France: Accelerated refunds proposed for loss-carryback receivables (COVID-19)

France: Accelerated refunds, loss-carryback receivables

The third “corrective” Finance Bill for fiscal year (FY) 2020 proposes a new measure as support French companies in response to the coronavirus (COVID-19) pandemic—an accelerated refund of “carryback receivables” as well as a specific procedure for obtaining the immediate refund of any carryback receivable derived during the COVID-19 crisis.


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Tax losses incurred during a given fiscal year may, upon election and under certain conditions, be used to reduce the tax liability of the preceding fiscal year, and are in turn converted into a "receivable" against the French government (up to a ceiling of €1 million in tax base)—hence, the term “carryback receivables” refers to such losses.

In principle, these loss receivables are either: 

  • Offset against corporate income tax due in respect of fiscal years closed during the five years following the fiscal year during which the loss carried back was suffered, or 
  • Refundable if not fully offset after the five-year period


French companies subject to corporate income tax, under standard conditions, would benefit from an accelerated refund of the carryback receivables, as follows:

  • Carryback receivables arising from an election exercised in respect of a prior fiscal year (with a FY closing date, at the latest, on 31 December 2020) would be refundable immediately even if the five-year period (noted above) has not yet lapsed. The new mechanism would only apply with regard to receivables that have not been transferred to a credit institution.
  • In addition, as regards tax losses realized during the fiscal year ended in 2020, companies would be allowed to elect to apply the carryback mechanism and to request the immediate refund of the corresponding receivable.

Practical implications

  • The immediate refund of previously carried back receivables would have to be requested at the latest on the corporate income tax return for FY 2020 by the return’s filing deadline (in principle, the third business day following 1 May if the year-end is 31 December).
  • As regards tax losses realized during FY 2020, the carryback request could be filed as from the first day following the FY closing date (i.e., based on an estimate with no need to wait for filing the corresponding corporate income tax return) in order to support the taxpayer company’s immediate need for cash. However, if the amount refunded were to exceed by more than 20% the amount of the receivable determined on the basis of the final taxable result, as declared in the corporate income tax return filed in May 2021 (for companies closing their fiscal year on 31 December), late-payment interest of 0.2% per month and a 5% late-payment penalty would be applied to the amount of the unduly refunded excess.

KPMG observation

This new refund mechanism is proposed as part of the third corrective Finance Bill for 2020, and is scheduled to be discussed in Parliament beginning 29 June 2020 and then expected to be subject to a parliamentary vote in early July 2020. Observers anticipate that few or no changes would be made during the parliamentary process.

For more information, contact a tax professional with KPMG Avocats in France:

Marie-Pierre Hôo | + 33 (0) 1 55 68 49 09 |

Patrick Seroin | + 33 (0) 1 55 68 48 02 |

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