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Competitiveness of French Economy Post Covid

New Insight
19 February 2021

France’s Post Covid €100 billion Recovery Plan

On September 3, 2020, the French government unveiled the country’s new €100 billion economic stimulus package. The ground breaking recovery plan is designed to « relaunch » the French economy after the economic shock of lockdowns and paralysis caused by the Covid 19 pandemic, and is based long-term investments replacing emergency crisis funding.

Although France is now experiencing its 2nd wave of the pandemic and the French economy is waiting on the relief from the roll-out of a its national vaccination program….the € 100 billion stimulus package is already planning for that future.
This series looks at the three central investment initiatives contained in the recovery plan : 1 « greening the economy », 2 « increasing the competitiveness of the French economy », and 3 « increasing employment ».

Part 2 : « Increasing Competitiveness of French Economy »

Importantly, the recovery plan puts the government’s pro-business efforts back on track, with structural reforms planned by the government to further improve the competitiveness, attractiveness and productivity of the French economy.

€ 34 billion has specifically been earmarked to reinforce the competitiveness and resilience of the French economy.

« Key measures will include a massive reduction of taxes on business (€10bn per year), measures to reinforce own funds of businesses, investments in innovation and in the resilience of the French industry especially to secure critical supplies. »

Included in this package are :

€ 10bn in annual permanent reduction of taxes on businesses (20bn € over 2021-2022) ; The most important of these production taxes are the property tax on built-up properties and the territorial economic contribution (CET), composed of the corporate property tax (CFE) and the value added tax (CVAE).

Announced to take effect in 2021 are :
• A 50% reduction in the CVAE for all companies corresponding to the elimination of the regional share of this tax.
• A 50% reduction in property taxes for industrial companies
• The lowering of the CET cap rate from 3% to 2%. Currently companies can cap the CET at 3% of the value added.

€ 1bn to favour the relocation of industrial production in France (600M€ dedicated to investments in five strategic sectors and a 400M€ fund to support industrial projects in France);

€ 11bn commited to investments in key technologies through the Programme d’investissements d’avenir (PIA – 20bn€ in total over 2021-2025);

€ 3bn to strengthen the equity capital of SMEs/VSEs and mid-size companies.

* As proposed, all the tax measures of the economic stimulus plan will be included in the 2021 French Finance Bill. We at Primexis will keep you informed as soon as we have more detailed information on the reduction mechanisms to be implemented.

To learn more, contact our IBS Team 

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