The French Finance Act for 2021 (the Finance Act) was enacted on December 29, 2020 and published in the French legal gazette on December 30. The Finance Act includes corporate tax measures designed to improve the French business environment and local companies’ competitiveness.
Other provisions in the Finance Act notably affect individual taxation, value-added tax (VAT), customs, and small companies. Those provisions are outside the scope of this Insight.
Most of the measures apply as of January 1, 2021 and affect multinational enterprises (MNEs) with French operations or subsidiaries. Such MNEs should consider the favorable impact of the applicable tax rate reductions with respect to their French operations as well as potential investment opportunities provided by the Finance Act.
MNEs should consider the impact of the enacted measures with respect to their subsidiaries and operations in France as well as the potential financing and investment opportunities available as a result of the newly enacted favorable tax treatments.
Note: Some of these measures are temporary.
MNEs also should consider how the reduced business tax rates as they apply to all companies locally could impact their IFRS positions and, for US MNEs, their US GAAP consolidated statements and deferred taxes.