France: Tax measures in stimulus plan; reduction to “local production” taxes proposed

France: Tax measures in stimulus plan

The French government on 3 September 2020 announced a two-year €100 billion “economic stimulus plan” (known as France Relance).


The tax measures in the economic stimulus plan are intended to improve the competitiveness of French companies, and are expected to be included later this month in the draft Finance Bill for 2021 (and thus applicable with regard to taxes for that year).

Tax proposals

The tax measures in the economic stimulus plan include a structured decrease to the territorial economic contribution (contribution economique territorial—CET) and the company property tax.

Companies engaged in a business in France are subject to the CET that is composed of two different taxes:

  • The land contribution for enterprises (Cotisation foncière des entreprises—CFE)
  • The contribution on added value of enterprises (Cotisation sur la valeur ajoutée des entreprises—CVAE)

According to the government’s proposals, the amount of the “property tax on built-up properties” (taxe foncière sur les propriétés bâties) would be reduced for industrial facilities, and there would be relief from the CET for all companies.

Other changes to be proposed include:

  • A reduction of the rate of the CVAE (contribution on added value of enterprises) from the current rate of 1.5% to 0.75%.
  • The taxable basis of the “property tax on built-up properties” on industrial facilities would be halved (divided by two). As a collateral benefit, the CFE (land contribution for enterprises) as assessed on the same tax basis would be reduced.
  • The CET is currently capped at 3% of the added value of the taxpayer; it is proposed that this cap would be reduced at 2% with the expectation that this “neutralize” the upper limit on the CET (given the proposed decrease of the CVAE and of the property taxes on industrial facilities).

The government expects that companies in industrial and retail sectors would be the main beneficiaries of the proposed tax relief.

Read a September 2020 report [PDF 136 KB] prepared by the KPMG member firm in France

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

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

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

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