2019 French budget introduces ATAD and BEPS provisions

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January 2019

Overview

The French parliament on December 28, 2018, approved the Finance Act for 2019 (the Finance Act). The Finance Act was published in the French legal gazette on December 30, 2018. 

The Finance Act includes corporate tax measures that transpose into French law Articles 4 and 6 of EU anti-tax avoidance directive no. 2016/1164 dated July 12, 2016 (ATAD) with respect to interest limitations and general anti-abuse rules.  It also amends the French tax consolidation rules, the participation exemption, and the French patent box regime pursuant to the nexus approach set out by OECD BEPS Action 5.  

Most of the measures apply as of January 1, 2019, and affect multinational enterprises (MNEs) with French operations or subsidiaries.

The takeaway

MNEs operating in France should consider the impact of the Finance Act on their international financing flows, French compliance requirements, IP nexus, and structuring for cash repatriation purposes.

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