Understanding tax laws 2012

Personal income tax

Withholding tax at source (Prélèvement Forfaitaire Libératoire) on securities income: starting from 2012, the rate of the withholding tax, with optional regime, that applies to dividends - has been raised from 19 to 21 per cent (34.5 per cent with social taxes).

The ordinary rate of the withholding tax at source on fixed-income investment products (for example, the interests of partner's current accounts) has also been raised from 19 to 24 per cent (37.5 per cent with social taxes).

Tax benefits: starting from 1st January 2012, the benefits resulting from tax reductions and tax credits have been cut a second time by 15 per cent (10 per cent already in 2011!). Take a look at the table below for more details on this.There is also a reduction of the maximum amount of the tax benefits. The limit will be 18,000 euros plus 4 per cent of the taxable income. 

Tax credit: the given tax credit for main home improvement is extended until 31st December 2015 only for expenditures made on properties completed for over two years.

Corporation tax

A new contribution

Companies paying corporation tax which have an annual turnover of over 250,000,000 euros are subject to a new tax for the financial year ending between 31st December 2011 and 30th December 2013. 

This new tax is an exceptional contribution and represents 5 per cent of the corporation tax due. It remains payable as no tax credits or other tax receivables can be used to pay this amount.

Handling of losses to be carried forward - carried back

Companies ending their financial year after 21st September 2011 can only carry forward the current year loss up to 1 million euros plus 60 per cent of the remaining taxable base after deduction of this million euros from the benefits of the next year.

For the optional regime of "carry-back", companies can only carry back the current year loss on the benefits of the previous financial year and this up to the amount of one million euros. The rest of the loss is kept and can be carried forward with the same rule the following years.

Tax return and tax payment on-line

All companies liable to corporate tax must declare their tax returns on-line starting from 1st January 2013 whatever their turnover may be. At the same time, the corporation tax must also be paid on-line by all companies starting from 1st October 2012. All the other companies (not liable to corporate tax) must submit to these obligations starting from 1st  January 2015. 

About VAT return 

Companies which are liable to the income tax must declare and pay VAT online starting from 1st October 2013 if their turnover is more than 80,000 euros and all companies must submit these obligations starting from 1st October 2014. (Companies with an annual turnover of more than 230,000 euros must already pay and declare VAT on-line).

Jean-Phillippe Gioann

iChartered Accountant, Cannes