Need to save money
All the tax niches from which companies benefit represent no less than 40 billion euros. The government’s objective is to reduce them by 1.5 billion euros. These tax niches are, by definition, varied to say the least: reduced VAT rates, TICPE (energy tax) reimbursement for certain categories, including farmers, exemptions from charges, etc.
The transmission of business is targeted. Olivia Grégoire, spokeswoman for the LREM group in the Assembly and member of the Finance Committee, was quite clear in an interview with the Journal du Dimanche. Asked about the tax niches that should be removed, the latter replied: “about ten niches that encourage the transfer and takeover of business. We must be able to gather them“, she assures. Note that the term “gather” used by Olivia Gregoire does not mean much. The aim being to generate savings, certain tax incentives for sellers and buyers should be abolished or significantly reduced. She also specifies that the suppression of certain niches “is only one source of financing, the other two being the reduction of public expenditure and the incentive to work more without changing the legal retirement age“.
The proposals of the Finance Committee of the National Assembly on the abolition of tax niches should be made at the end of May. The Prime Minister will then make his decisions, but it is, of course, Emmanuel Macron who will decide in fine. It has already been decided that the measures selected will be included in the 2020 Finance Bill (PLF). There is therefore little doubt that the sellers and buyers of companies will clearly suffer from this change of course of Emmanuel Macron’s economic policy. A policy that was until now quite pro-business (the Pact law is a good illustration of this) is now moving towards a policy of demand and trying to increase purchasing power.
A transmission market that is very sensitive to its environment
Until then, the Minister of the Economy will meet with employers’ organizations on the subject. The discussions are likely to be stormy. The CPME was quick to react, denouncing “the tax increase hidden under the ambiguous term of elimination of tax niches for companies. It seems that the tax fatigue of small and medium-sized businesses has not been heard”. The Medef is not to be outdone. Its president Geoffroy Roux de Bézieux arguing that these tax niches “are tax credits that compensate for taxes that are too high in our country. He evokes an ideological turn in the policy of Emmanuel Macron. “Macron is doing the politics of demand. It doesn’t work,” he says.
It is clear that the abolition of tax incentives in the field of business transfers will have significant consequences. This market being very sensitive to the macro-economic environment and to legal stability, such a development will slow it down and place its actors in a wait-and-see attitude. Some sellers will undoubtedly delay their transaction and thus make their company less dynamic. Quality potential buyers may also simply give up on their projects.
Numerous tax incentives
Let’s briefly recall, in a non-exhaustive way, the main existing fiscal aids in order to favor the transfer of a company.
Since the 2018 Finance Act, capital gains on the sale of securities have benefited from the flat tax at a single rate of 30%, however a derogatory deduction regime for retiring sellers remains in place. And it is indeed this one that could be targeted. For example, the latter can benefit from a reinforced deduction of 85% when the shares have been held for at least 8 years. In this case, the taxpayer must opt for taxation at the progressive scale of the IR.
Buyers also benefit from various tax incentives. For the takeover of a company in an assisted area (rural revitalization zone), the buyer is entitled to an exemption from income tax, CFE and property tax. The system is similar for the buyers of an industrial company in difficulty. In addition, employees of a company who take over their own business can benefit from a tax credit, if a holding company is created for the takeover. For their part, sellers and buyers of a company within a family framework benefit from the advantageous and recently simplified provisions of the Dutreil pact. Is this also under threat?
