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France: Tax developments in response to COVID-19

General Information

This page offers an overview of tax developments being reported globally by KPMG member firms in response to the Novel Coronavirus (COVID-19).

The content will be updated regularly. However, due to the fast-moving pace of change, it may not always reflect the most current developments in a given jurisdiction. Please refer to the date of accuracy and refer to the relevant links, under additional information, for original source information.

Date accurate as of: 30 September 2020

Any company in difficulty as a result of the health crisis could  postpone, without penalty, the payments of direct taxes due in March, April, May and June 2020

  • Applicable to all direct taxes (CIT and payroll taxes) but not to VAT, indirect taxes, the withholding of the employees' personal  income tax levied by employers or social solidarity contribution.
  • Also applicable to payment of wage tax due in July and August  (postponement by 3 months).
  • Upon request to the competent tax center without justification by  submitting a simplified form.
    • Applications that are "manifestly unfounded" with regard to  the activity carried out are likely to be rejected by the tax  authorities.
    • Applicable also, under certain conditions, to companies which  are facing practical difficulties to meet compliance deadlines  without facing financial difficulties.
  • As a counterpart, “large companies” must commit not to distribute  dividends in 2020 and not to be established in a non-cooperative  State or territory.

Payment of the ‘cotisation foncière des entreprises’ (business contribution on property) and the ‘taxe foncière’ (property tax)

  • Upon request to the tax center, the monthly payments can be suspended.
  • The total amount of unpaid tax will be settled upon final payment,  without penalty.
  • For the industry sectors which have been the most highly  impacted by the health crisis (tourism, hotels, restaurants,  culture, events organization, sport, air transportation): automatic  postponement of the full amount of the CFE until 15 December  2020 without penalty.
    • For small and mid-size companies (with revenue < 150m€):  waiver of 2/3 of the 2020 CFE (subject to relevant decision by  the respective local public bodies by 31 July 2020).
  • Possibility to take into account the cap of the CFE based on the added value when applicable for the June installment of the CFE.

Settlement plan for tax payments

  • Who can claim the benefit of the settlement plan?
    • Companies facing serious economic difficulties to preserve  the continuity of their business as a result of the health crisis.
    • Which have started to operate their business at the latest on  31 December 2019 and are up-to-date with their tax  compliance obligations.
    • Qualifying as small and mid-size companies (revenue < 50m€  or total balance sheet < 43m€ + employees < 250).
    • Which have already asked payment deferral to their creditors  for payables due between 1 March and 31 May 2020.
  • Scope will cover all direct and indirect taxes collected by the  DGFiP which should have been settled between 1 March and 31  May 2020 (e.g. CIT balance and monthly VAT payments from  February 2020 to April 2020).
    • Tax payments assessed during a tax audit are excluded.
  • Maximum duration: 36 months (from 12 months to 36 months  subject to the level of tax and social liabilities vs. the revenue).
    • Securities are required when the duration exceeds 12 months.
    • First payment at the earliest on 1 September 2020 for  settlement plans executed before that date.
  • Settlement plan waived if any of the above conditions is not met  or if payments are not duly and timely made according to the plan.
  • Request filed at the latest on 31 December 2020 by submitting a  specific form to the tax office.

The CCSF (‘Commission des chefs des services financiers’) can grant companies in financial difficulties payment deferral plans for tax and social security debts (employer's contributions). 

This commission can grant companies that encounter financial difficulties payment terms for their tax and social security debts (employer's share) in complete confidentiality

  • Who can introduce the request?
    • The debtor itself (trader, craftsman, farmer, individual exercising an independent professional activity and legal entity under private law (companies, associations))
    • The ad hoc representative
  • Conditions
    • Be up to date with the filing of tax and social security returns and the payment of employee contributions and personal income tax of employees at source
    • Not have been convicted for undeclared work
  • Nature and amount of debts
    • All taxes, social security contributions to the exception of the employee social contributions’ share and personal income tax of employees at source
    • No minimum or maximum amount
  • Which CCSF is competent? 
    • In principle, the CCSF of the department of the company's head office or principal establishment 

CIT installments to be paid during FY opened before 20 August  2020 can be reduced on the basis of the estimated CIT charge  for the said FY

  • Acceptable error margin increased to up to 30% for the second  CIT installment.
  • Subject to the application of a 5% penalty and late payment  interest in case of under estimation of the said CIT installments  (taking into account the acceptable error margin).
  • Companies having benefited from a deferral of the 15 March CIT  installment until 15 June are allowed to postpone the 15 June  CIT installment but 15 September CIT installment will have to be  adapted to include the unpaid 15 June CIT installment.

