Tax decreaseIn effectLocal business taxationNational

Halving of the CVAE by abolishing the regional share

As part of the reduction of production taxes in the recovery plan, Article 8 of the 2021 Finance Act halves the business value-added contribution (CVAE) by abolishing the share previously allocated to the regions. The theoretical tax rate falls from 1.5% to 0.75% of value added and each rate of the progressive scale is halved; the additional relief for businesses with turnover below €2 million falls from €1,000 to €500 and the minimum contribution from €250 to €125. The rate of the additional CVAE tax allocated to chambers of commerce and industry is raised to 3.46% to maintain its yield. Regions receive in compensation a share of net VAT revenue equal to the CVAE collected in 2020; the remaining CVAE is split 53% to municipalities and inter-municipal bodies and 47% to departments.

Measure originators

InitiatorGVT

Bruno Le Maire

Gouvernement

InitiatorGVT

Olivier Dussopt

Gouvernement

Impact on public finances

Costs 7.2 bn €/yr2021 estimate · State

Source of the estimate: Sénat, rapport général n° 138 (2020-2021), tome II, commentaire de l'article 3 du PLF 2021 (Indirect official figure)

A positive amount is revenue or savings for public finances; a negative amount is a cost or lost revenue.

Effective date

1 January 2021

Measure impact

Businesses liable for the CVAE (turnover above €500,000) pay half as much from the CVAE due for 2021. According to the Senate finance committee report, based on the preliminary assessment, abolishing the regional share represents a €7.2bn tax cut for businesses, borne by the State through the VAT share paid to the regions.