On October 10, Michel Barnier’s government presented its Finance Bill for 2025, proposing a €60 bn effort to restore public accounts, a third of which will be achieved through revenue increases, mainly concentrated on large corporations and the wealthiest taxpayers. Debates will begin in the French National Assembly on October 21.
Here is an initial analysis of the 3 most significant measures for enterprises as the text currently stands.
- Introduction of an exceptional levy on the profits of large companies (article 11)
In a classic example of recovery measures, the PLF 2025 proposes to re-introduce a surtax on corporate income tax for large companies for the first two consecutive financial years ending on or after December 31, 2024, the amount of which would be halved for the second of these years.
Large companies are those with sales in France of up to one billion euros. Within tax consolidated groups, this is the sum of the sales of the companies making up the group. In the case of fiscal years other than 12 months, sales are adjusted over 12 months.
Based on the amount of corporate tax before deducting tax reductions, tax credits (or tax receivables of any kind such as carry-back receivables) and non-deductible for corporate tax purposes, its rate is differentiated according to sales:
- For sales between €1 and €3 billion, the contribution rate will be 20.6% for the first financial year ending on or after December 31, 2024 and 10.3% for the second;
- for taxpayers with sales in excess of €3 billion, the rates have been raised to 41.2% and 20.6% respectively.
A smoothing mechanism is also provided for companies whose sales exceed the thresholds for the different rates by less than €100 million.
As an additional contribution to corporate tax itself, it should have no impact on the calculation of employee profit-sharing according to the legal formula.
- Introduction for large companies of a tax on share capital reductions resulting from the repurchase of their own shares (article 26)
The PLF 2025 proposes to introduce a special tax on share capital reductions through the cancellation of shares resulting from a company’s repurchase of its own shares, for companies with sales of over €1 billion in the last financial year (as assessed in the consolidated accounts if any and scaled back, if necessary, to 12 months).
The tax would apply to capital reduction transactions carried out on or after October 10, 2024.
Calculated at a rate of 8%, the tax would apply to the amount of the capital reduction itself, as well as to capital-linked premiums in proportion to the reduced capital, excluding reserves. Under the terms of the scheme, the original qualification of capital/premiums linked to capital or reserves will be retained for withdrawals and incorporations between these items booked as from the financial year in progress on October 10, 2024.
It should be noted that this is a tax payable by the company whose capital is being reduced, and not by the shareholders, so that it is a priori outside the scope of tax treaties.
- Three-year postponement of the phasing-out of the business value-added tax (so called CVAE) (article 15)
The PLF 2025 provides for a three-year postponement of the abolition of the CVAE, already gradually postponed last year from 2025 to 2027. The CVAE tax rates for the years 2025 to 2027 will thus be maintained at their 2024 level, i.e., with a maximum rate of 0.28%. This rate will then be lowered to 0.19% in 2028, 0.09% in 2029, and the CVAE will be abolished for fiscal year 2030. The lowering of the capping rate of the global territorial economic contribution based on value added and the increase in the rate of the additional tax on the CVAE are adjusted accordingly.
