Reed Smith Client Alerts

The Modified Finance Bill for 2014 (the Bill) was presented to the French Parliament on June 11 2014 and will be reviewed by the Finance Committee of the lower Chamber of French Parliament (Assemblee Nationale) on June 18.

The main measures of this draft budget law are the following:


The Bill provides for the abolition of the social solidarity contribution (C3S) in 2015 for companies whose turnover is below EUR3.25 million in 2015. This contribution should be definitely ended in 2017.

In addition, the temporary surtax of 10.7% applying to standard corporation income tax for companies with turnover exceeding EUR250 million will end in December 30 2016 instead of December 31 2015. Furthermore, from 2017 corporation income tax should decrease progressively up to a rate of 28% in 2020.


The Bill provides for a tax reduction of EUR350 for a single taxpayer (EUR700 for a couple) when fiscal income is less than that of an employee receiving a remuneration equal to 1.1 of the net French minimum wage (SMIC).

In addition, from January 1 2015 employee contributions should be reduced for all employees paid between 1 and 1.3 of the French minimum wage (SMIC).

Also, from January 1 2015 an employer of an employee receiving the SMIC should not pay any more social security contributions. This exemption should be decreasing to 1.6 SMIC. The full exemption should also benefit companies with 20 or more employees, since the difference in contribution level currently existing between companies with less and more than 20 employees should be ended. Furthermore, the family allowances contributions should be reduced by 1.8 points for wages below 1.6 SMIC. From January 1 2016 this measure should be extended through a reduction of the family contributions for the wages below 3.5 SMIC.

From January 1 2015 independent businesses (commercial, agricultural occupations, skilled crafts and self-employed) whose income is less than EUR53 thousand per year should benefit from a reduction in their family contributions:

  • For independent businesses whose income is less than or equal to three annual net SMIC (slightly more than EUR40 thousand), the exemption rate should rise to 3.1% of the income base of the family allowances contribution
  • For independent businesses with an income of between three and 3.8 annual net SMIC, the exemption rate should decrease gradually until 3.8 annual net SMIC


Client Alert 2014-171