WTS in France

Foreign entities owning real estate in France could face a 3% annual tax unless they meet specific disclosure requirements. Recent court rulings highlight key conditions for tax exemptions.

In France, losses incurred by a company in a given fiscal year can be carried forward to offset profits in subsequent years, without time limit.

France has introduced the principle of gradually making the use of electronic invoicing compulsory from 2019 (law no. 2019-1479).

A couple of months ago, the e-invoicing and e-reporting reform was still foreseen to progressively enter into force as from 1 July 2024, with a timetable extending until 1 January 2026.

The French tax administration tried to increase the scope of French withholding tax by increasing the beneficial ownership requirements in cases where French banks acquire shares temporally from foreign shareholders.

For FYs opened as from 1 January, 2023, groups have the possibility to set up a captive reinsurance company in France whose purpose is to exclusively reinsure the own risks of the group.

This article examines the Paris Administrative Court of Appeal's ruling on corporate income tax and residency, reshaping how tax treaties are interpreted.

On 22 December 2022, France and Switzerland reached an agreement on the taxation of home office income.

During the past 18 months, the French Supreme Administrative Court (Conseil d’Etat) has rendered several decisions requalifying capital gains realised by managers of companies

New rulings regarding local research tax credits paving the way for consistently deducing the local research tax credits and/or similar subsidies from any R&D cost-plus services provided by eligible French companies

The VAT regime applicable to distance sales has been amended as of 1 July 2021.

In its decision, the French supreme tax court (Conseil d’Etat) had to decide whether, in the presence of intermediary companies, the treaty with the state of residence of the beneficial owner should be applied

Under the parent-subsidiary regime, dividends received by a parent company are exempt from corporate income tax (CIT)

In principle, every employee recruited from abroad to take up a position in France is affiliat­ed to the compulsory French social security schemes for basic and supplementary retirement pension insurance.

Recent case law regarding intercompany cash pool interest rates in a decision involving the SAP Group. 

Reminder of the French tax regime applicable to interest

Over the past few years, responsibility for taxes has been in the process of being transferred from French customs to the French tax authorities

The notions of “main entrepreneur” and “routine entity” are often used, as it is the routine entity’s margin which will be set, with the entrepreneur receiving the residual profit/loss.

Article 21 of the French 2022 Finance Act retroactively adjusts certain tax rules to re-establish the tax neutrality which, until the legal modification introduced by the PACTE Law of 22 May 2019, had benefitted shareholders and unitholders in demergers of UCIs aimed at segregating their illiquid assets.

France has recently announced that it will join other Member States that have gone ahead of EU regulations and imposed electronic invoicing.

The draft of French Budget Bill for 2022 proposes to facilitate the election for VAT taxation of banking and financial in order to make French Funds Managers more competitive as from 1 January 2022.

An important decision on the characterization of a permanent establishment in France has been rendered by the French Supreme Administrative Court (Conseil d’Etat) in the Conversant International Ltd case (CE, 11 December 2020, n° 420174).

France has an attractive regime to incentivize foreign talents to take up residence in France: the impatriate regime.

Clarifications have recently been provided, through decrees and an order, on the conditions for accessing and consulting data contained in the registers of trusts and “fiducies” (French-style trusts) kept by the French General Directorate of Public Finances (Direction Générale des Finances Publiques, DGFiP).

Clarifications have recently been provided, through decrees and an order, on the conditions for accessing and consulting data contained in the registers of trusts and “fiducies” (French-style trusts) kept by the French General Directorate of Public Finances (Direction Générale des Finances Publiques, DGFiP).

In three decisions dated 13 July 2021 (nos. 428 506, 435452 and 437 498) and a ruling of 17 November 2021 (no. 439 609), the Conseil d’Etat (French Supreme Administrative Court) has clarified the tax treatment of gains from incentive plans that offer managers an equity interest in the companies they work for  (“management packages”).

Clarifications have recently been provided, through decrees and an order, on the conditions for accessing and consulting data contained in the registers of trusts and “fiducies” (French-style trusts) kept by the French General Directorate of Public Finances (Direction Générale des Finances Publiques, DGFiP).

