French corporate tax rate : a reduction trend that must be amplified

A reduction of the French corporate tax rate from 33.33% down to 28% is eventually enacted in the French draft tax bill for 2017. But this reduction is applicable only for the SMEs, whose sales do not exceed € 50 M, and only on a portion of their taxable income capped to € 75 K.

This favourable but very targeted measure supplements the existing provisions, already focused on the smallest SMEs. For 2017, the corporate tax rate scale can therefore be detailed as follows:

– SMEs with sales not exceeding € 7.63 M: 15% up to € 38,120 of taxable income, 28% between € 38,120 and € 75,000, and still 33.33% on the portion exceeding this threshold;

– SMEs with sales ranging from € 7.63 M to € 50 M: 28% up to € 75,000 of taxable income, and 33.33% on the exceeding part;

– companies, whose sales are higher than € 50 M: 33.33% on their whole taxable income.

This same draft tax bill also provides that this new rate of 28% should be extended according to the following timetable:

– for 2018, it should apply to all companies subject to corporate tax, on a portion of their taxable income capped to € 500 K nevertheless;

– for 2019, it should apply on the whole taxable income, but only for the companies, whose sales will be lower than € 1 billion;

– for 2020, it should apply to all companies liable, whatever their sales and taxable income may be.

This reduction is actually a very good sign towards the SMEs and afterwards all French resident companies; but it must be amplified to restore the competitiveness of the French territory as an attractive business place, in particular for foreign investors. The minimum target is indeed to cut the corporate tax rate down to 25% for all enterprises liable, and to keep the reduced rate of 15% for the smallest SMEs as it is.