Finance Act 2023 in France

February 27, 2023

AGN EMEA Taxation Task Force (TTF) Newsletter

The Finance Act for 2023 has been published. It increases the income tax scale by 5.4% and phases out the CVAE by 2024. Read the four main points below.

1. Increase to the income tax scale

Due to inflation, the limits of the brackets of the 2022 income tax scale, applicable in 2023, are subject to a significant 5.4% increase.

2. Tarif shield

In 2023, the gas and electricity tariff increase is limited to 15% for individuals and for VSEs (less than ten employees, turnover below €2 million) with an electricity meter with a power of less than 36 kVA. Namely: a plan called “electricity shock absorber” is set up for VSEs and SMEs (less than 250 employees, turnover below €50 million or balance sheet total below €43 million) not eligible for the tariff shield. Besides, a “gas and electricity” aid can be granted to energy-intensive companies.

3. Phasing out of CVAE

The Company Value Added Contribution (business licence tax based on added value), a major relief measure for companies, will disappear within two years: In 2023, it has been halved. In 2024 it will be abolished entirely.

Note: Correspondingly, the cap rate of the territorial economy is lowered from 2 to 1.625% for 2023 according to the amount of the VAT. Then, this rate, which will only concern the business property assessment (CFE), will fall to 1.25% as of 2024.

4. Extension of the reduced corporate tax rate

SMEs whose turnover does not exceed €10 million (excluding tax) benefit from a reduced corporate tax rate of 15% (instead of 25%). Until now, this reduced rate concerned taxable profit per 12-month period not exceeding €38,120. For the taxation of the results of the fiscal year ended on or after December 31, 2022, this profit ceiling increases to €42,500.