production expenses for phonographic works: December 31st 2027;
- Tax credit for video game creators: December 31st 2026;
- Tax credit for executive production expenses for cinematographic and audiovisual works: December 31st 2026;
- Tax credit for live performance production expenses: December 31st 2027;
- Tax credit in favor of theatrical performances of dramatic works (extended to circuses): December 31st 2027;
- Tax credit for musical publishing expenses: December 31st 2027;
- Tax credit in favor of artistic crafts: December 31st 2026.
Creation of a tax credit for investments in favor of green industry:
Industrial and commercial companies taxed according to their actual profit or exempt under certain preferential regimes (new companies, regional aid, etc.) will be able to benefit from the tax credit.
The tax credit concerns new investment expenses incurred for their activities contributing to the production of batteries, solar panels, wind turbines or heat pumps.
The company must meet certain conditions and obtain prior approval from the minister responsible for the budget after assent from the public environmental establishment (ADEME). This public establishment certifies that the activities set out in the application for approval fall within the scope of eligible activities.
Credit tax calculation:
The basis of the tax credit is made up of expenses incurred, within the framework of the investment plan presented for approval, with a view to the production or acquisition of the following tangible assets:
- the buildings, installations, equipment, machines and base areas necessary for the operation of the latter equipment, subject to being acquired from a third party who is not linked to the company;
- patent rights, licenses, etc.
The tax credit rate is equal to 20%. This rate is increased to 25% or 40% for investments made in certain regional aid areas.
These provisions apply to applications for approval submitted from September 27th 2023.
5. Capital gains
Transfers of buildings: the law extends until December 31st 2026 the application of a reduced corporate tax rate (19%) for capital gains from the sale of office buildings, or for industrial or commercial use, and land to build, located in areas where there is a particularly significant imbalance between supply and demand for housing, provided that the transferee transforms the property into residential premises within 4 years.
Compensation paid by an insurance company to an insurance agent ceasing his activity: from now on, insurance agents can benefit from the capital gains exemption regime (total exemption if the price is less than €500,000; partial exemption if the price is between €500,000 and 1 million euros) in the event of transfer of portfolio to the mandating company and receipt of compensation.
6. Dividends received from a subsidiary established in another Member State of the European Union or the EEA
The rate of the share of fees and charges is set at 1% for dividends received by a company member of a group due to a participation in a company subject to a tax equivalent to the corporation tax in a Member State of the European Union or in another EEA State, provided that these companies have fulfilled, for more than one financial year, the conditions to constitute a group than if the second company was established in France.
7. Micro-BIC regime for furnished rentals
The tax regime for direct or indirect rentals of furnished tourist accommodation (within the meaning of article L. 324-1-1 of the tourism code) is aligned with that of the micro land regime for bare rentals, with the application of a 30% reduction within the limit of €15,000 in revenue.
However, rental activities of premises classified as furnished tourist accommodation benefit from an additional reduction of 21% on turnover, when the latter are not located in geographical areas characterized by a significant imbalance between the supply and the demand for housing (mainly rural areas), provided that the annual turnover excluding taxes does not exceed €15,000.
In the absence of a specific effective date, the measure applies for the determination of 2023 income tax.
8. Strengthening control of transfer pricing of multinational companies
This reinforcement results in:
- Lowering the turnover threshold for triggering the obligation to present, at the start of tax audit, complete documentation of the transfer pricing policy (€150 million instead of €400 million);
- Increase in the amount of the fine for failure to present this documentation;
- Opposability of the documentation to the company.
9. Agricultural profits
Increase in the ceilings for the precautionary savings deduction:
All thresholds are raised by approximately 14% for the income tax due for 2024 and subsequent years.
Increase in the application limit of the micro-BA regime:
The ceiling for the average revenue over the last three years, below which farmers can benefit from the “micro-BA” scheme, increases from €91,900 to €120,000.
This new ceiling applies to the income tax due for the year 2024 and subsequent years.
Raising the threshold for exemption from professional capital gains:
The revenue ceiling allowing you to benefit from the total exemption is increased from €250,000 to €350,000 for companies carrying out agricultural activity. In addition, the turnover ceiling allowing for partial exemption is increased from €350,000 to €450,000.
Tax credit for replacement expenses for agricultural operators’ leave:
- The “common law” rate of the tax credit is increased to 60% instead of 50%.
- This rate is increased to 80% (instead of 60%) for expenses incurred to provide replacement for leave due to illness or an accident at work as well as (new) to follow professional training.
- The number of replacement days giving entitlement to the tax credit is increased to 17 days (instead of 14 days).
This system applies to expenses incurred from January 1st 2024.
“High environmental value” (HVE) tax credit:
The application of this tax credit is extended for 2024.
II – VAT
1. Adaptation of VAT rules to European directive 2022/542
Adaptation of the rules of territoriality of service provision as well as operations relating to works of art and collectibles and antiques:
Changes to the territoriality rules will come into force on January 1st 2025. We will present them in future articles.
Adjustments to the furnished rental regime:
The law gives a new definition of activities taxable for VAT.
