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).

 

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.