On October 5, 2022, the French National Assembly announced the gradual abolition of the business value-added contribution (cotisation sur la valeur ajoutée des entreprises – CVAE) in its Budget Bill for 2023. This measure will lower production taxes for all French businesses that make annual revenues of more than €500,000 before tax, irrespective of their legal status, activity or their tax regime.
In 2022, the CVAE amounted to €8.3 billion in revenue for the French government, which is forecast to decline to €4.2 billion in 2023. The total gain from this decision for businesses will be €9.3 billion, with 530,000 businesses standing to benefit from the change in law. The share of the gain for micro-enterprises and SMEs will be around 20% of the total amount. Furthermore, industry will be the area that will benefit the most from this measure, with gains of 25% enabling it to double its share in French national GDP.
According to the Minister for the Economy, the CVAE will disappear progressively over two years “in order to balance the public finances”. Consequently, CVAE tax rates will be halved in 2023, on the basis of rates in 2022, before disappearing completely in 2024. The decision comes as the French government is trying to strengthen the competitiveness of French businesses.
The gradual abolition of the CVAE is just part of the efforts that have already been agreed by the French government to reduce corporate taxation and increase the attractiveness of France’s regions: the overall tax rate in France fell from 44.4% in 2017 to 25.8% in 2022. France therefore has a tax rate that is similar to Austria, Belgium, Spain and the Netherlands, and that is lower than in Germany (29.8%) and Italy (27.8%).
For further information on how to calculate the CVAE for your business, please visit this link.
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