End of exemption from surtax on distributions within tax-consolidated groups: no retroactive effect the French Government announced

The French Government has just announced that the end of the exemption from 3% surtax on distributions within tax consolidated groups will not have a retroactive effect.

France’s constitutional court issued a decision on 30 September 2016, concluding that the exemption from the 3% surtax on distributions made within a tax-consolidated group does not comply with the equality principle in the French constitution and, therefore, is unconstitutional.

The issue was addressed on the date on which the legislature will take actions, by a deputy, during the 2017 Finance Bill discussions.

The Secretary of State for the Budget, Christian Eckert, took this opportunity to remind that the Constitutional Court gave the Government until 1st January 2017 to come up with a remedy to the consequences of unconstitutionality. He confirmed that the proposed amendments to the exemption for tax consolidated groups would have no retroactive effect and that only the fiscal years starting from 1st January 2017 will be affected.

He wished that the minutes of the debates include this piece of information. He thus reassured groups on the continued application of the said exemption until the end of the fiscal year.

On the expected proposal to replace or amend the 3% surtax, a balanced solution is sought in consultation with concerned groups and the preferred option will be revealed during the discussions of the Rectifying Finance Bill for 2016, mid-November.

Thomas Perrin

Thomas Perrin, Partner, specializes in international tax. He has been involved in many transactions for international French and foreign groups. In 2004, he created the R&D department as well as […]

Nathalie Aymé

Nathalie Aymé, Partner, specializes in domestic and international tax law. She regularly advises French and international companies especially in the manufacturing and the telecom & technology sectors. She assists her […]

Christophe Le Bon

Christophe Le Bon, Partner, specializes in corporate and international tax. Christophe advises French and foreign groups in connection with their restructuring, acquisition or disinvestments and follow up of tax audits. […]

Grégoire Madec

Grégoire Madec, Partner, has over 20 years of experience in corporate tax. He mainly assists multinational groups in the definition of their tax strategy as well as in the management […]

Sophie Tardieu

Sophie Tardieu is a partner in the international tax department of Deloitte Société d’Avocats. With over 25 years’ experience in corporate taxation, Sophie advises French and foreign multinational companies in […]