The French Parliament on September 8 passed the Second Supplementary Budget Bill for 2011, which focuses on new tax measures to reduce deficits. Additional tax measures have been proposed in the draft budget law for 2012, which will be presented to the Cabinet on September 28.

New Measures

For Businesses

Tax Losses

Previously, corporate taxpayers could carry forward their tax losses to subsequent financial years without any limitations. There is still no time limit on the carryforward of tax losses, but the deductible amount is now limited to €1 million, plus 60 percent of any taxable profit exceeding €1 million. This limit also applies to the subsidiaries of consolidated tax groups for tax losses accumulated by the subsidiaries before their entry into the group. The fraction of tax losses that cannot be deducted can still be carried forward to subsequent years without any time limit.

Corporate taxpayers also previously could carry back their tax losses for three financial years with no limit on the amount. Now, tax losses can only be carried back to the previous financial year and only up to €1 million.

Both of these new rules apply for years ending as of the date of entry into force of the bill (the day after its publication in the official gazette).

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