What is the content of the commitment to responsibility?

  • Not to distribute dividends in 2020 to (French and non-French)  shareholders,
    • Except in case of legal obligation to distribute dividends in  2020 (but only up to the amount which is required to be  distributed).
    • Except in case of dividend distributions within the group of  companies (as defined below) when such dividends are  aimed to provide financial comfort to a French company.
    • To be noted: dividends received by French companies from  their non-French subsidiaries are authorized.
  • Not to perform any share buy-back in 2020.
    • Except in the context of free shares plan to the benefit of  employees.
    • Other specific exceptions are available when the share buy-  back is linked to an event/obligation existing prior to 27 March  2020.

From which companies is this commitment required?

  • Large companies
  • Any company (or group of companies) which, during the last  FY, meets one of the following criteria:
    • Having employed at least 5,000 employees or
    • Having realized consolidated revenue exceeding €1.5bn  in France.
    • The concept of ‘group of companies’ refers to the definition  used for the CVAE or the tax consolidated group (95% control  threshold).
    • Not applicable to the foreign subsidiaries of a French  group.
    • Applicable to all French subsidiaries of a group controlled  by a foreign parent company.
  • When such companies have benefited from:
    • Deferral of (or rebates to) tax payments or social security  contributions.
    • Accelerated refund of tax credits and tax receivables are not taken into consideration.
    • The partial activity mechanism is not taken into  consideration (although the French Government asks  large companies benefiting from partial unemployment  aids to lower as much as possible dividend distributions).
    • A guarantee from the State on loans they have taken on.
  • The commitment is required from all French entities of the group  when at least one of the members has benefited from one of the  above measures even if a concerned group company has not  benefited itself from a deferral or rebate of tax or social  contribution.

The commitment does not apply to:

  • Dividend distributions or share buy-backs decided before 27 March 2020.
  • Deferral of tax payments or social security contributions obtained before 27 March 2020 or State guarantee granted before 27 March 2020.

The failure to comply with the commitment to responsibility triggers:

  • The immediate reimbursement of the full amount of loan guaranteed by the French State or the tax payments and/or social security contributions benefiting from the rebate or postponement.
  • 5% penalty + 0.2% monthly late payment interest.

Commitment not to be established in a non-cooperative State or territory required from large groups

In addition to the commitment to responsibility, “large companies” (as defined under such commitment) must commit not to be established in a non-cooperative State or territory when they are requesting a deferral of tax payments or social security contributions or a State-guaranteed loan.

  • The commitment is also required from all French entities of the group when at least one of the members has benefited from one of the above measures even if a concerned group company has not benefited itself from a deferral or rebate of tax or social contribution.

Non-cooperative States or territories are those referred to under Section 238-0 A of the French Tax Code

  • As at the date the deferral of tax or social payments or State guaranteed loan has been granted.
  • The current list is as follows (last update: 6 January 2020):
  • Anguilla, Bahamas, Fiji, Guam, American Virgin Islands, British Virgin Islands, Oman, Panama, American Samoa, Samoa, Seychelles, Trinidad and Tobago, Vanuatu.

What is the content of the commitment?

Not to have its registered office or, if different, its actual head office or a subsidiary without economic substance in a non-cooperative State or territory.

Which entities are considered as “subsidiary without economic substance”

Direct or indirect subsidiaries of French entities only with 50% of capital or voting rights.

Economic substance is deemed to exist when the entity mainly operates an actual commercial or industrial business locally.

Ongoing evaluation of compliance as long as the company benefit from the tax or social payment deferral or the State guaranteed loan

  • If the company has benefited from such measures between 27 March and 23 April 2020:
    • Appreciation as from 23 April 2020.
    • Possibility to remediate to the situation within a 3 month period as from 5 May 2020.
    • Failing this, immediate reimbursement of the full amount of State-guaranteed loan or the tax payments and/or social security contributions benefiting from the rebate or postponement + penalties and late payment interest.
  • If the company has benefited from such measures as from 23 April 2020:
    • Appreciation as at the date when the company benefited from such measures.
    • As the case may be, commitment to remediate to the situation within a 3 month-period.
    • Failing this, immediate reimbursement of the full amount of State-guaranteed loan or the tax payments and/or social security contributions benefiting from the rebate or postponement + penalties and late payment interest.
  • If the company ceases to comply with the commitment:
    • Possibility to remediate to the situation within a 3 month period.
    • Failing this, immediate reimbursement of the full amount of State-guaranteed loan or the tax payments and/or social security contributions benefiting from the rebate or postponement + penalties and late payment interest.

