In December 2004, the “2005 Finance Act” and the “Amended 2004 Finance Act” were published. Below we draw your attention to four important changes for companies located in France.
-A reduced rate of corporate income tax for most SME’s. From 34.33% to 33.83% in 2005, declining to 33.33% in 2006.
- Corporate income and business tax exemption as well as relief on employment costs. Under certain conditions, companies located in “high technology geographic poles” and conducting specific activities that include research units, training centers, and approved research and development projects, usually involving a Government research organization, will be entitled to the above. This is to help promote the links between the private and public sectors.
- Tax credits. For the next two years tax credits are available against: expenditure by SMEs in capital equipment and information technology; and for companies repatriating productions facilities which were previously relocated outside of the EEA (European Economic Area), to help reverse de-localisation.
- Reduced tax on equity gains. In 2005, for gains realized on equities held more than two year the tax rate is reduced from 19% to 15%. By 2007, the objective is total tax exemption on certain gains.
