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Reinvestment Incentive Article 6 of the second amending finance law for 2012 creates in article 235 ter ZCA (new) of the General Tax Code, an additional contribution to corporation tax on the amounts distributed. The contribution is equal to 3% of the amounts distributed. Its objective is to encourage companies to reinvest profits rather than distribute them to shareholders.
French or foreign companies or organizations liable to corporation tax in France (excluding UCITS for the dividends they pay to their shareholders and micro, small and medium-sized enterprises) are subject to this additional contribution, for the amounts they distribute within the meaning of Articles 109 to 117 of the General Tax Code.
Additional Contribution to Corporate Tax on Distributions:-
For distributions paid before September 1, 2012, an additional contribution to the corporate tax must be paid spontaneously before December 15. Article 6 of the second amending finance law for 2012 introduces this contribution to encourage companies to reinvest profits instead of distributing them to shareholders.
Scope and Payment of the Contribution:-
French or foreign companies and organizations liable to corporation tax in France, excluding certain entities such as UCITS and micro, small, and medium-sized enterprises, are subject to this additional contribution on the amounts they distribute according to the General Tax Code. However, there are exceptions, such as distributions between companies within the same group.
For foreign companies generating profits in France that are deemed to be distributed, the contribution is calculated based on the amounts that cease to be available to French operations. In most cases, the contribution is paid spontaneously along with the first corporate tax installment following the month of distribution.
An exception to the payment schedule is made for distributions made before September 1, 2012. In such cases, the contribution is paid spontaneously when the corporation tax installment is due on December 15, 2012.
It is important to note that there has been an update regarding a separate social contribution, which is not directly related to corporation tax. This social contribution amounts to 3.3% of the corporation tax and is not applicable to companies with a turnover of less than €7,630,000 (excluding taxes).