Special edition LFA Covid 19 : Urgent Tax Measures I Update May 4, 2020

Several payment facilities are offered to businesses to enable them to overcome the financial difficulties related to the health crisis. These measures concern direct taxes (CIT, payroll tax, business tax, property taxes) and do not extend to VAT and other indirect taxes:

• Deferral or Postponement of Payment of Direct Taxes for March and April (and possibly beyond)

Companies may request an extension or a deferral of the taxes due in May 2020 (corporate tax deadlines) until June 30, 2020. The deferral is granted for a period of three months, without penalty or interest, upon simple request made using a form available online (Download the form (PDF) to be completed and sent by email to the Corporate Tax Department (SIE). It is not necessary to provide proof of financial difficulties.

Please note that for large companies and corporate groups (more than 5,000 employees or 1.5 million € turnover), this deferral is only granted in the absence of dividend payments or share buybacks until the end of the year.

• Cancelation of Direct Taxes in Case of Exceptional Financial Difficulties 

Businesses that can evidence that they are experiencing more serious difficulties can apply for a cancelation of their outstanding tax liability using the same form (Download the form (PDF). The cancelation of taxes is exceptional and can only be requested by businesses that are facing financial difficulties that cannot be resolved by deferring or postponing the tax payment deadlines. Supporting evidence would consist of document showing the decrease of sales in 2020 vs. 2019, the cash flow situation, the due dates of other outstanding debts, etc.

• Suspension of Monthly Direct Debit Schemes 

Monthly direct debit contracts for the payment of certain taxes can be discontinued either online www.impots.gouv.fr or by contacting the Centre prélèvement service which is in charge of direct debit schemes. The deferred tax with be settled with the balance on receiving the tax bill, without penalty.

• VAT, Indirect Taxes, Wage Tax Withholding and Excise Duties, not Covered by Payment Facilities

The possibility to postpone the payment of taxes covers direct taxes only and does not extend to VAT, wage tax and other “indirect” taxes. These taxes are to be paid at their usual due dates.

However, simplification measures have been put in place for the calculation of the VAT liability to take account of the difficulties associated with the shutdown (see below).

• Tax Neutrality for Aid Granted by the Solidarity Fund 

These aid granted by the solidarity fund will be exempt from corporate income tax or income tax as well as from all social security contributions.

Refundable tax credits available for 2020 (e.g. R&D tax credit for SMEs) can be claimed immediately before the income tax return for 2019 is submitted (due date 31 May, see below). This facility covers not only tax credits that originated in FY 2019 but also those carried over from previous years.

The refund is to be requested online at impots.gouv.fr by downloading the following forms:

• Tax credit refund application form No. 2573
• Tax credit justification form No. 2069-RCI
• CIT balance statement (Form No.°2572), when the CIT returns have not yet been finalized

The tax offices have been instructed to process refund claims expeditiously (“within days”).

The state of health emergency does not affect the deadlines for filing tax returns. However, the tax authorities are deciding, on a case-by-case basis, to extend the filing deadlines for certain taxes: 

• • The (corporate) income tax returns for the FY 2019 is postponed to 30 June 2020
  • The CVAE-tax declaration (form 1330) is also postponed to 30 June 2020
  • The due date for the CFE-tax declaration (form 1447-M) is 5 May 2020
  • The due date for the 3%- real property tax declaration is 15 May 2020
  • The Corporate Social Solidarity Contribution (C3S) must be declared and paid by 15 May 2020

• Individual income tax returns for 2019 are due by 4, 8 and 11 June 2020, depending on the department of residence

The VAT payable for any given period (month or quarter) cannot be deferred because VAT is not a cost for businesses. However, specific arrangements have been put in place to take account of the practical difficulties which businesses may face as a result of the shutdown in gathering the information needed to prepare the VAT return correctly.

Businesses subject to monthly VAT filing are offered the possibility to either estimate their VAT, make a flat-rate payment on account, and file and pay VAT on real figures later once the state of emergency is over:

• Possibility to Estimate the VAT Liability 

During the COVID outbreak shutdown, businesses are allowed to make use of the system applicable during holiday periods, and estimate the VAT liability and pay this estimated amount on account. Attention should be paid to the fact that under this scenario only a margin of error of 20% is allowed. A higher deviation would result in the payment of penalties.

For an exhaustive description of this possibility, see administrative guidelines Bofip BOI-TVA-DECLA-20-20-10-10  §260 ;

• Possibility to Make a Lump Sum Advance Payment of 80% / 50% of the VAT of Previous Month

Exceptionally and for the duration of the shutdown, the French tax authorities authorize businesses that have experienced a decrease of their sales because of the health crisis to make a flat-rate payment on account and declare the real sales figures and pay the balance once the restrictions have been lifted.

