Health crisis - support mechanisms for companies

April 30th 2020

This news update provides a summary of the tax measures announced by the emergency law no. 2020-290 to face the Covid-19 epidemic and specified, in particular, by the Orders presented on March 25, 2020.

Postponement of tax deadlines

All the companies subject to the payment of a direct tax may benefit from the measures defined below regardless of their cash flow situation. Nonetheless, the government encourages the companies which are not in difficulty to settle the instalments initially provided, to promote national solidarity.

The companies in difficulty may request from their local tax office (SIE) a 3 months deferral (without penalties) for their next tax deadlines (corporate income tax, “CFE”, “CVAE”, tax on salaries) for the months of March and April.

Concerning the instalments for March, which would have already been paid, two solutions are offered by the tax authorities :

  • You may object to the SEPA direct debit with your bank;
  • Failing that, you may request the reimbursement from your local tax office.

The tax authorities provide a form for such purpose for companies (Section 1 of the form).

It must be emphasized that “major companies” (at least 5,000 employees or a consolidated turnover greater than 1.5 billion euros in France) which request the benefit of these measures must not pay dividends during FY 2020, or proceed with share redemptions during FY 2020.

The companies may also suspend their monthly subscriptions for the payment of CFE and property tax. These formalities must be accomplished via their professional space on the website impots.gouv.fr.

The VAT or assimilated taxes and the withholding personal income tax (“prélèvement à la source de l’impôt sur le revenu”) are not included under such tolerance.

With regard to the VAT, the Ministry of Social Action and Public Accounts nonetheless specified during a conference held on the 19th of March that a deferral of payments could be envisaged on a case by case basis (proven difficulty) for the VAT due on the invoices issued but not collected by the tax payer.

Furthermore, the tax authorities authorize companies to pay an amount of flat-rate VAT in the following cases:

  • 80% of the VAT for the previous month for companies in activity but encountering difficulties with their VAT statements;
  • 50% or less of the VAT for the previous month for companies justifying a decline in activity.

Finally, the Government mentioned that the requests for VAT credits formulated by the companies would be promptly processed.

Possible referral before the Chief Financial Services Commission (“CCSF”)

The Government recalled that the CCSF may also be referred to for companies’ difficulties in the context of this sanitary crisis, in order to grant them time period extensions for their tax and social charges.

This referral, entirely confidential, may present a benefit compared to a standard request for the deferral or extension of the tax instalments for the following reasons:

  • The CCSF decides on both tax and social matters. Accordingly, it has a global vision of the company’s file and may propose the most customized solutions.
  • The CCSF is entitled to grant payment periods concerning tax and social debts relating to periods prior to the sanitary crisis.

 

Direct tax remittance

In the event of characterized difficulties for the payment of direct taxes (corporate income tax, “CFE”, “CVAE”, tax on salaries), remittance may be requested.

Such remittance may be granted upon condition that factual elements are provided concerning the company’s morose financial situation (Section 2 of the form).

The information requested by the tax authorities for the instruction of the request for the remittance of direct taxes is as follows:

  • The evolution of the turnover for the period from January-May 2020, compared to the evolution acknowledged for the same period in 2019;
  • The debts, other than tax debts, due by the company;
  • The company’s cash flow situation.

 

Accelerated refund of tax credits

In accordance with a notification from the government dated 22nd of March, the tax authorities confirm the current possibility to request a refund of the tax credits due to be returned in 2020 (without waiting for the filing of the income statement).

This measure enables companies to file tax credit refund requests prior to the filing of their tax returns, in particular for those for which the financial year coincides with the calendar year and for which the final subscription date for the tax return is set at June 30, 2020.

These requests shall be promptly processed by the competent local tax authorities.

The tax credits concerned by this measure include the following:

  • The tax credits immediately returnable which exceed the amount of corporate income tax due for the FY 2019 (the family tax credit, the tax credit for research [CIR] 2019 or the innovation tax credit [CII] 2019 for the companies benefiting from an immediate right to refund).
  • The tax credits which may be deferred and returned upon the expiry of a period of three years, such as the CIR, CII and the tax credit for competition and employment (CICE). In practice, the request may concern the tax credits for the FY 2016, which were not attributed to the corporate income tax by the company for the FY 2019.

From a practical point of view, the filing of a request for an accelerated refund of tax credits shall firstly require the company’s taxable result to be defined for the FY 2019 and, as the case maybe, the corporate income tax due after allocation of the tax credits.

Any excess in tax credits may be subject to a refund request via the filing of a corporate tax balance statement for 2019 (form no. 2572), which should be accompanied by:

  • Statements relating to tax credit(s) (in particular, form no. 2069-RCI);
  • The reimbursement request form (form no. 2573).

This request must be made by the companies via their professional space on the website impots.gouv.fr.

 

Postponement of the date for filing the companies’ income tax returns

The tax authorities announced that an additional period was granted to companies unable to file their income statement within the due periods for the fiscal years ended on December 31, 2019.

The final date for filing, currently fixed at 20th of May, is deferred to June 30, 2020 (last version of the schedule for the principal tax instalments for professionals for the month of May 2020 presented by the Minister for Social Action and Public Accounts on Wednesday April 22, 2020).

This measure applies to results subject to corporate income tax and personal income tax, including for the income statement for real estate companies not subject to corporate income tax.

This additional delay also applies to the income statements for the FYs ended in January or February 2020 and to the following returns :

  • Tax credit forms;
  • Tax consolidation group returns;
  • Non-profit making organizations returns (no. 2070);
  • Real-estate co-ownership companies returns (no. 2071);
  • CVAE return (no. 1330);
  • CVAE  liquidation and regularization return (no. 1329-DEF), except for the creditor companies for which the deadline remains fixed at 5th of May.

 

Tax audits and debt recovery

The order no.2020-306 relating to the extension of the due deadlines during the sanitary emergency period and the adaptation of the procedures during this period provided specifications for the means of operating the tax audits and the recovery of tax receivables.

  • Interruption of tax audits:

In accordance with the government’s announcements, the tax audit mission of the tax authorities has been suspended.

During the entire sanitary emergency period, the tax authorities shall not carry out any tax audit procedures: it shall not send any tax inspection notices, information requests, responses to tax payers’ comments, etc.

  • Suspension of the time periods for tax audits:

The temporary interruption of the tax audit mission shall result in a suspension of the tax authorities recovery limitation periods: all the limitation periods are suspended during the period from March 12, 2020 until the expiry of a one-month time period as from the cessation of the sanitary emergency status, referred to as a “legally protected period”.

Unless it is extended, the end of the sanitary emergency status is scheduled for the 24th of May, which means that the recovery period for the tax authorities is suspended from the 12th of March until the 24th of June, i.e., for more than three months. Upon the outcome of the suspension period, the recovery period shall restart until the expiry of the statutory period (three years, six years or 10 years, as required).

The tax authorities shall have a period of at least three months in 2021 to proceed with corrections for the taxation periods which would normally have reached maturity on 31st of December 2020.

Furthermore, all the procedural time periods provided for by the law or regulations are suspended by the application of the following principles:

  • The time periods which had started to run before the 12th of March are suspended and shall restart upon the expiry of the legally protected period;
  • The time periods which started to run as from March 12, 2020 shall only begin as from the expiry of the legally protected period.

 

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All the teams at YDES are mobilized and are available to assist you during this difficult period.