Technical Update - Finance Bill 2020
After several major overhauls of the tax system in recent years (for example the 2018 Finance Bill introduced the new wealth tax restricted to real property and a new flat rate tax on investment income, and the 2019 Finance Bill saw France at last introduce a version of PAYE, or deduction of tax at source, on salaries and many other types of income), the 2020 Finance Bill has brought in no new measures of such wide-ranging import.
Some developments which concern our clients include:
- The continued phasing out of taxe d'habitation (local tax on property occupiers) for primary residences, expected to be fully achieved by 2023;
- The lifting of the obligation for "professional" furnished letting landlords to register at Companies House;
- The continued reduction of the rate of corporation tax for very large companies, albeit more gradually than anticipated by the 2018 Finance Act. The rate of corporation tax rate has been brought down from 33.33% in 2019 to 28% in 2020, except for profits of over €500,000 made by companies with turnovers exceeding €250 million which will instead be taxed at 31%. The fall to 28% by 2020 was previously expected to apply to all companies. This rate is still expected to drop to 25% for all companies by 2022.
- Directors of large French companies who themselves live outside France will now be considered to carry out a professional activity in France. If their employer has an annual turnover of more than € 250 million such directors will be deemed to be French resident and liable to French income tax on their worldwide incomes. In practice the relevant double tax treaties will still be decisive in determining where income tax is actually paid.