The specific arrangement would in practice work as explained below:

• VAT Declaration Filed in April for March (flat rate of 80% or 50%)
• • The VAT liability can be set at 80% of the VAT for February 2020 (or January 2020);
  • The VAT payment can even be set at 50% of the VAT for February 2020 if the business has been discontinued since mid-March (total closure) or has drastically reduced (by 50% or more). The rate of 50% can be set by reference to the VAT for January 2020 if the VAT liability of March was not based on real figures).
• In practice, the VAT advance payment will be reflected on line 5B of the VAT form and the “Comment” box of the VAT form should be filled in with the reference “Covid-19 advance payment” and the indication of the flat rate (80% or 50%) used 
• VAT Declaration Filed in May for April
• • Same as in April: Payment of 80% or 50% of the VAT paid for February or January, if the shutdown period has been extended and the business cannot determine its VAT liability based on real sales and purchases figures.
• Retroactive Adjustment of VAT Figures 
• • Once the shutdown period is over, the real sales and purchases figures will be retroactively declared and the VAT payment adjusted.
• The VAT adjustment declaration will cumulate the transactions of the month with those of the previous months which were the subject of advance payments. The sum of the advance payments will be reflected on line 2C of the VAT form.

With the shutdown and the restrictions on the public post mail service, businesses are facing difficulties with sending or receiving original paper invoices per normal post mail. The tax authorities allow businesses to scan and send paper invoices via e-mail:

• Possibility to Use Scanned Copies of Paper Invoices Sent by E-mail

Suppliers are allowed to issue invoices in paper form and send them as scanned copies by e-mail to their customers without the need to send the original by normal post. These invoices may be used as supporting documents for the VAT deduction.

These digitized paper invoices do however not become electronic invoices (which are subject to compliance with the strict conditions provide by Article 289, VI CGI).

To guarantee the authenticity of the origin, the integrity of the content and the legibility of these paper invoices, whether or not they are scanned for storage, businesses are reminded of their duty as regard the need for a reliable audit trail.

• Storage of Scanned Paper Invoices 

For the duration of the health crisis, the customer may store the “paper” invoice received by e-mail in PDF format. At the end of this period, it will be the responsibility of the customer to print and store the invoice in accordance with applicable legal provisions.

Businesses also have the possibility to request payment facilities for customs and indirect duties by contacting the customs administration using the specific form available online at

Covid-19 – Formulaire de demande de report de paiement pour les professionnels

Companies subject to a tax audit have certainly received a notification from the tax auditor informing them of the suspension of the audit until the end of the health emergency period. Audit visits will resume as soon as the crisis is over. It is highly unlikely that a tax audit would be initiated or continued during the shutdown although this cannot be absolutely be excluded.

Pursuant to the Government’s Ordinance 2020-306 of 26 March 2020 all time limits or deadlines that expire during the period of the health emergency are suspended. 

All time limits that have not expired before or that start to run from 12 March 2020 have been suspended for a period starting on 12 March 2020 and ending one month after the date of cessation of the state of public health emergency (“legally protected period”).

As the state of health emergency was declared for two months from 24 March to 24 May, the fiscal deadlines are currently suspended until 24 June 2020, subject to an extension. A draft national law adopted by the French Council of Ministers on 2 May 2020 is currently being discussed in Parliament and would provide for a two-month extension of the period of the health emergency until 24 July 2020.

The suspension results in a temporarily interruption of the course of the time limit. The time that had elapsed before the start of the suspension period, is not “erased”. The time count shall resume at the end of the suspension period and the time elapsed before 12 March 2020 shall be added to the time remaining after the end of the legally protected period.

In spite of the multiplicity of possible situations, the suspension measure entails the following practical consequences:

• • All time limitations expiring on 31 December 2020 will be extended by the period of suspension. For instance, the tax authorities will thus have the possibility to audit the FY 2017 und adjust the CIT base until the first months of 2021 (vs. 31 December 2020)

• • All other time limits granted both to the administration and to businesses to act (e.g. time limit for replying to a tax adjustment notification) are suspended

• • All and any time limitation that should have commenced during the protected period shall start to run with the end of the protected period

The time limits for challenging an administrative or court decision in tax matters are not suspended during the shutdown. A special rule has been enacted whereby taxpayers will have the possibility to challenge these decisions within two months from the end of the legally protected period. This results in practice in a deadline extension to file claims or appeals to courts.

According to Government’s Ordinance 2020-306 of 26 March 2020 any act, recourse, legal action, formalities, etc. that should have been initiated during the legally protected period will be deemed to have been done on time if the required action has been initiated within a period that cannot exceed, as from the end of this period, the time limit provided by the statutes for taking action. The action must however be initiated within 2 months of the end of the protected period.

In other words, for the calculation of the time limits for lodging a claim or an appeal, and contrary to the case of suspension outlined above, the period that has elapsed before 12 March 2020 will be ignored. The time limit for the claim or the appeal will start anew after the end of the legally protected period and will run for maximum two months.

For instance, a rejection decision received on 15 February 2020, for which the time limit for lodging a claim before the tax court would normally have expired on 15 April 2020, may be validly challenged until 24 August 2020, in the event that the state of emergency ceases on 24 May 2020. The period running between 15 February and 12 March 2020 will not be taken into account. Since this is a protective measure, the taxpayer may well initiate legal action before the extended deadline expires.

Cancelation of rent bills or rent forgiveness granted to renters between 15 April to 31 December 2020 may be deducted by landlords from their (corporate) income tax base. A similar incentive is available to private landlords.