C A B I N E T B R A H I N
DANSK-FRANSK ADVOKATFIRMA I FRANKRIG / DANISH-FRENCH LAW FIRM IN FRANCE
What will change…
for companies
While companies will benefit from a relief of around 11 billion in 2014 thanks to the CICE, their corporate taxes will reach new heights.
- The additional contribution on the IS more than doubled
This was one of the main about-faces of the executive. After announcing the creation of a “contribution on the gross operating surplus (EBE)”, and faced with the foundation of business leaders, the executive has fallen back on an increase from 5 to 10.7% of the rate of the additional contribution on corporate tax. This surtax will only apply to companies with a turnover of more than 250 million. This measure is expected to bring in roughly the 2.5 billion euros of revenue expected from the tax on EBITDA. “Without taking into account the tax on very high salaries, known as the “75% tax”, with the additional contribution on the IS at 10.7%, which is added to the social contribution on profits of 3.3%, and taking into account the contribution of 3% on distributed dividends, our IS rate, which is already the highest in Europe at 36.1% of profits, will be close to 40% for some companies for two years”, notes Patrick Fumenier, partner at Taj. Paradoxically, the executive initially intended to lower it by one point at the same time as the creation of the tax on EBITDA.
- The 75% tax paid by companies
After a first version censured by the Constitutional Council in 2012, it is the return of the famous “75% tax” on incomes above one million euros. It is not the households concerned who will pay it, but the employers during two years (on the 2013 and 2014 incomes). The “exceptional contribution of solidarity on high incomes” of 50%, to which it is necessary to add the existing social levies to reach the symbolic 75%, will be based on all the gross remunerations received by the employees and managers on the bracket higher than one million. It will be capped at 5% of turnover and will concern 470 companies and 1,000 executives, according to Bercy. It will bring 260 million to the State the first year and 160 million the second.
What will change…
for households
No tax break for taxpayers. A review of the main measures that will affect them next year.
- Increase of the VAT
Voted at the end of 2012 but contested from all sides, the VAT increase will apply on January 1, 2014. The standard rate will rise from 19.6% to 20%, the intermediate rate (catering, accommodation, transport … from 7 to 10%. The reduced rate (food) will be maintained at 5.5%, instead of dropping to 5%. Total? About 6 billion more revenue for the state.
- Tightening of the ISF ceiling
The socialist deputies have added life insurance contracts (interest, dividends, capital gains) to the wealth tax base. The tax cap of 75% of the income remains unchanged, which means that an additional wealth tax is paid on the income from life insurance.
- Indexation of the income tax scale
After two years of freezing the income tax scale, the Ayrault government has decided again to increase the value of the bracket limits in line with inflation in 2013. This is accompanied by an exceptional 5% increase in the decote, which raises it from 480 euros to 508 euros. Cost of these two measures: 900 million “to support the purchasing power of households”.
- The ceiling of the family quotient lowered
To fill the hole in the family branch of the Social Security system, the government has lowered for the second consecutive year the ceiling of the family quotient, from 2000 to 1500 euros. This will affect 13% of families. Additional revenue: a little over a billion euros.
- End of tax exemption on supplements
The portion of the group health insurance paid by the employer was until now tax exempt. It will no longer be exempt from tax as of income received in 2013. This technical measure will bring in nearly one billion euros for the State.
- Capital gain on transfer of securities
The aim is to encourage “long-term investment and risk-taking by generalizing the progressive scale of taxation” of capital gains for individuals. A 50% deduction is therefore introduced after two years of ownership of a security, which could reach 65% after eight years. A second reinforced system, in response to the “pigeons” movement, introduced a 50% allowance after only one year of holding securities of new SMEs, which rises to 65% after four years and 85% after eight years.
- VAT at 5.5% for energy improvement work
The deputies have decided to apply the reduced VAT rate of 5.5% to energy renovation work in homes older than two years. This rate will also apply to induced work (made necessary by these renovations, such as moving radiators or removing old flooring). In addition, other renovation work will not have their VAT rate raised to 10% if they have been the subject of a signed estimate and advance payments of a minimum of 30% by December 31, and if they are completed by March 1, 2014.
- Tuition tax credit saved
The socialist deputies have succeeded in removing the tax reduction for school fees in secondary and higher education. Families will therefore be able to continue to deduct 61 euros from their taxes for a middle school student, 153 euros for a high school student and 183 euros for a university student. This measure was to finance the family reform to the tune of 440 million.
Me Nicolas BRAHIN
Lawyer at the Bar of NICE
Nicolas.brahin@brahin-avocats.com
Diploma of Higher Specialized Studies in Banking and Financial Law
University Panthéon-Sorbonne (DESS 1997)
Dated January 23, 2014
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Text change 2014 companies and households
