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Business Value Added Contribution (VAC)

Verified 06 novembre 2020 - Legal and Administrative Information Directorate (Prime Minister), Ministry of Finance

Covid-19: exceptional measures to assist undertakings

Businesses and self-employed workers in difficulty during the period of the coronavirus epidemic can apply for the deferral or remission of payment of their maturities of certain taxes ..

It is possible to modulate payment of CVAE deposits ..

Companies in certain sectors may benefit from a CFE reduction..

The value-added tax (VAC) and the business property tax (EFC) constitute the territorial economic tax (TEC). The CVAE is owed by companies and self-employed workers from a certain turnover. It is calculated based on the added value produced by the company.

The CVAE is owed by the undertaking (natural or legal person) which:

  • more than €500,000 turnover excluding tax (irrespective of its legal status, activity or taxation system) 
  • and carries on a taxable activity with the property tax of enterprises (CFE).

The activities taxable to the CFE are self-employed, gainful and usual professional activities. It also concerns non-professional furnished rentals.

The undertaking with a turnover greater than €152,500 must make the declaration of value added and employee numbers (n°1330-CVAE).

It provides the data needed to distribute the CVAE among local communities.

The CVAE is due by the undertaking carrying on an activity on 1to January of the taxation year.

The new undertaking is not subject to the CVAE in the year of its creation, except in the case of transmission of activity.

Civil society, professional and medium-sized, and groups of professional members shall be liable on their own behalf to the CVAE.

The members of these structures are also subject to the CVAE when their turnover is greater than €152,500.. The turnover of the partner in the course of an individual activity shall also be taken into account.

  Please note : the planned exemptions from CFE also apply to the CVAE.

Turnover and value added (plate of the CVAE) are taken into account in determining the tax base of the CVAE. Turnover is used to determine the eligibility threshold for the EAC and the effective corporate tax rate.

The calculation of the turnover is made over the reference period which generally corresponds to the fiscal year ended during the taxation year. The turnover to be taken into account for the CVAE base is wider than the company's accounting turnover.

It includes the following products:

  • Products that usually make up the turnover (sales/services) 
  • Additional revenue (capital gains from disposals of capital assets when they relate to current and normal activity, and charges rebilled in the expense transfer account).

Value added is determined from turnover, plus other income, and less production costs and other expenses, relating to taxable activities. Taxable activities are those that fall within the scope of the CFE and do not benefit from an exemption.

The contribution rate is theoretically equal to 1,50 % value added (regardless of turnover).

However, undertakings whose turnover does not exceed €50 000 000 are entitled to a rebate (paid by the State). The progressive and variable scale is therefore applied without prior request from the company, depending on the turnover achieved by the company at the time of payment of the advance payments and the balance.

Tax rate of the CVAE according to turnover (CA HT)

Sales excluding tax

Effective tax rate

Less than €500,000

0%

Between €500,000 and €3 million

0,5 %  x (CA) €500,000)€2.5m

Between €3 million and €10 million

0,5 % + 0,9 % x (CA) €3 million)€7 million

Between €10 million and €50 million

1.4% + 0.1% x (CA) €10 million) €40 million

More than €50 million

1.5%

Example :

A company produces a turnover of 2 million euros.

The tax rate is: 0.5% x (2,000,000 - 500,000) / 2,500,000 = 0.30%.

  Please note : the undertaking is taxed at a rate calculated on the sum of the turnover of undertakings satisfying the same conditions as it where that sum exceeds €7,630,000..

The effective tax rate that is determined on the basis of the firm's own turnover (or the sum of the turnover in the case of group membership) shall be applied to the value added produced by the firm:

Value added x effective tax rate = CVAE due or minimum contribution (€250)

  Please note : undertakings with a turnover exceeding €500,000 and for which the amount of the CVAE would be less than €250 must pay a minimum contribution of €250..

An additional tax to the CVAE (TACVAE) is collected, in addition to the CVAE contribution, for the benefit of the regional Chambers of Commerce and Industry (CCI). Its rate is set at 1.73%.. Some companies are exempt: the professional furnished rentals (LMP) and professionals receiving non-commercial profits (NGB), including liberal professions.

If the enterprise is subject to TACVAE:

CVAE due (or minimum contribution) x annual rate additional tax = additional tax

A sum equal to 1% of the amount of the CVAE and the additional tax to the CVAE shall be collected in respect of the costs of managing local taxation:

[CVAE due (or minimum contribution) + additional tax] x 1%= management costs

Total tax = CVAE due (or minimum contribution) + additional tax + management fees.

The taxable bases and the amount of tax are rounded to the nearest euro.

amounts less than €0.50 are neglected and those above or equal to €0.50 are counted as 1.

Regardless of the closing date of the financial year, the undertaking must perform by dematerialized means:

  • the declaration of value added and employee numbers #1330-CVAE using the EDI-TDFC procedure 
  • declaration #1329-DEF in EDI or EFI mode.

Statements must be made within the following time limits:

  • 2eworking day after 1to May (between 3 and 5 May) 
  • Within 60 days of the end of business during the year 
  • Within 60 days of the decision to initiate collective proceedings (safeguard, reorganization or liquidation), unless the opening of the proceedings does not put an end to the activity. In this case, only declaration No. 1329-DEF must be transmitted within 60 days.

Filing of declaration No. 1330-CVAE is not necessary if the undertaking meets the following cumulative conditions:

  • Completing the framework reserved for the CVAE in its declaration of results (Tables 2033E, 2035E, 2059E and 2072E) 
  • Have only one establishment used for the professional activity
  • Do not employ employees who work outside the company for more than 3 months 
  • Do not operate multiple activities that require different income statements 
  • Not be a civil society of means (SCM) 
  • Do not close multiple fiscal years during the CVAE reference period 
  • Not to have merged with another company during the CVAE reference period 
  • In the case of a foreign undertaking, it must have a permanent establishment in France 
  • Not be subject to the micro-enterprise regime.

  Please note : the CVAE reference period is the period beginning at the last accounting year and extending over 12 months over which the CVAE is calculated.

The company responsible for the CVAE must pay the prepayments and the balance.

She must pay 2 installments of 50% of the contribution due by means of the deposit statement 1329-AC ::

  • on or before June 15 of the taxation year,
  • and on or before September 15 of the taxation year.

Where the amount of the CVAE does not exceed €3,000, there are no advance payments (the CVAE is paid at one time),

The CVAE regulation is mandatory for all companies that are liable to the CVAE.

The debtor company must proceed with the final liquidation of the CVAE using the declaration #1329-DEF.. It must be transmitted dematerially by 2eworking day after 1to May of the year following the taxation year. It must be accompanied (if necessary) by the payment of the balance.

In the event of a surplus linked to an overpayment of deposits, the latter, net of any other direct taxes due, shall be reimbursed by the tax authorities.