The limit of profits taxable at the reduced rate of 15% for SMEs is raised to €42,500 for the taxation of results for financial years ending on or after 31 December 2022 (art. 37).

A solidarity contribution on the excess profits of certain companies in the energy sector is instituted, only for the financial year 2022. Its base is equal to the difference between the taxable result of the first financial year beginning on or after 1 January 2022 and 120% of the average amount of the results recorded for the four previous financial years. Its amount amounts to 33% of this base (art. 40).

The scheme in favour of young innovative companies is extended by three years, but the status allowing the exemption of profits is once again reserved, for companies created as from 1 January 2023, for JEIs created less than eight years ago (Art. 33).

For financial years ending on or after 1 January 2023, captive reinsurance companies owned by a company other than a financial company may set up a special tax-free provision to cover certain categories of risks that are listed exhaustively. This provision is subject to an annual ceiling and an overall deduction ceiling (art. 6).

The obligation to retain the securities of the transferring company, to which the granting of approval for the tax neutrality regime for contribution-attribution transactions is notably subject, is no longer required of the shareholders of a transferring company listed on a regulated market holding at least 5% of the voting rights, subject to compliance with certain conditions (art. 25).

Accounting documents received or drawn up in electronic form must be kept in that form for the entire retention period. Two adjustments are also made to the invoicing obligation: a new technical solution for issuing or receiving electronic invoices is authorised and the exemption from fines in the event of a first offence is reinstated (Art. 62).

As of 1 January 2023, transfers of sole proprietorships and EIRLs that have opted to be assimilated to an EURL, and are therefore subject to corporate income tax, are assimilated to transfers of company shares subject to the duty provided for in Article 726 of the CGI (art. 23).

The scope of the reduced rate of 5.5% is modified in the agri-food sector (Art. 61) and for energy renovation work (Art. 65).

The CVAE tax rate is reduced by half for the taxes established for 2023, before a total abolition of this contribution from 2024. At the same time, the rate of capping according to value added is lowered (Art. 55).

The six-yearly update of the rental values of business premises is postponed to 2025. As a result, the tax bases for 2023 are revalued according to the common law rules for the annual updating of rates (Art. 103).

The increased rate of the Madelin tax reduction for subscription to the capital of SMEs is renewed in 2023, subject to the approval of the European Commission. It is also renewed for subscriptions to the capital of sociétés foncières solidaires (art. 17).

The Defi-forêt is extended until 31 December 2025 and adjusted to be more attractive. In particular, from 2023 onwards, it opens up the right to a tax credit regardless of the nature of the investments made (art. 10).

The revision of rental values for residential premises is postponed by two years (art. 106).

From 2023, the perimeter of "tense" zones, in which the tax on vacant housing as well as the increase in housing tax on second homes can be applied, is expanded. In addition, the rates of the tax on vacant dwellings are substantially increased (art. 73 and 74).

As from 1 January 2023, the administration may request justifications on all capitalisation contracts and similar investments subscribed with organisations established abroad (Art. 90). As from the same date, the auditor may request directly from financial institutions, as soon as an ESFP is initiated, the taxpayer's account statements (art. 89).

In a decision of principle, the Conseil d'Etat rules that the levy under Article 244 bis B of the CGI applicable to the capital gain on the disposal of a substantial shareholding made in 2014 by a Cayman Islands Limited Partnership (LP) is incompatible with the free movement of capital.

It provides three useful clarifications:

- on the one hand, the Overseas Countries and Territories (OCTs) of which the Cayman Islands are a part benefit from the liberalisation of capital movements provided for in Article 63 of the Treaty on the Functioning of the European Union (TFEU) in their capacity as third States;

- secondly, the stipulations of Article 63 TFEU may be invoked against the provisions of Article 244 bis B of the CGI in their version in force in 2014, since they are not intended to apply only to shareholdings that enable a definite influence to be exercised over the decisions of the transferred company;

- finally, it is up to the administration and, where applicable, the tax judge, to disgorge the taxation in dispute to the extent necessary to restore an equivalence of treatment, the High Jurisdiction confirming on this point its previous case law ( CE 6-12-2021 no 433301).

The decision of the Versailles administrative court of appeal, which had pronounced the total restitution of the tax without comparing the tax burden between the transferring company and a French company placed in a comparable situation ( CAA Versailles 20-10-2020 no 18VE03012), is annulled for error of law, and the case is sent back to be retried on the merits.

