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Immediate refund of “carry-back” credits : 3rd Amending Finance Act 2020

New Insight
7 January 2021

France : Immediate refund of “carry-back” credits : 3rd Amending Finance Act 2020 – Article 5

During this time of preparation of 2020 financial statements, we believe it’s important to refer back to a mechanism that has sometimes been neglected and was last brought to light last July 23rd with the adoption of the 3rd Amending Finance Law for 2020 in its Article 5.

As a reminder, the “carry back” mechanism allows companies that are subject to Corporate Income Tax (CIT) to reduce the impact of a loss-making year by deducting it from previous profits, thus generating a tax credit in return for the recognition of an exceptional income.

This “carry back” receivable can be used to pay CIT over the five fiscal years following the closing of the fiscal year in which the option was exercised, and if not offset during this period, it will finally be reimbursed to the company. It should be noted that once it has become refundable, the credit may also be used to pay other types of taxes (e.g. VAT).

The reform of tax losses carried forward for fiscal years ending on or after September 21st, 2011, introducing a ceiling of €1 million plus 50% of the profit exceeding this threshold, has significantly reduced the attractiveness of the tax loss carry back mechanism by limiting both the profit to be carried forward to the sole previous fiscal year and to the €1 million base limit.

It should be noted that the attractiveness of this scheme is all the more limited in tax-consolidated groups as the imputation profit is limited to €1 million, regardless of the number of consolidated subsidiaries.

In the context of the health crisis linked to COVID 19, the legislative objective to provide direct support to companies’ cash flow has resulted in Article 5 of the 3rd Amending Finance Act now allowing companies to request immediate early repayment of their carry-back credit (without waiting for the 5-year period to expire). This optional temporary measure must be exercised as soon as the 2020 financial statements are closed and no later than the deadline for filing the annual income tax statement (May 19th, 2021).

From an accounting point of view, resulting income must be recorded during the loss-making year. From a tax point of view, as the income is not taxable, it will be mentioned in cell ZI and deducted in cell XG of form n°2058-A of the annual tax return. The amount of the fiscal year’s deficit carried back must be indicated in cell ZL in order to implement the option for the regime.

In addition, the specific form n°2039 SD “carry back of deficits” allows for determining the receivable credit, it must be filed at the same time as the CIT balance statement of the fiscal year. The request for reimbursement is done by means of form n°2573-SD “request for reimbursement of tax credits”.

It will be necessary to be vigilant at the time of the 2020 financial statements closing, whether to apply or not this updated mechanism according to the tax situation of each company, without however forgetting the “carry back” receivables recorded during the last 5 previous financial years.

Primexis’ Real Estate Department is at your disposal to assess the attractiveness of this measure in light of any asset impairments recorded or rental waivers granted, generating an exceptional tax loss for this 2020 financial year.


Daniel Wickers




Nurettin Talic





Selim Boutaleb






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