Recent Senate discussions have shaped the revenue aspects of the 2025 state budget, introducing a surtax on large corporations and adjustments to the research tax credit. Aimed at generating significant revenue, the surtax will affect around 450 companies. Additionally, a tax on major maritime freight firms and an increase in GAFAM taxation were approved. Senators also debated the research tax credit, proposing revisions to enhance efficiency and curb potential abuses, while extending the innovation tax credit.
The recent discussions among senators have significantly influenced the ‘revenues’ aspect of the 2025 state budget proposal. Key topics included a surtax on major corporations, the taxation of GAFAM, and the revision of the research tax credit.
As the government faces the possibility of a motion of censure next week regarding the Social Security budget, senators have remained focused on advancing the finance bill.
Among the pivotal measures approved is a surtax aimed at large corporations, projected to contribute 8 billion euros to the state budget in 2025 and an additional 4 billion euros in 2026. This tax targets around 450 companies that earn over one billion euros in revenue in France, manifesting as an increased corporate tax rate, which is set to be halved in 2026 before being eliminated.
Given the public deficit exceeding 6% of GDP this year, this tax is viewed as a ‘necessary evil’ by Budget Minister Laurent Saint-Martin, despite its contradiction to the supply-side policies established since 2017. Prime Minister Michel Barnier assured that the government would continue to support businesses, especially amidst the ongoing trade disputes.
Additionally, senators have sanctioned a special tax on major maritime freight companies, primarily impacting CMA CGM, with anticipated revenues of 500 million euros in 2025 and 300 million euros in 2026, according to Laurent Saint-Martin.
In a surprising move against the government’s stance, senators raised the tax on GAFAM from 3% to 5% and approved an amendment allowing the state to allocate 2% of EDF’s capital for employee ownership.
Intense Discussions on the Research Tax Credit
Despite spirited debates, senators approved a provision delaying the elimination of the CVAE, a production tax on companies, for three years. There was substantial discussion surrounding the research tax credit (CIR), which is highly regarded by industrialists but criticized by others for potential misuse. The government aims to refocus this credit to cut expenses.
Senate budget rapporteur Jean-François Husson (LR) highlighted the CIR as a significant tool but suggested revising its base, excluding certain expenses, and increasing tax on patent revenues—aiming for a yield of approximately 400 million euros. However, government and opposition amendments have diluted his proposal, leading Husson to remark to AFP that there is little substance left, emphasizing the need for savings and fairness in the system.
Economy Minister Antoine Armand cautioned against excessively burdening the CIR, as it could undermine France’s attractiveness in the research sector. In a surprising turn, centrist senators introduced an amendment that narrowed the CIR’s scope for firms lacking production units in France or the EU.
Senators also extended the innovation tax credit for an additional three years, albeit with a reduction in its rate from 30% to 20% starting in 2025. Against the government’s recommendations, the upper chamber adopted amendments from centrist and left-leaning senators aimed at combating tax fraud, including stricter penalties for advisors facilitating fraud and requiring tax administration approval for cross-border transactions among multinational subsidiaries.
The examination of the ‘revenues’ section in the Senate will continue through the weekend, with nearly a thousand amendments scheduled for discussion.