When the administration has, within the recovery period, filed a complaint that has led to the opening of a judicial investigation for certain cases of tax fraud, the deficiencies relating to the period covered by the recovery period may exceptionally be repaired until the end of the year following the decision ending the proceedings and, at the latest, until the end of the tenth year following the year of taxation (LPF art. L 188 B).

Stating for the first time on these provisions, the Court of Cassation lays down the principle that the special time limit does not apply only to the taxes due in respect of the years covered by the complaint, but to all the taxes included in the initial recovery period that had not expired on the date the complaint was lodged.

It is thus stricter than the administrative doctrine for which the time limit concerns taxes due in respect of the period covered by the complaint (BOI-40-10-10-30 no 145).

This judgment is issued for the application of the regime prior to the 2012 Amending Finance Act, in which the special recovery period was reserved for the most complex types of tax fraud. Its scope is now broader, since it can concern any manoeuvre intended to mislead the administration.

A company operating as a property trader sells building plots from a built-up property complex, independently of the land on which the construction is built. The company considered that the land thus sold constituted building land from the time of its acquisition and that the margin VAT regime provided for in Article 268 of the CGI was applicable to its resale. The administration, considering that these plots of land were not acquired as building plots, but as the base for a built building, questions the application of this regime.

The division of the land was not carried out prior to the acquisition, but the company put forward the fact that the land sold was, prior to the signing of the deeds of acquisition, in a buildable zone and had been the subject of prior declarations of division, a decision of non-opposition by the mayor, as well as town planning certificates. The Bordeaux administrative court of appeal considers that the fact that this division had been authorised in a sufficiently precise and detailed manner prior to the acquisition was sufficient to qualify the land not supporting construction as building land (CAA Bordeaux 7-4-2022 no 20BX00181).

Censure: The Conseil d'Etat recalls that it follows from the provisions of Article 268 of the CGI, read in the light of Article 392 of the VAT Directive whose transposition they are intended to ensure, that the derogatory rules for calculating VAT that they provide for apply to transactions involving the sale of building land that has been acquired with a view to resale and therefore do not apply to a sale of building land that, at the time of their acquisition, had the character of a built-up land, in particular when the building which was built on it was demolished by the purchaser-reseller or when the acquired property was the subject of a division of the land with a view to the separate sale of the parts which do not constitute the land on which the building is based (in particular, CE 27-3-2020 no 428234 : BPIM 3/20 inf. 177; CE 13-10-2021 no 433745: RJF 1/22 no 13). The administrative court of appeal should have, in order for the margin VAT regime to apply to the resale of building land, investigated whether the deeds of sale of these plots of land, acquired as part of a real estate complex comprising land supporting buildings, showed that they had been acquired as building land, distinct from the land on which the buildings were built.

As an exception to the principle of taxation of salaries in the State of exercise of the activity, point 3 of the protocol to the Franco-Luxembourg convention of 20 March 2018 provides that a resident of a contracting State who is employed in the other contracting State remains subject to tax in that other State when he or she works for a maximum of 29 days per year in his or her State of residence and/or in a third State.

France and Luxembourg signed an amendment to the agreement on 7 November 2022 which increases the fixed rate for cross-border workers from 29 to 34 days per year.

This rider must be submitted for ratification in each of the States. In a joint press release dated 7 November, the French and Luxembourg finance ministers specify, however, that these new arrangements may apply from income received in 2023.

For income received in 2022, only the days teleworked from July to December are deducted from the package, the days teleworked from January to June being neutralised in accordance with the amicable agreement of 16 July 2020 (applicable until 30 June 2022), it being specified that the 29-day package is not prorated (our news item of 5-7-2022).

In a decision of principle, the Conseil d'Etat rules on the application of the purchase price theory to dissolution operations by confusion of assets and liabilities referred to in Article 1844-5 of the Civil Code and placed under the favourable regime for mergers. It ruled that expenses corresponding to latent liabilities of the merged company that are borne by the merging company after the transaction are deductible.

The High Court thus dismisses the application of the purchase price theory in the absence of remuneration paid by the merging company in return for the transfer of the merged company's net assets and in view of the tax neutrality objective of the preferential regime. It recalls that the transfer of the merged company's net assets is carried out at book value and any merger bonus is not taxable.

It is irrelevant that the merging company acquired the shares of the merged company taking into account, at the date of this acquisition, the real value of the latter's net assets, including, if applicable, its off-balance sheet commitments.

The opposite solution adopted by the Montreuil administrative court, overturned by the Versailles administrative court of appeal, is definitively overturned ( TA Montreuil 18-1-2018 no 1701374).

The question of whether or not the purchase price theory applies to asset confusion transactions placed under the common law regime is not decided by this decision.