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COVID-19: What are the Main Tax Impacts? 

by Jean-Guillaume Follorou, Jacques-Henry de Bourmont

Published: March, 2020

Submission: March, 2020


Taxation: emergency measures to be taken to deal with the coronavirus (COVID-19) crisis: transcription of the crisis into the companies’ accounts, reduction of the tax burden, preservation of the company’s cash flow and choice of financing and restructuring tools.



Given the foreseeable impact of the coronavirus (COVID-19) epidemic on the French economy, the French tax authorities published, on 15 March 2020, several exceptional tax measures to help companies facing financial difficulties to cope with this global health crisis.

Companies are thus entitled to request from their own tax service the postponement without penalty of the payment of the next direct tax installments (corporate tax installments and payroll tax in particular). If the companies have already paid their March installments, they may nevertheless oppose the SEPA Direct Debit or request their refund to their tax service once the SEPA Direct Debit has been made.

Furthermore, if companies have concluded a monthly payment contract for the payment of their business premises contribution (cotisation foncière des entreprises) or their property tax (taxe foncière), they can suspend it directly via their professional area on the French tax authorities’ website (impots.gouv.fr) or by contacting their Direct Debit Centre (Centre prélèvement service) (the outstanding amount will be debited from the balance without penalty).

To facilitate these procedures, the French tax authorities provide companies with a request template, available on the French tax authorities’ website (impots.gouv.fr), to be sent to their own tax service (Simplified request for postponement of payments or remittance for companies in difficulty due to the Coronavirus – Covid 19 (PDF)).

The French government has also undertaken, for companies facing extreme difficulties as a result of the coronavirus situation, to grant them direct tax rebates (corporate taxes, business premises contribution and business added-value contribution –cotisation sur la valeur ajoutée des entreprises) on a case-by-case basis after an examination of the company’s situation and only in the event of characterized difficulties that a deferral of payment would not be sufficient to overcome.

However, no provision is made for VAT, so that companies must continue to declare and pay their VAT according to legal deadlines: they may nevertheless request a deferral from their tax service, but the latter is, in principle, entitled to refuse it and may, in any event, apply to said companies late payment penalty and interest (except where anex gratiarebate is granted).



Without being considered definitively irrecoverable, the recovery of a debt may nevertheless be compromised at the end of a fiscal year due in particular to the financial difficulties of the debtor. Thus, a provision equal to the amount of the debt (or up to the amount of the doubtful portion) may be deducted from the taxable result of the company holding the debt (French tax authorities’ guidelines BOI-BIC-PROV-40-20-20150401). The deduction of such a provision is subject to certain requirements of substance and form, namely, in particular the existence of ongoing events at the end of the fiscal year making the contemplated loss probable.

Even if the deduction of these provisions for the fiscal year 2019 seems difficult, it could possibly apply to exceptional situations.



In addition, companies may also use factoring, which is based on a personal and contractual subrogation mechanism, whereby the factor (financial institution) pays the amount of the debt to the creditor company and then continues to collect it from the debtors. Depending on the agreements, losses may be taken into account on the portfolio of receivables that are deductible for tax purposes.

The same situation will exist in the case of assignment of receivables. The assignor will thus be able to assign some of its receivables at a market price and book a potential loss which will be, under certain conditions, tax deductible.



Tax losses recorded during a fiscal year by a company are in principle charged against the future profits made by the latter (Article 209 of the French tax code). This carry-forward is unlimited in time, subject to a certain ceiling (€ 1m plus an amount of 50% of the taxable profit for the fiscal year exceeding this first limit).

In addition, in certain cases, companies may opt to carry back their tax losses (offset against profits already taxed) (Article 220quinquiesof the French tax code). In the latter case, the carry-back results in the recognition of a tax claim, equal to the amount of the tax losses actually offset, which is offset against the amount of corporation income tax subsequently due or refundable for a period of five years (subject to conditions). This carry-back can be made up to a maximum of € 1m, and only on the profit of the previous fiscal year.


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