Tax Alert – Local taxes of companies having industrial premises in France, 11/03/2021

 

Property tax on developed land (i.e., “taxe foncière sur les propriétés bâties”, or TFPB) is levied annually on developed land situated in France. The tax accrues to départements, communes and their public establishments for intercommunal cooperation. Taxable property includes permanent constructions perpetually attached to the ground such as premises intended to accommodate people (residential properties) or business assets (workshops, sheds), certain civil engineering structures and transport routes, land immediately necessary for such constructions, etc. Business premises contribution (i.e., “cotisation foncière des entreprises”, or CFE) has the same tax base.

By exception, no tax is levied where there is entitlement to temporary exemption or permanent exemption (for example, in case of industrial assets etc.). For the latter, the scope of the exemption provided by section 1382, 11° of French tax code related to industrial fixtures, equipment and tooling was extendedby the Supreme Administrative French Court (Conseil d’Etat, December 11, 2020, « SA GKN Driveline »), leaving a clear path for enterprises to obtain tax refunds of property tax and business premises contribution.

WHO IS CONCERNED?

Any enterprises with industrial premises may be concerned. In particular, those for which the tax base is assessed on the accounting value of the assets (property tax form “Modèle-U”) as provided by sections 1499 to 1500 of the French tax code.

As a reminder, there is no legal definition of industrial premises. To establish the distinction with other premises (in particular, business premises), both administrative guidelines and law cases use the criterion of the significancy of the industrial equipment compared to other equipment.

WHAT WAS RULED BYT THE COURT?

Since 2013, the permanent exemption for industrial fixtures, equipment and tooling materials should be granted where there were directly involved in the industrial activity (functional criterion); and be removable from the buildings (physical criterion).

The French Supreme Administrative Court overruled those two-criterion approach allowing the exemption to be applied regardless the removability from the buildings and the direct implication in the industrial process. The exemption is now solely subject to the fact that the industrial fixtures, equipment, and tooling materials are “specifically adapted to the activities carried out in such industrial premises”.

WHAT IS THE MAIN OUTCOME?

First, industrial fixtures, equipment and tooling materials that were not previously of a removable nature will now be eligible for the exemption. These include, for example, industrial ovens, tanks, cooling circuits, pits, platforms, overhead cranes, etc. Finally, the redefinition of the functional criterion makes it possible to exempt materials that are not directly involved in the industrial process, such as fire safety installations and other air handling units.

WHAT COULD BE DONE?

The concerned companies must carry out a complete audit of their industrial fixtures, equipment, and tooling materials for property tax purposes.

In the event of identification of installations newly covered by the exemption, companies must file tax claims to obtain property tax/business premises contribution refund of as from FY2020 or to dismiss the potential tax reassessment in this regard, should they not be time-barred (previous tax audits leading to a tax reassessment issued in 2020 can be claimed until December 31st, 2021).

WHAT COULD BE DONE?

Jeantet is one of the leading independent French business law firms that delivers customized services with added value and:

  • may perform an in-depth tax base audit with respect of property tax / business premises contribution;
  • may file the tax claims to obtain tax refunds (TFPB/CFE);
  • can monitor the application of the newly-reduced tax bases for the future, especially with French tax authorities.

Our last newsletters

Sanctions Against Russia. Recent Developments

On 23 February 2024 European Union and the United States introduced a new round of sanctions targeting Russia. The 13th package of European sanctions provides for new individual sanctions, sectoral sanctions, export restrictions. Additionally, EU added the United Kingdom to the list of partner countries for the iron and steel import restrictions. American sanctions include […]

Moscow Desk

+

Newsflash – Corporate – Venture Capital – French government announcements to support Innovative Startup Companies (JEI)

For the occasion of the French Tech’s 10th anniversary, new measures stemming from the  report of Parliament Member Paul Midy (for which Jeantet had been consulted) have been announced. These measures, which aim at supporting the French startup ecosystem, should be included in the next Finance Act for 2024. ► Doubling of companies eligible to […]

| CORPORATE – M&A – PRIVATE EQUITY

+

Russian Counter Measures. Recent Developments

On 23 August, the Russian Ministry of Finance partially lifted a ban for the payment of dividends to foreign shareholders in case such shareholders have invested in the Russian economy. On 8 August, the Russian President suspended certain provisions of double tax treaties. Suspended provisions include tax regime for dividends, real estate, business profit, etc […]

Moscow Desk

+

Sanctions Against Russia. Recent Developments

On 23 June 2023, the EU introduced 11th package of sanctions. It primarily focuses on measures that would prevent circumvention of sanctions. It also includes new import and export restrictions and individual designations. Switzerland has joined European Union in sanctions targeting entities and individuals and may join other sanctions within the 11th package in August. […]

Moscow Desk

+

Newsletter – Tax law

Read the Jeantet Newsletter dedicated to Tax Law, covering issues related to : Transactional taxation Group taxation International Taxation Taxation of LBO transactions Non-profit organizations For more information, please download the Newsletter.

Paris | TAX

+

Russian Counter Measures

On 25 April 2023 Russian President issued a decree establishing cases authorizing him to introduce the regime of external management of certain assets owned by foreign residents. Namely, under the decree, the President may establish the regime of external management, if Russia, or its entities and individuals become deprived or risk of being deprived of […]

Moscow Desk

+

Russian counter measures and measures aimed at business support. Recent developments

Special regime for transactions involving securities On 3 March 2023 Russian President issued Decree No. 138 establishing additional measures involving securities. Namely, the new Decree establishes a specific procedure for transactions / operations involving: shares of Russian joint-stock companies, sovereign bonds, bonds of a Russian issuer, held in collective safe custody of a Russian depository, […]

Moscow Desk

+

Sanctions against Russia. Recent developments (2 march 2023 update)

By the end of February, the EU, US and UK announced new rounds of sanctions, all of them including restrictions targeting prominent Russian financial institutions The EU package includes individual listings of Russian entities and individuals and additional exports restrictions. The US sanctions provide for sectoral sanctions targeting Russian mining and metals sector, as well […]

Moscow Desk

+

Russian counter measures. Recent developments ( 12 january 2023 update)

Governmental Commission on Foreign Investments revised rules on the sale of assets and the payment of dividends On 30 December 2022, Russian Governmental Subcommission of the Commission of the Ministry of Finance on Foreign Investments (the – Commission) published revised rules and criteria for authorization of the sale of assets in Russian companies involving persons […]

Moscow Desk

+

Sanctions against Russia. Recent Developments (21 December 2022 update)

This December, the EU introduced a series of restrictive measures targeting Russia. Council of the EU approved the ninth package of sanctions. Additionally, the European Commission proposed framework that would amend the Lisbon Treaty and harmonize criminalization of violation of sanctions at the level of the Union. Finally, the EU introduced a price cap for […]

Moscow Desk

+

Russian counter measures. Recent developments (21 December 2022 update)

Russia has adopted a series of new measures. Namely, the President introduced new restrictions concerning certain transactions involving credit organizations and joint-stock companies that are not credit organizations. The Russian Central Bank issued decision expanding the scope of application of type C accounts. Moreover, the Ministry of Finance issued clarifications on the scope of transactions […]

Moscow Desk

+