France: Amended Finance Law For 1995 - Ratification By The French Council Of Ministers

Last Updated: 21 July 1995
The budget amendment was decided by the French Council of Ministers on June 28, 1995 and presented to the press by the Minister of the Economy and Finance, Mr. Alain Madelin. It uses again the measures previously announced by the Prime Minister analysed in FR 30/95, p. 13 s. It includes in addition a new clause concerning the fixing of standard revaluation coefficients for rental values used as a basis for direct local taxes in 1996.

Subscription to the capital of small-sized companies

As announced by the Prime Minister, the ceiling of payments giving right to a tax reduction provided by article 199 terdecies OA of the French General Tax Code would be increased by 50%. Thus it would increase from FF 50,000 to FF 75,000 for a married couple and from FF 25,000 to FF 37,500 for a single person depending on the subscriptions realised and paid up from August 1, 1995 to December 31, 1996.

The following table specifies the consequences of the new measure on the functioning of the device in case of investments made by a married couple.

Subscriptions to the capital 					Amount of the
performed in 1995 						subscription giving
								right to a tax reduction

From January 1st 	From August 1st 	Total 
to July 31		to December 31

80,000               0          80,000      50,000
60,000          20,000          80,000      70,000 (1)
15,000			65,000			80,000      75,000 (2)
0               80,000          80,000      75,000

(1) of which FF 50,000 for the first period and FF 20,000 for the second one.
(2) of which FF 15,000 for the first period and FF 60,000 for the second period, the total of the payments for the year 1995 giving right to a tax reduction not exceeding FF 75,000 for a married couple and FF 37,500 for a single.
This file also specifies that the new measure would allow, for instance, a Limited Liability Company with a registered capital of FF 300,000 divided between five partners (4 married and 1 single) to offer the interested persons a participation in an increase of capital of FF 375,000 before the end of the year 1995. This contribution of equity capital would give right for the partners to the following tax advantage:

- for each of the married partners:

(FF 75,000) x 25% = FF 18,750;

- for the single partner:

(FF 37,500) x 25% = FF 9,375.

It is assumed that the involved partners would not have subscribed to the capital of other unquoted companies.

10% contribution on corporate income tax

It would be equal to 10% of the corporate income tax computed before application of the tax credits.

If it is spontaneously paid, it might be subject to down payments under the same conditions as the corporate income tax, being specified that for 1995, these down payments should be paid before the end of this year.

The contribution would be set up - as of the payment of the down payments - as much on the corporate income tax of 33.1/3% on profits as on the corporate income tax at a reduced rate of 19% applicable to long term capital gains.

According to our information, the contribution would apply for the first time to the corporate income tax of the tax years closed as of January 1st, 1995. For tax years already closed at this date, the contribution should in some cases be wholly paid before September 15, 1995 (with the first down payment of the 1996 contribution). Neither the tax credits nor the receivables arising from the carry back of the losses, nor the yearly standard taxation would be chargeable to the 10% contribution.

Increase of the normal rate of VAT

The normal rate of VAT would increase by 2 points, i.e. from 18.6% to 20.6% as of August 1, 1995.

The 20.6% rate would apply to operations the taxable event of which will occur as of August 1, 1995, that is to say to deliveries performed and services rendered as of this date. This two points increase, which is temporary, will be suppressed as soon as the government deficit in the meaning of the European Union Treaty is inferior to 3% of the gross domestic product. The increase of the VAT rate triggers a 6% increase in the price of cigarettes.

Reduction of rights on purchases of housings

The decrease of 35% of the departmental right and the regional tax will apply to deeds signed between July 1st, 1995 and December 31, 1996 on the amount of the rights (i.e. a decrease of about 30% of the whole amount of rights with the local taxes).

Increase by 10% of the wealth tax

The increase would apply as of the year 1995 and be paid at the latest on next October 16. It would be computed on the amount of the wealth tax paid by the taxpayer (i.e. if need be after reduction for dependent persons, ceiling or application of the tax paid outside France).

However, it would not be possible to set a ceiling on the increase in itself.

Local direct taxes

The land rental values are used as a basis for local direct taxes (housing tax, land tax, business tax). They are increased, each year, by the application of standard revaluation coefficients determined in function of the variation of rents. These coefficients have not yet been fixed for 1996.

In order to allow the local administrations to dispose, as of next January, of the information necessary to the vote of rates for local direct taxes, the Government will offer to fix the revaluation coefficients, in 1996, applicable to local direct taxes.

These coefficients would be fixed at:

- 1 for undeveloped properties and industrial buildings booked as the assets of an industrial or business company coming under the real tax regime. The rental value of these properties and buildings would thus not change;

- 1.01 for all other developed properties. The rental value of these properties would thus increase by 1%.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about specific circumstances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be brought about your specific circumstances. For additional information contact Claire Acard on 33/(1)/ or Lionel Benant on 33/ or enter text search: "ARCHIBALD ANDERSEN Profile". The members of ARCHIBALD ANDERSEN Association d'Avocats (S.G. Archibald and Arthur Andersen International) are registered with the Hauts-de-Seine Bar and the Lyon Bar.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions