Tax Alert France – February 2013

By Laurence Clot


New tax credit for competitiveness and employment (CICE)

The third amended Finance Act for 2012 set up a new tax credit “credit for competitiveness and employment” – “Crédit d’impôt pour la compétitivité et l’emploi” (CICE).

  • A tax credit: 4% for 2013 and 6% for 2014 based on gross remuneration paid to employees during the calendar year,  not exceeding 2.5 times the French minimum wage “SMIC” (SMIC is approximately equal to 43 k Euros per year on the basis of a ceiling of 35 hours). Particular attention should be paid however to the specific calculation method regarding hours of overtime and depending on the number of hours worked.

  • A tax credit based on the gross amount of remuneration paid to employees during the calendar year 2013 subject to social contributions (without taking account of the closing date for the financial year). Some supplementary wages are included (e.g., compensation for paid leave, bonus, rewards, etc…), others are excluded (e.g., business expenses, bonuses related to performance incentive plans, etc…).

  • This tax credit will be offset against tax liabilities payable over the three next years. Any remaining or unused credit after a period of three years will be refunded to the taxpayer.

Accounting treatment

The accounting treatment under French GAAP is currently being discussed by the French National Accounting Authority, and should be determined by the end of February.

According to this institution there could be two different ways of  recording the CICE:

  • as a reduction of the corporate income tax or

  • as a reduction of personal expenses.

The second method could have a positive impact on the operating profit, without being taxable, and have beneficial effect on budgets for closing March 31, 2014 (calculated on wages in calendar year 2013).

It should be neutral from a tax standpoint (tax adjustments should be operated depending on the method of recording), however there could be other impacts on several subjects, e.g.,:

  • calculation of employee participation

  • calculation of employee profit sharing

  • calculation of employee participation in the insurance sector

  • calculation of the companies’ social solidarity contribution (ex-Organic) contribution for banks, financial institutions and insurance sector.


Should you have any additional queries, please contact:

Laurence Clot, Attorney at law, Partner, Tax -
Vaea Pery, Attorney at law, Tax -
Rébecca Feliman, Attorney at law, Tax -
Anton Chyrkov, Attorney at law, Tax -
Jenna Scaglia, Attorney at law, Tax -