Business tax: effective cap at 3.5% of value added
Article 85 of the 2006 Finance Act reforms the cap on business tax (taxe professionnelle) based on value added (Article 1647 B sexies of the General Tax Code). From the 2007 assessments, the cap rate is set at 3.5% of value added for all companies and 1.5% for agricultural, rural and forestry works companies; the cap is computed on the tax actually due. The relief granted to a company may not exceed €76,225,000. The State bears the relief only on the basis of a reference rate (for municipalities, the lowest of the 2005 rate, the 2004 rate plus 5.5%, or the current year's rate); the share due to rate increases beyond that is charged to local authorities. Business tax was abolished in 2010.
Measure originators
No official estimate found for this measure.
Measure impact
Companies whose business tax exceeds 3.5% of their value added receive relief, funded mostly by the State and, for the share linked to rate increases beyond the reference, by local authorities. A Senate summary note on the 2007 budget bill states that the business tax reform reduced the tax burden on companies by almost €3.2 billion in steady state, a figure covering the whole reform rather than the cap alone.
Official references
Sources
Procedure timeline
Follow the progress of this fiscal measure through the different stages of the parliamentary procedure.
Administrative implementation
Entrée en vigueur de la mesure et mise en œuvre par l'administration
President of the Republic signature
Publication au Journal officiel