The Finance Bill is one of the most crucial and influential government documents in the political and economic life of a nation. It embodies the government’s financial vision for the year ahead, setting out the budget priorities, spending programmes and tax resources needed to support public policies. In this sense, Finance Bill 1680 for the year 2024 is of particular importance, as it lights the way for the key financial decisions that will shape our country’s future over the coming year.

The year 2024 brings with it major challenges, both nationally and internationally. Persistent economic challenges, the consequences of the COVID-19 pandemic, growing environmental concerns and the demands on public services such as education, health and security mean that the government must make informed budgetary decisions to meet people’s expectations while ensuring financial stability. Finance Bill 1680 for 2024 therefore reflects policy responses to these pressing challenges.

Établissement Boisbouvier Robert proposes to highlight the key elements of the Bill, the government’s budget priorities, the economic and social implications of its provisions, and the expected reactions of various players and stakeholders.

Our aim is to provide an informed perspective on how this bill could shape the future of our nation, highlighting its strengths and limitations, its implications for the daily lives of citizens and its role in achieving the government’s policy objectives.

Établissement Boisbouvier Robert has selected the 10 key points from the bill’s 59 articles.

1. Increase in income tax rates

As a reminder, income tax scales are a scale established by a country’s tax authorities to determine the amount of tax a taxpayer has to pay based on their taxable income. They are structured progressively according to a base determined annually. The government has announced its intention to raise this scale to combat inflation. In fact, by adjusting the tax scales to reflect inflation, the government can help prevent “fiscal drag”, a phenomenon where taxpayers are pushed into higher tax brackets due to inflation, even though their real purchasing power has not increased.

The proposed increase would raise the tax scale by 4.8%, i.e. :

2. Increased aid for the disabled

Capital grants for disabled people are a tax measure designed to ease the financial burden on individuals and families who invest in equipment and fittings to improve the daily lives of disabled people. Eligible expenditure includes the purchase of medical equipment, mobility devices, communication equipment and home adaptations. The bill aims to extend the aid granted until 2023 by applying it to expenditure incurred up to 31 December 2025.

3. Transposition of the “Pillar 2” directive

The taxation of multinational groups of companies is a complex challenge due to the transnational nature of their activities. These companies have the opportunity to implement aggressive tax planning strategies. International initiatives, such as the OECD’s BEPS project, aim to coordinate countries’ efforts to combat tax base erosion and profit shifting. These efforts have been given concrete expression in the European “Pillar II” Directive. Under the terms of this directive, the European Union has imposed on Member States a minimum effective tax rate of 15% in each of the countries in which the group generates its sales. This taxation will apply to financial years beginning on or after 31 December 2023.

4. Green industry tax credit

To support investment in the production of batteries, solar panels, wind turbines or heat pumps, the government intends to grant a tax credit ranging from 20% to 60% depending on the location of the investment and the size of the company.

5. Geographical condition for income tax reduction

In order to revitalise economic activity in certain areas of the country, the government intends to grant tax reductions to companies developing activity in the targeted areas. The government therefore intends to extend the schemes for dynamic urban areas, regional aid areas, priority development areas, town centre business regeneration areas and urban policy schemes, despite the initial deadline of 31 December 2023. In addition, the government plans to create a “France Ruralités Revitalisation” zoning scheme, which will refocus the categories divided between rural regeneration zones, employment areas in need of revitalisation and rural business regeneration zones.

6. Basic VAT exemption for small businesses

The basic VAT exemption is a tax scheme that allows small businesses not to charge VAT on the goods or services they provide. Businesses benefiting from this exemption are not allowed to reclaim VAT on the goods and services they purchase, but they are also exempt from the administrative burden of collecting and paying VAT to the State. The government intends to introduce an exemption scheme to simplify accounting for small businesses.

7. Application of VAT to dropshipping transactions

The application of VAT to dropshipping transactions depends on a number of factors, including the location of the seller, the location of the supplier and the location of the customer. In general, in the dropshipping model, the seller does not physically hold the goods, but has them shipped directly by a supplier to the customer. VAT is generally payable in the country where the final delivery is made, i.e. where the customer resides. Thus, if the customer is located in the European Union, the seller must charge the VAT applicable in the customer’s country. However, if both the seller and the supplier are established outside the European Union, specific tax rules apply. These situations can lead to VAT fraud, to which the government intends to respond by reforming the rules on VAT on imports.

8. Continuation of the gradual reduction in the CVAE

The Cotisation sur la Valeur Ajoutée des Entreprises (CVAE) is a local tax in France that applies to businesses based on their turnover. The gradual reduction in the CVAE refers to the gradual reduction in its tax rate over the years, as part of measures to reduce the tax burden on businesses. This reduction is intended to support business competitiveness and stimulate investment. It comes against a backdrop of tax and budget reform aimed at improving the economic environment for businesses, particularly SMEs, by reducing their tax liability. Since the previous Finance Act, the CVAE has been progressively exempted for small contributions. Under this bill, this tax will be completely exempt for the smallest contributions. This reduction will continue, with a total disappearance by 2027. The synergy effect of the CTE ceiling, or Social Security Ceiling, which determines the maximum limit of remuneration taken into account for the calculation of certain social security contributions and benefits, is that it is no longer possible to calculate the CTE ceiling.

and which serves as the basis for calculating social security contributions, set at 1.531% of added value, to further reduce the burden of contributions.

9. Exemption from property tax

The government is explicitly committed to promoting energy investment in property through tax incentives. These tax incentives can take the form of tax reductions, tax credits or special deductions for investments aimed at improving energy efficiency, using renewable energy sources or installing environmentally-friendly facilities. This is in line with an objective to reduce carbon emissions and promote clean energy, while offering investors tax benefits for their energy projects in the property sector. The bill supports these provisions by exempting from property tax a property that has been upgraded from energy class F or G to class A or B following extensive renovation work.

10. Combating fraud