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The Finance Bill for 2014


The French Finance Bill for 2014 provides for an increase of the CIT rate and a prohibition of the deduction of certain financial expenses (especially interest on hybrid instruments). Taxand France discovers how these two updates will affect multinationals.

Increase of the corporate tax rate (CIT)

Two additional contributions have to be added to the French CIT rate (33.1/3%): 

  • A social contribution of 3.3% of the CIT (subject to certain exceptions)
  • An exceptional contribution of 5% of the CIT for companies which have a turnover over 250 million of euros

Pursuant to the Finance Bill for 2014, the exceptional contribution increase from 5% to 10.7%, so that the effective CIT rate amounts to 38% starting from the fiscal period ending on or after 31 December 2013.

Prohibition of certain financial expenses

Interest paid to related companies will no more be deductible if the interest income is not taxed at the lending company’s level at a rate at least equal to 25% of the French CIT. This prohibition should be applicable starting from the fiscal period ending on or after 25 September 2013.

Discover more: The Finance Bill for 2014

Your Taxand contact for further queries is:
Roland Schneider
T. +33 (0)1 70 38 88 03

Also published in Thomson Reuters' Taxnet Pro, 9 January 2014


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Taxand's Take

The Finance Bill for 2014 completes the former measures which aim at limiting/avoiding the deduction of financial expenses. Multinationals should review their financing structures to investigate whether these updates will have an affect their operations. 

Taxand's Take Author