Finance act for 2025 – Main provisions concerning Companies

We offer you below a summary of the main measures of the finance law for 2025 concerning businesses. In a forthcoming article, you can 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 – Furnished rentals subject to the real regime

The law provides for the reintegration of depreciation allowed as a deduction from taxable profit into the basis of the taxable capital gain made on the sale of premises which have been the subject of furnished rental as part of an activity carried out on a non-professional basis.

However, the measure does not apply to depreciation relating to construction, reconstruction, expansion or improvement expenses incurred by the seller and carried out by the lessor since the acquisition of the property, when they have not been deducted from taxable income and do not have the character of deductible rental charges.

Exceptions: The measure does not apply to property or rights relating to such property located in:

• A residence intended exclusively for students, people in training or internships, people holding a professionalization or apprenticeship contract, or people over the age of 65;
• A residence with services for the elderly or disabled;
• A residential facility for people who are not able to live independently.

Effective date: February 15^th 2025.

2 – Depreciations

• Extension until December 31th 2027 of the super-depreciation mechanism for “green” vessels.
• Extension until December 31^st 2030 of the “super-depreciation” of low-polluting vehicles using electricity or hydrogen:
  • The scope of the measure is now limited to new vehicles using exclusively electricity or hydrogen and rates are increased.

The deduction is equal to:

• 115% for vehicles with a maximum permissible laden weight greater than or equal to 3.5 tonnes and less than or equal to 16 tonnes;
• 75% for vehicles with a maximum permissible laden weight greater than 16 tonnes;
• 40% for vehicles with a maximum permissible laden weight greater than or equal to 2.6 tonnes and less than 3.5 tonnes.

3 – Corporation tax

• The law introduces, for large companies, a tax on capital reductions following the repurchase of their own shares.
  Only companies with a turnover excluding tax, adjusted to a twelve-month period where applicable, of more than €1 billion during the last financial year are subject to this tax.

• Introduction of an exceptional contribution on the profits of large companies for the first financial year ending on or after December 31th 2025.
  This exceptional contribution is payable by corporation tax payers with a turnover of €1 billion or more for the financial year for which the contribution is due or for the previous financial year.

We do not outline the terms and conditions of the above two measures in this article, but our chartered-accountants are available to provide details of the terms and conditions upon request.

4 – Mergers and divisions of companies

The preferential regime for mergers and demergers is extended to the following transactions:

• mergers without an exchange of shares;
• partial demergers.

We do not present here the details of the conditions for obtaining the benefit of this preferential regime, but we can provide them to you upon simple request.

5 – Agricultural taxation

• Partial exemption of Precautionary Savings Deduction (DEP): These amounts are deducted to cover potential contingencies. They are used during the ten fiscal years following the one in which the deduction was made. These amounts are then reported in the income statement for the fiscal year in which they were used or in the income statement for the following fiscal year.
  
  The law provides for a taxation of only 70% of their amount when they are used during the fiscal year in which one of the following risks occurs:
  • The occurrence of an outbreak of animal or plant disease or an environmental incident;
  • Loss of crops or harvests due to damage caused by climatic hazards;
  • Agricultural disasters meeting the conditions for entitlement to compensation.

This system applies to income tax due for the year 2024 and subsequent years.

• Provision for increase in the value of the stock of suckler dairy cows: This new provision may be made for financial years ending on or after January 1^st 2025 and ending December 31^st 2028.

• Incentives for the transfer of farms to young farmers:
  • The amount of the fixed tax allowance applicable to the capital gain on the sale of company shares in the event of a manager’s retirement is increased to €600,000 when the sale is made to:
    • One or more individuals who can provide proof of receipt of aid for the establishment of young farmers;
    • Or a company or group in which each of the partners or members can provide proof of receipt of such aid.

• • Exemption from capital gains based on turnover: The revenue threshold in the event of transfer to young farmers is raised to €450,000. The capital gain will be partially exempt if annual revenue is less than or equal to €550,000.