The French Tax Authorities (“FTA”) have just published comments clarifying their position with respect to recent case law governing the fate of flows between the branches (branch or head office) of a single legal entity, which are also members of a VAT group in the State in which they are established.

Companies ensuring the operation in France within the meaning of Articles L. 5124-1 and L. 5124-2 of the French Public Health Code of one or more pharmaceutical specialties reimbursable or covered by health insurance, are liable for the contribution relating to the amount M (“Contribution M”) when the sum of the tax-free turnover achieved by these companies is greater than an amount M determined by law.

European counterparts distinguish the French customs authorities by the diversity of their tasks and missions, as well as by the fragmentation of their organisation. To improve the efficiency and productivity of its administrations, the French government has decided to reorganise the missions of tax, customs and fraud administrations.

The French Tax Administration has grown bolder and has deployed new, ambitious approaches both proposing a different Transfer Pricing method and providing an economic analysis to support the profit allocation.

France announced an ambitious reform that was to enter into force from 1 January 2023 but a couple of days ago it was postponed until July 2024.

The French research tax credit (“CIR”) has undergone several changes recently, as a result of new French Supreme Court case law, the 2021 Finance Act and the updating of tax authorities guidelines.

Today, the EU reform of the rules on cross-bor-der distance selling is undoubtedly moving in the same direction with the introduction of the one-stop shop. Against this trend, it is worth noting the reform regarding the payment of import VAT in France as from January 2022.

The French Supreme Court has just refined its definition of permanent establishment in France for VAT and corporate income tax (CIT) purposes (CE, 11 December 2020, No. 420174, Min. c/ Société Conversant International Ltd).

In France, after half a century, the status quo of the tax regime regarding intangible assets is changed. Our French colleagues outline some of the principles behind the newly established “Nexus” approach.

Our summary of R&D Incentives provides guidance where such incentives are provided, and who in WTS Global can support you to gain from these incentives for your business or individually the most.

In accordance with European regulations, the scope of the e-invoicing obligation will be extended to all domestic transactions between companies starting 1 January 2023. The 2020 French Finance Bill (Article 153) sets four objectives for the introduction of this obligation.

On 21 February 2021, the French tax authorities (FTA) published their related comments, providing useful interpretive guidance on the French Treaty as well as other treaties based on the MLI model.

The French tax authorities published their comments on the effects of the United Kingdom’s withdrawal from the European Union on the tax benefits granted to individuals and legal entities in respect of investments made in the EU or the European Economic Area.

The Amending Finance Bill for 2021, intended to finance the various accompanying measures related to the health crisis, was presented on 2 June to the Council of Ministers and is now before the Parliament.
Among the key measures, eagerly anticipated by companies, the temporary removal of the limit on the carry-back of losses.

The French Supreme VAT Court provides taxpayers with an extended timeframe for the reporting of input VAT.

In France, to deduct the full amount of intergroup interests, a French company must prove that the paid interests are not excessive. Our French colleagues outline some of the principles behind this regulation.

Major changes postponed to 1 July 2021

A tax focused perspective on the current French lockdown.

The so-called “quick fixes” measures, provided by the Directive 2018/1910/EU and by the French finance Bill for 2020, effective since January 1st 2020, were recently commented by the French tax authorities (hereafter ‘FTA’) in their official guidelines (BOFIP update on October 14th, 2020).

VAT Alert by Villemot WTS

Our French colleagues explain what needs to be considered from a transfer pricing perspective in these times of COVID-19, especially with regard to documentation requirements, the use of benchmarking studies and the deductibility of interest expenses.

An overview on VAT crash optimisation.

Article 13 of the French finance bill for 2020 introduced a new tax domiciliation criterion for executives of large French companies

Obligations of online marketplaces have been increased recently in France, with the aim of improving VAT collection and the new DST (digital service tax) collection.

Mandatory electronic invoicing between the government and its suppliers

The measures proposed will be included in the Finance Bill for 2020 and unveiled at the end of September 2019

France has been one of the last OECD member countries adopting a pay-as-you-earn (PAYE) system

The French Minister of Economy and Finance has introduced a draft law creating a tax on digital services