Guidance has been given within the tax administration to accelerate the refund of the following tax credits and receivables:

  • VAT credits
  • Tax credits refundable in 2020 (with no need to wait for the filing of the tax return)
  • 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

Documents to be submitted to the tax center 

  • Tax credit refund claim (form #2573)
  • If not already submitted, tax return justifying the amount of the tax credit (form #2069-RCI or specific return)
  • If the CIT return is not available, CIT balance return (form #2572) computing the CIT charge of the year and the refundable tax credit for 2020

Additional Information

Possibility of claiming, as of 2020, the refund of the carry-back  receivables that will be recognized in 2020 as a result of losses  related to the health crisis (FY closed at the latest on 31  December 2020)

  • Only the following claims are concerned
    • arising from an option exercised in respect of a fiscal year  ending no later than 31 December 2020 and
    • which have not been transferred to a financial institution
  • This claim must be submitted no later than the deadline for filing  the CIT return for the FY ending on 31 December 2020.
  • For tax losses realized in 2020, the claim can be made as early  as the day after the close of the fiscal year, without waiting for the  final settlement of the CIT charge to allow for maximum  anticipation of the refund of said receivables. As a result,  companies that close their fiscal year during calendar year 2020  will benefit from cash flow support as of 2020.

If the refunded amount exceeds by more than 20% the amount of  the actual carry-back receivable, late payment interest provided  and 10% penalty will be applied to the amount unduly repaid.

Postponement of the filing of tax returns

MDR (DAC6) reporting

  • On 3 June, agreement between Member States to allow a  postponement of MDR reporting deadlines.
    • Measure subject to an unanimous decision of the EU Counsel  and the release of an opinion by the European Parliament  (both published respectively on 24 June and 19 June) –  publication of amended Directive on 26 June 2020.
    • Exchange of information between Member States are  postponed until 30 April 2021.
  • France has decided to extend MDR reporting deadlines until.
    • 28 February 2021 for existing arrangements (instead of 31  August 2020).
    • As from 1 January 2021 for arrangements implemented as  from 1 July 2020.

Future tax audits

  • The statute of limitation for the French tax authorities normally  expiring on 31 December 2020 is suspended until 23 August  2020.
    • Statute of limitation will then start running again. As a result it  will elapse on 14 June 2021.
    • Applicable only for the year with a statute of limitation expiring  on 31 December 2020.
    • The time limits of statute of limitation expiring after 31  December 2020 are not affected by the suspension.
  • Suspension, during the period from 12 March until 23 August  2020, of all time limitations for conducting audit and investigation  procedures in tax matters.
    • Applicable to both the taxpayers and the tax authorities.
    • No audit should have been initiated during the period from 12  March until 23 August 2020.
  • Identical provisions have been ruled for all time limitations  applicable to recovery, inspections and tax rulings under the  French Customs Code.

On-going tax audits

  • No computation of late payment interest from 12 March until 23  June 2020. 

Reduced VAT rate on masks, protective clothing and personal hygiene products

The products benefiting from the 5.5% reduced VAT rate will be  listed by a joint order of the Ministry of the Finance and the  Ministry of Health

Products include:

  • masks and protective clothing adapted to prevent the spread of  the virus
  • personal hygiene products adapted to prevent the spread of the  virus (e.g. hydro-alcoholic solutions and products performing a  similar disinfectant function).
  • Also applicable to EU supplies and acquisitions where the VAT-  able event occurs between 1 March 2020 (24 March 2020 for  masks and protective clothing) and 31 December 2021.
  • Retroactive application of such measures triggers practical  issues such as the refund of excess output VAT during the  retroactive period.

Tax treatment of rental debt waivers granted by lessors

For the lessor

Rental debt waivers related to real estate properties lease agreements are fully tax deductible.


  • Rental debt waivers granted to professional lessees only (not individuals) who are not considered as related parties with the lessor within the meaning of Section 39-12 of the French Tax Code.
  • Rental fees waivers granted between 15 April and 31 December 2020
  • No justification required.
  • Applicable to lessors closing their financial year on or after 15 April 2020 and are subject to corporate income tax or personal income tax.

For the lessee

Increase of the €1m ceiling available to offset tax losses by the amount of the rent waivers granted between 15 April 2020 and 31 December 2020.

Additional Information