COVID-19: The exceptional tax measures set up to help companies to manage their cash flow
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On March 19, 2020, the Government presented to the National Assembly the amended finance bill for 2020 as well as the emergency bill to deal with the COVID-19 epidemic. This amended finance bill for 2020 does not contain any tax measures. At this stage, the Government should be empowered by ordinance to take any measure, notably tax measures, in order to support companies.
However, the French Tax Authorities has already set up exceptional measures intended to help companies facing significant cash flow difficulties and a significant decline of their activity.
Our tax team presents these exceptional announced tax measures below. These measures are likely to evolve within the coming days. We will keep you informed on any new developments.
Exceptional tax measures for companies
Requests for deferral of payment and discount of direct taxes
Companies can request without providing further justification a 3 month deferral for the payment of their coming direct taxes due.
Which taxes are concerned?
Only the following taxes are included within the scope of this measure:
• Corporate tax (instalments);
• Payroll tax;
• Business Property Tax (CFE);
• Business value-added local contribution (CVAE).
How to benefit from deferred payment?
In order to benefit from this measure, companies simply need to complete the following form and send it back to their respective local tax Center (“SIE”).
How to proceed if the March instalments have already been settled?
There are two possibilities:
• Contest the SEPA payment with one's online bank if still possible;
• Otherwise, request reimbursement from the local tax Center (SIE).
Companies can moreover make a request for an early reimbursement of excess corporate tax instalment payments.
Requests for discount on direct taxes, late payment interests and tax penalties
If a deferred payment is not sufficient to overcome the cash difficulties encountered, companies can request a discount on their direct tax.
The scope of the taxes at stake is the same as for deferral of payment.
To request a discount on taxes, it is necessary to complete the above mentioned form.
What are the conditions to benefit from the discount?
A discount can only be granted in case of serious difficulties that make a deferral of payment insufficient. These difficulties must be justified by the company. To this end, relevant difficulties can be justified by:
• A decrease in monthly turnover since the beginning of the current fiscal year ( compared with the same period of the previous fiscal year) ;
• Debts other than tax and social debts (by specifying their amount, nature and falling date);
• Description of the cash position;
• Other elements likely to justify a discount.
Accelerated repayment of tax credits
It is possible for businesses to obtain accelerated repayment of tax credits normally refunded in the course of 2020.
Which tax credits are concerned by this measure?
This measure applies to all tax credits reimbursable in 2020, notably tax credit for competitiveness, R&D and innovation tax credit.
Please note that an early reimbursement of tax credits for the year after 2020 is not possible at this time.
How to get the accelerated repayment?
Companies must log into their professional space on the French tax authorities website impot.gouv.fr in order to declare:
• the tax credit refund request (form n ° 2573);
• the tax form justifying the amount of tax credit (n° 2069-RCI or specific form, unless it has already been filed);
• the corporate income tax settlement form (n° 2572) in case the corporate income tax return has not been submitted yet.
The suspension of tax audits of companies in the most affected sectors of business
In view of the exceptional situation, the current tax audits would be suspended and no new audits will be carried on.
The suspension of CFE and property tax collection
The monthly payment contracts for the payment of the CFE or the property tax can be suspended, without penalty, on the website impots.gouv.fr or by contacting the tax administration.
Other ways to improve corporate tax cash flow?
Beyond the measures already announced by the government to help businesses, other ways to improve cash flow of companies must be considered.
Optimization of the tax result for fiscal year ending on December 31, 2020
All measures to optimize the taxable profit, particularly for the fiscal year ending on December 31, 2020, can be used: provisions, amortization, tax deductions, etc.
Our experts are available to assist and guide you on the every measure to reduce your taxable income.
Mobilization/refinancing of tax receivables
At this stage and despite the requests made by professional organizations, the Government does not plan to make the early repayment of tax credits or tax loss carry-back receivables possible.
In order to overcome this drawback, most tax receivables can nevertheless be mobilized from financial institutions.
The carry-back of fiscal year 2020 loss could then be contemplated.
Proactive management of ongoing tax rectification procedures
It is important to take into account the current situation in the management of potential ongoing procedures.
The claims opened to the taxpayer during the tax reassessment procedure (commissions, hierarchical appeals, etc.) can be used to increase delays before the issuance of a potential complementary tax bill.
The difficulties encountered by the company can also be put forward in an attempt to mitigate tax penalties or conclude tax transactions more favourably.
Proactive management of tax claims and reimbursement requests
In the current context, companies will have interest in initiating procedures with the tax authorities in order to try to accelerate:
• the refund of tax already claimed. In this respect, it should be noted that "mass tax litigations", such as that on the rate of CVAE within tax consolidated groups, have not yet given rise to all the expected refunds;
• Reimbursement of VAT credits: instructions have been given to tax Centres to speed up reimbursements.
The deferral of the payment of down payments of tax at source for the self-employed
Self-employed workers can benefit from a deferral of the payment of withholding taxes at source on professional income:
• If the down payments are monthly: carryover is possible from one month to the next, up to three months;
• If the down payments are quarterly: carryover is possible to the next quarter.
Please note that for the self-employed, as for other income (salaries of business managers, etc.), taxpayers always have the option to :
• Modulate the rate of withholding tax;
• Adjust the amount of the down payments.
Requests to defer payment of advances as well as rate modulation requests must be made before the 22nd of each month to take into account such change the following month.
To do this, these requests are to be sent to the tax administration by taxpayers via their personal space on the website impots.gouv.fr, under the heading "manage my withholding tax".
Our tax experts are available to advise and assist you with all of your tax issues in the current context. Our firm's tax team is keeping up to date on any new developments on these exceptional measures.
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