• • The exemption of capital gains made in the event of retirement is extended to staggered transfers in the case of transfers to young farmers.

• • The capital gains exemption thresholds, based on the price of the assets sold, are increased in the case of transfers to young farmers.
    The amounts of €500,000 (full exemption) and €1,000,000 (partial exemption) are increased to €700,000 and €1,200,000.

All these incentive measures concern sales made from January 1^st 2025.

II – Tax credits

1 – Agricultural tax credits

The following tax credits are extended:

• High Environmental Value (HVE) tax credit: through 2025;
• “Farm operator replacement” tax credit: until December 31^st 2027.

2 – Changes to the research tax credit

These changes are as follows:

• Elimination of the “young doctor” scheme;
• The flat rate applied to personnel expenses for calculating eligible operating costs is reduced to 40% (instead of 43%);
• Removal of certain expenses from the tax credit calculation base (mainly the costs of obtaining and maintaining certain patents).

Effective date: February 15^th 2025.

3 – Innovation tax credit

The 30% rate is reduced to 20% and is extended until December 31^st 2027.

4 – Research tax credit in the textile sector

 This tax credit is extended until December 31^st 2025.

5 – Tax credit for video game development companies

This credit has been extended until 2031.

III – VAT

1 – Rates of VAT

• Elimination of the reduced rate on gas and electricity subscriptions: Subscriptions will therefore be subject to the standard rate (instead of the reduced rate), as will gas and electricity consumption for subscriptions relating to periods beginning on or after August 1^st 2025.

• Supply and installation of boilers likely to use fossil fuels: The Finance act stipulates that the standard rate of 20% “applies to energy renovation services including the supply or installation of a boiler likely to use fossil fuels.”

• Extension of the reduced rate of 5.5% to solar energy production equipment: The reduced rate applies to the delivery and installation, in homes, of electricity production equipment using solar radiant energy with a power output of 9 kilowatts peak or less.
  Effective date: October 1^st 2025.

• Simplification of certification for work in residential homes: The service provider will now only need to certify on the quote or invoice that the conditions for benefiting from a reduced rate are met.

2 – Simplified system

This system is replaced by a quarterly reporting system: the declaration must be filed every calendar quarter when the taxpayer’s turnover, plus taxable acquisitions, does not exceed:

• €1,000,000 during the previous calendar year;
• €1,100,000 during the current year.

If the threshold is exceeded, declarations will be filed monthly.

These measures will come into effect on January 1^st 2027.

IV – Miscellaneous taxes

1 – Single VAT payer (groups of companies)

The law establishes an exemption from payroll tax to neutralize the consequences for employers of joining a single VAT payer.

2 – Value-added tax for businesses

The phase-out of the value-added tax for businesses has been postponed for three years. The rate reduction planned for 2025 to 2027 has been postponed to 2028 to 2030.

An additional contribution to the value added tax for companies is introduced for financial years ending on or after February 15^th 2025. The basis for this contribution is the contribution on the added value of companies due for the year 2025 and its rate is 47.4%.

Taxpayers must pay a single advance payment equal to 100% of the contribution by September 15^th 2025 at the latest.

3 – Housing tax

In “France Ruralities Revitalization” (FRR) zones, municipalities may, by resolution, exempt:

• Premises classified as furnished tourist accommodation;
• Guest rooms.

To benefit from the exemption, the taxpayer must send to the tax office of the location of the property, before March 1^st of each year, a declaration accompanied by all the elements justifying the allocation of the premises.

4 – Vehicle Taxes

All various vehicle taxes are being increased.

In addition, an annual tax has been created to encourage the purchase of low-emission light vehicles. This tax applies to companies with a fleet of at least 100 vehicles.

Please don’t hesitate to contact us if you need any clarification on any of the points raised in this article, and don’t miss our next article on the main new features of the Finance Act 2025 on individuals.