Exceptional and temporary “carry-back” scheme: option until end of september 21

Exceptional and temporary “carry-back” scheme: option until end of september 21

Exceptional and temporary “carry-back” scheme: option until end of september 21 800 533 Exponens International

Exceptional and temporary “carry-back” scheme: option until end of september 21

Published on 10/09/2021

The new tax bill for 2021, definitively adopted on July 12, 2021, exceptionally and temporarily modifies the system of the carry-back. The scheme is only available to corporate income taxpayers and imposes no limit on the amount of loss carry-forward. The text provides that:

The new tax bill for 2021, definitively adopted on July 12, 2021, exceptionally and temporarily modifies the system of the carry-back. The scheme is only available to corporate income taxpayers and imposes no limit on the amount of loss carry-forward. The text provides that:

  • the 1st deficit recorded for a fiscal year ending between June 30, 2020 and June 30, 2021 can, on option, be charged against the profits of the 3 previous fiscal years (2019, 2018 and 2017 for a company closing on December 31);
  • this deficit can be charged without limitation of amount (non-application of the limit of 1m€ in the common law); on the other hand, the profits of imputation must be determined under the usual conditions (it is the declared taxable profit which was subjected to the French corporate income tax, excluding the fraction of this profit which was distributed, and which was paid with other tax credits);
  • the option can be made until September 30, 2021, including for fiscal years already ended in the period (June 30, 2020 – June 30, 2021);
  • the amount of the carry-back is determined using the corporate income tax rate applicable to fiscal years beginning on or after January 1, 2022 (i.e. mainly 25%).

This bill can also be applied to integrated groups in respect of the group’s deficit recorded over the same period (June 30, 2020 – June 30, 2021).

The carry-back claim will be used as commonly applied before the tax bill. Thus, the carry-back claim could be used to pay the corporate income tax due for the next five fiscal years, the fraction of the claim not used at that time will be reimbursed to the company at the end of this period. In addition, companies will always have the possibility to monetize this claim in advance, via banks for example.

The option for companies to request early refund of their remaining carry-back claim, as introduced by the 3rd tax bill 2020, has not been renewed.

Companies will have to determine before September 30, 2021 whether such an option is favourable. If you are concerned by this temporary carry-back regime, contact us in order to file a corrective return with the option!