On 27 September 2017, the French Government outlined the proposed draft Finance Bill for 2018. Taxand France provides a breakdown of the main fiscal changes proposed.


With respect to businesses, the official goal is to sustain attractiveness and competitiveness of French economy

  • Corporate income tax: the progressive decrease of corporate income tax rate to 25% in 2022 is strengthened. In 2018, corporate income tax rate will be 28% until €500k of tax profit and 33.1/3 beyond; in 2019, corporate income tax rate becomes 31%.
  • Removal of one of the interest deduction limitations: currently, interest expense deduction is disallowed when evidence that decision power on acquisition and/or control of the acquired entity is not exercised in France. Arguing that doubts have arisen with respect to the compatibility of these provisions with European law, the draft Bill simply proposed to withdraw such provision.
  • Tax credit for competitiveness and employment (“CICE”): the CICE tax credit rate should be decreased from 7% to 6% of relevant salaries paid in 2018. In 2019, the CICE should be definitively removed and replaced by a relief of social levies due by enterprises on low salaries.
  • 3% contribution on distributions: the controversial 3% contribution on distribution made by companies, which is already under severe attack based on various national and European case law, should be definitively removed for distributions paid from 2018.
  • Tax on salaries highest rate (20%) is to be removed: as a result, the highest rate on salary tax would become 13.60%.
  • Tax on financial transactions: extension of tax on financial transactions to intraday transaction, initially foreseen for 2018, is cancelled.
  • Local taxes: the computation of the tax on corporate value added (“CVAE”) would be computed based on total turnover of companies belonging to a group of entities, irrespective of whether, or not, they form a tax consolidated group for corporate income tax purposes.


With respect to taxation of individual, the official aim is to ease economic investment of savings

  • A unique lump sum levy on income from capital would replace former provisions: the levy would be at the flat rate of 30%, made of 12.8% as income tax and 17.2% as social levies. Modest taxpayers would be allowed to elect for taxation upon the progressive slices of personal income tax rather than using the flat tax rate. Flat rate would encompass the whole investment income (interest, dividends and other distributions), insurance income stemming from new payments made from 27 September 2017, gains from the disposal of shares and similar gains, some of the capital gains aimed by the “exit tax” provisions. The exceptional contribution on very high revenues (3% or 4%) is however not cancelled.
  • Removal of Wealth Tax (“Impôt sur la Fortune”) and replacement by a tax on the real estate wealth (“IFI”): New IFI will only concern real estate properties and deemed real estate properties. The threshold to become liable to IFI will still be €1.3m. Same taxation scale as the former ISF and similar rules as for the ISF would apply.
  • Housing tax (“taxe d’habitation”): 80% of households would see progressive withdrawal of Housing Tax over the next three years.
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Taxand's Take

The new Finance Bill will be discussed, and possibly amended, before the Parliament and before being adopted and becoming positive law.

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Article tags

France | International | International Tax

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