The French Government has just announced that the end of the exemption from 3% surtax on distributions within tax consolidated groups will not have a retroactive effect.
France’s constitutional court issued a decision on 30 September 2016, concluding that the exemption from the 3% surtax on distributions made within a tax-consolidated group does not comply with the equality principle in the French constitution and, therefore, is unconstitutional.
The issue was addressed on the date on which the legislature will take actions, by a deputy, during the 2017 Finance Bill discussions.
The Secretary of State for the Budget, Christian Eckert, took this opportunity to remind that the Constitutional Court gave the Government until 1st January 2017 to come up with a remedy to the consequences of unconstitutionality. He confirmed that the proposed amendments to the exemption for tax consolidated groups would have no retroactive effect and that only the fiscal years starting from 1st January 2017 will be affected.
He wished that the minutes of the debates include this piece of information. He thus reassured groups on the continued application of the said exemption until the end of the fiscal year.
On the expected proposal to replace or amend the 3% surtax, a balanced solution is sought in consultation with concerned groups and the preferred option will be revealed during the discussions of the Rectifying Finance Bill for 2016, mid-November.