Tax Alert - June 2017 - Constitutional Council decision

By Laurence Clot, Dorian Benchargui


Tax claim opportunities regarding CVAE in tax consolidated groups

Purpose of the decision:

Following the Constitutional Council decision, dated on the 9th May 2017 N° 2017-629 QPC, the calculation of CVAE's rate in tax consolidated groups is unconstitutional.

Article 1586 quarter I bis of the French Tax Code specifies that companies, members of a tax consolidated group, should computed the CVAE's rate by reference to the sum of turnovers of all the entities included within the tax consolidated group.

This article has been found unconstitutional based on difference in treatment vis-à-vis companies, non-members of a tax consolidated group. For such companies, the CVAE’s rate is computed by reference to their own turnover (on a standalone basis).

Companies, members of a tax consolidated group and having a turnover less than 50 million euros, have potentially paid an excessive amount of CVAE.

Our recommendations:

  • Regarding CVAE 2017, the individual turnovers of companies, members of a tax consolidated group, must be used in order to assess the amount of CVAE that would be payable in FY 2018 and to determine the instalment that will be paid in 2017.
  • Furthermore, in accordance with Constitutional Council comments that follow its decision, the companies can claim the CVAE excess payment for FYs 2015 and 2016 (paid in 2016 and 2017).

The Tax team of the Bird & Bird office is at your disposal to assist your group for filing these claims.