France: Corporate income tax installment relief; expedited refunds of tax credits in 2021 (COVID-19)
France: Corporate income tax installment relief
The French Ministry of Economy and Finance on 2 March 2021 announced new measures intended to provide relief to companies encountering financial challenges in response to the coronavirus (COVID-19) pandemic.
The relief measures allow eligible companies to anticipate a decrease in profits as a consequence of the pandemic as well as to provide financial assistance by expediting the refund of tax credits.
Greater flexibility for 15 March and 15 June 2021 installments of corporate income tax
French corporate income tax is paid by taxpayers in four quarterly installments, with the positive or negative balance being settled three to four months after the fiscal year-end.
The first installment of corporate income tax for 2021—due 15 March 2021 by companies with a fiscal year ending 31 December 2020—can be adjusted under the relief measures. As an exception to general rules, calendar-year companies can compute their first installment of the estimated (forecasted) corporate income tax for the fiscal year ending 31 December 2020 with a 10% margin of error (whereas standard rules provide that the first installment must be, in principle, based on the profits of the penultimate fiscal year (that is, for 2021, the installments would be based on the fiscal year ending 31 December 2019).
If the company elects to adjust its first installment of corporate income tax due 15 March 2021, the amount of the second installment that is due 15 June 2021 is to be determined based on the sum of the first two installments if this amount equals at least 50% of the corporate income tax due for the fiscal year ending 31 December 2020.
These measures also apply with regard to the 3.3% social contribution on corporate income tax installments due 15 March and 15 June 2021.
No specific election formalities are required. This treatment is optional. Companies, therefore, can decide to follow the standard rules for determining the quarterly installments of corporate income tax paid in 2021.
Large companies (those companies or corporate groups with more than 5,000 employees or annual revenues greater than €1.5 billion) that elect to apply these relief rules will need to make two commitments: (1) that they will not make any dividend distributions or share buy-backs in 2021; and (2) that their head office or subsidiary without economic substance is not located in a non-cooperative country or territory.
Expedited refund of corporate income credits in 2021
A program allowing expedited or accelerated refunds of corporate income tax credits in 2020 is continued into 2021. Under this process, companies benefiting from a tax credit that is refundable in 2021 can obtain the corresponding refund without having to wait to file their tax return.
The Ministry of Economy and Finance specified that this expedited refund mechanism concerns all tax credits that are refundable in 2021—and, in particular, tax credits that were enacted or granted since the beginning of the pandemic (such as the tax credit granted to lessors waiving their rent receivables or the energy renovation tax credit for small and medium-size entities for fiscal year 2020). Accordingly, the expedited credit refund process also applies to:
- CICE (competitiveness and employment tax credit)
- CIR/CII (R&D tax credit)
- Tax credit for film production expenses
- Tax credit for production expenses for audiovisual works
- Tax credit for foreign film and audiovisual production expenses
- Tax credit for businesses engaged in live musical or variety shows
- Tax credit for phonographic production expenses
- Tax credit for video game makers
For more information, contact a tax professional with KPMG Avocats in France:
Marie-Pierre Hôo | + 33 (0) 1 55 68 49 09 | email@example.com
Patrick Seroin Joly | + 33 (0) 1 55 68 48 02 | firstname.lastname@example.org
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