- Hotel sector: These are accommodation services provided within the framework of the hotel sector or sectors with a similar function which meet the following cumulative conditions:
- They are offered to the customer for a period not exceeding thirty nights, without prejudice to the renewal possibilities offered;
- They include the provision of furnished premises and at least three of the following services: breakfast, regular cleaning of the premises, the supply of household linen and the reception, even if not personalized, of customers;
- Other sectors: Rentals of furnished accommodation for residential use (other than the hotel sector referred to above), which are accompanied by three of the following services: breakfast, regular cleaning of the premises, supply of household linen and reception, even non-personalized, customer-oriented;
- Indirect rentals: Rentals of bare, furnished or furnished premises granted to the operator of an accommodation establishment which meets the conditions set out above (excluding those granted to the operator of an establishment mentioned in Article L 633-1 of the Construction and Housing Code).
Arrangement of the basic franchise:
From January 1st 2025, companies established in a Member State of the European Union (EU) will be able to benefit from the franchise regime, not only in their State of establishment, but also in other Member States, provided that they do not exceed a ceiling of business set at European level at €100,000.
In return, the franchise thresholds in each State will be modified as follows:
- Total national turnover:
- Previous calendar year: €85,000
- Current year: €93,500
- National turnover relating to the provision of services other than sales for consumption on site and accommodation services:
- Previous calendar year: €37,500
- Current year: €41,250.
2. Riding education
From January 1st 2024, the reduced VAT rate of 5.5% applies to services provided by equestrian centers for the teaching of horse riding, access to sports infrastructures dedicated to this practical, as well as animations and demonstration activities for the purposes of discovery and familiarization of the equestrian environment.
3. VAT calculation
Deductions from the tax imposed on certain vehicles:
The value added tax relating to deliveries, imports, intra-community acquisitions and provision of services has been fully deductible since January 1st 2024 with regard to the following vehicles:
- All-terrain vehicles assigned exclusively to the operation of ski lifts and ski areas;
- Vehicles designed for transporting equines.
Fishing operations exempt but giving right to deduction:
Since January 1st 2024, exempt operations carried out by fishermen give rise to the right to deduction. This concerns fishermen and fishing boat owners, with the exception of freshwater fishermen.
New application schedule for electronic invoicing:
- Reception of electronic invoices, mandatory for all companies from September 1st 2026;
- Issuing electronic invoices:
- As of september 1s 2026 for mid-sized companies, large companies and VAT groups;
- As of september 1st 2027, for SME and micro-enterprises that are not members of a VAT group.
III – Local taxes
1. Calendar for the removal of the CVAE
The maximum CVAE tax rate is gradually reduced to 0.28% in 2024:
- 0.19% in 2025;
- 0.09% in 2026;
- the CVAE will be completely abolished in 2027.
The rate of capping the territorial economic contribution (CET) based on added value is also gradually lowered over four years:
- 1.531% for taxes established for 2024;
- 1.438% for taxes established for 2025;
- 1.344% for taxes established for 2026;
- 1.25% for taxes established for 2027.
The minimum contribution on the added value of companies is eliminated from 2024.
2. Extension of the scope of application of the property tax exemption for social housing
Social rental housing to which personalized housing assistance applies benefits from an exemption from property taxes for a period of 15 years.
They now benefit, under certain conditions, from an exemption for a period of 25 years when the application for approval was submitted between January 1st 2024 and December 31st 2026.
IV – Taxation applicable to vehicles
1. Vehicle registration tax
Scale based on carbon dioxide emissions: “CO2 penalty”:
The trigger threshold drops to 118 g of Co2 per km (instead of 123) and the price, in this case, is €50. All prices are increased and the maximum price (above 193 g/km) is set at €60,000 (instead of €50,000 above 225 g/km).
Scale depending on administrative power:
It concerns vehicles which have not undergone European approval. This scale is also increased: for example, 4 CV, €1000 (instead of €500) and €60,000 above 15 CV (instead of €50,000 above 28 CV).
Tax on the mass in running order of passenger vehicles “weight penalty”:
The scale is modified from 2024. The tax threshold is lowered to 1600 kg (instead of 1800 kg). The current rate (€10/kg) is replaced by a progressive scale comprising 5 brackets (with a rate ranging from €10/kg to €30/kg).
Reductions are provided in the following cases:
- Vehicles which have at least eight seats and which are owned by a legal entity, the mass in running order is subject to a reduction of 500 kilograms;
- Certain hybrid electric vehicles, the mass in running order is subject to a reduction of 200 kilograms, within the limit of 15% of this same mass;
- Large families (200 kg per child) for families with at least three children;
- Vehicles whose energy source includes electricity (other than exempt vehicles), the mass in running order is subject to a reduction of 100 kilograms.
Tax on the allocation of vehicles for economic purposes (TVS):
The annual tax on seniority is replaced, from January 1st 2025, by an annual tax on “emissions of atmospheric pollutants”. Three prices consistent with the Crit’Air categories are thus retained:
- Category E, which brings together vehicles whose energy source is exclusively electricity, hydrogen or a combination of the two;
- Category 1, which brings together vehicles which are powered by a spark-ignition thermal engine and which comply with the Euro 5 or Euro 6 emission limit values;
- Category of the most polluting vehicles includes vehicles falling under neither E nor 1.
The annual rate, depending on the category of pollutant emissions, is as follows:
- Category E: free
- Category 1: €100
- Other vehicles: €500.
Hybrid vehicle regime: The exemption for hybrid vehicles is abolished as of January 1st 2025.
All the team of French Business Advice is at your disposal, so do not hesitate to contact us!
