France: Revenue from tax proposals to finance new social measures

20 December 2018

The French government announced several measures that were in response to the “Yellow Vests” (Gilets Jaunes) social movement. Certain of the proposed measures have received an initial vote in the parliament; others are expected to be voted on shortly.

The measures would:

  • Cancel an increase in the environmental taxes to be imposed on certain petroleum products such as oil
  • Increase several allowances paid to low-wage workers
  • Cancel an increase of the CSG (Contribution Sociale Généralisée—a social charge) on certain pensions that are below a threshold amount
  • Remove paid overtime from being subject to social contributions and income tax
  • Encourage employers to pay certain employees (those whose salary is below €3,600) a bonus of a maximum €1,000, with this bonus payment being exempt from social contributions and from income tax provided the bonus amounts are paid on or before late March 2019


Tax revenue to pay for the new social measures

The proposed social measures would increase what has been forecasted as the budget deficit for 2019. To address the financial impact of these measures on the deficit, several specific tax revenue measures are being considered including:

  • A modification of the corporate tax rate

At present, this measure has not yet been announced by the government, but it is the subject of persistent rumors and some believe it might be included in legislation submitted to the French parliament early next year.

The 2018 Finance Law included a reduction of the corporate income tax rate from 33.33% to 31% for the portion of profits exceeding €500,000 (profits below this threshold amount still being subject to the 28% rate) for financial years open as from 1 January 2019. This tax rate reduction could be repealed for companies with revenues over a certain threshold level (to be determined). Hence, profits of the affected taxpayers would still be taxed at the 33.33% regular rate.

However, the progressive and subsequent phased-in reduction of the corporate income tax rate during years 2020 to 2022 (as well as the application of the 3.3% surtax on the standard corporate income tax), as provided for by the Finance Law for 2018 would remain unaffected. 

  • Taxation of long-term capital gains

Long-term capital gains on shares are exempt from corporate tax, except for a 12% portion when the shares’ sale takes place outside of a tax group. The 2019 Finance Law provides that the 12% portion would be taxable for long-term capital gains realized for sales made within a tax group.


For more information, contact a tax professional with Fidal* in France:

Gilles Galinier-Warrain | +33 1 55 68 16 54 |

Olivier Ferrari | +33 1 55 68 18 14 |


* Fidal is a French law firm that is independent from KPMG and its member firms.
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