French General Tax Code
In forceI.-Companies subject to corporation tax or income tax under an actual taxation system may deduct from their taxable income:
1° An amount equal to 125% of the additional capitalised costs, excluding financial costs, directly linked to the installation of equipment, acquired when new, allowing the use of hydrogen or any other decarbonised propulsion as the main propulsive energy or for the production of electrical energy intended for the main propulsion of ships and boats for the transport of goods or passengers and which are assigned to their activity, when the contract for the acquisition of this equipment or the construction of the ship or boat is concluded from 1 January 2020 until 31 December 2024;
2° A sum equal to 105% of the additional capitalised costs, excluding financial costs, directly linked to the installation of equipment, acquired when new, allowing the use of liquefied natural gas as the main propulsion energy or for the production of electrical energy intended for the main propulsion of ships and boats for the transport of goods or passengers and which are assigned to their activity, when the contract for the acquisition of this equipment or for the construction of the ship or boat is concluded from 1 January 2020 until 31 December 2024;
This 2° also applies, under the same conditions, to equipment acquired when new allowing the use of liquefied petroleum gas, compressed natural gas, ammonia, methanol, ethanol or dimethanol, ethanol or dimethyl ether as the main propulsion energy or for the production of electrical energy intended for the main propulsion of ships and boats for the transport of goods or passengers and which are assigned to their activity, when the contract for the acquisition of this equipment or for the construction of the ship or boat is concluded from 1 January 2022 until 31 December 2024;
3° A sum equal to 85% of the additional capitalised costs, excluding financial costs, directly linked to the installation of goods intended for the treatment of sulphur oxides, nitrogen oxides and fine particles contained in exhaust gases, that they acquire when new from 1 January 2020 until 31 December 2024, with a view to installing them on a ship in service to improve the level of environmental requirements with regard to at least one of the following two criteria:
- a level of emission of sulphur oxides lower than that set out in regulation 14 of Annex 6 to the International Convention for the Prevention of Pollution from Ships or, where the ship is subject to it, by Directive (EU) 2016/802 of the European Parliament and of the Council of 11 May 2016 relating to a reduction in the sulphur content of certain liquid fuels;
> - an emission level of nitrogen oxides below that corresponding to Tier III as defined in paragraph 5.1 of regulation 13 of Annex 6 to the International Convention for the Prevention of Pollution from Ships.
This 3° also applies to the goods mentioned in the first paragraph, acquired new from 1 January 2020 until 31 December 2024, with a view to installing them on a goods or passenger transport vessel, if these goods make it possible to improve the level of environmental requirements with regard to the levels of pollutant emissions defined by Regulation (EU) 2016/1628 of the European Parliament and of the Council of 14 September 2016 on requirements concerning emission limits for gaseous and particulate pollutants and the type-approval of internal combustion engines to be installed in non-road mobile machinery, amending Regulations (EU) No 1024/2012 and (EU) No 167/2013 and amending and repealing Directive 97/68/EC.
4° A sum equal to 20% of the original value, excluding financial costs, of goods intended to supply electricity during a port of call via the terrestrial network or by means of auxiliary engines using liquefied natural gas or a low-carbon energy source, which they acquire when new, from 1 January 2020 until 31 December 2024, with a view to installing them on a ship or boat in service.
>This 4° also applies to the purchase of equipment for the supply of electricity during a port of call via the terrestrial network or by means of auxiliary engines using liquefied natural gas or a low-carbon energy source. This 4° also applies to goods intended to supplement the main propulsion of the ship or boat with a low-carbon propulsion system, acquired when new, from 1 January 2022 until 31 December 2024. For these assets, the rate of deduction is increased to 85% of their original value, excluding financial costs.
1° to 4° of this I apply to commercial ships flying the flag of one of the Member States of the European Union or of another State party to the Agreement on the European Economic Area as well as to goods or passenger transport vessels navigating inland waters within the meaning of Article L. 4000-1 of the Transport Code and, where applicable, to those navigating at sea under the conditions set out in Article L. 4251-1 of the same code.
The additional costs, excluding financial costs, directly linked to the installation of the equipment mentioned in 1° and 2° of this I are determined by the difference between the original value, excluding financial costs, of this equipment and the original value, excluding financial costs, of similar equipment that would have allowed the use of heavy fuel oil or marine diesel as the main mode of propulsion or for the production of electricity intended for the main propulsion of the freight and passenger ship or boat in question.
The additional costs, excluding financial costs, directly linked to the installation of the assets mentioned in 3° of this I are determined by the difference between the original value, excluding financial costs, of this equipment and the original value, excluding financial costs, of the similar equipment that would have had to be installed on the ship in question in order to comply with regulation 14 of Annex 6 to the International Convention for the Prevention of Pollution from Ships or, where the ship is subject thereto, with the provisions of the aforementioned Directive (EU) 2016/802 of the European Parliament and of the Council of 11 May 2016, or with Tier III nitrogen oxide emissions in accordance with the stipulations of paragraph 5.1 of regulation 13 of Annex 6 to the International Convention for the Prevention of Pollution from Ships or, for a goods or passenger vessel, to comply with Regulation (EU) 2016/1628 of the European Parliament and of the Council of 14 September 2016 referred to above.
For the calculation of the deduction provided for in this I, the amount of the additional capitalised costs referred to in 2° shall be retained up to a limit of €15,000,000 per ship or boat and the amount of the additional capitalised costs referred to in 3° and the original value of the assets referred to in the second paragraph of 4° shall be retained up to a limit of €10,000,000 per ship or boat.
II - The deduction is spread on a straight-line basis from the time the assets are brought into service over their normal useful life. If the asset is sold or replaced before the end of this period, the company is only entitled to deduct the amounts already deducted from income on the date of sale or replacement, which are calculated pro rata temporis.
III. III. A company that leases a new asset as referred to in I, under the conditions set out in 1 of article L. 313-7 of the Monetary and Financial Code as part of a leasing contract or a lease with a purchase option, entered into between 1 January 2020 and 31 December 2024, may deduct an amount equal to 125% of the additional investment costs in the case of the equipment mentioned in 1° of I, 105% of the additional investment costs in the case of equipment mentioned in the first paragraph of 2° of I, 85% of the additional investment costs in the case of an asset mentioned in the first paragraph of 3° or 20% of the original value, excluding financial costs, in the case of an asset mentioned in 4° of I, at the time the contract is signed. It may also deduct an amount equal to 105% of the additional investment costs if it concerns equipment mentioned in the second paragraph of 2° of I, when it leases a new asset mentioned in the same I under the conditions provided for in 1 of Article L. 313-7 of the Monetary and Financial Code, as part of a leasing contract or lease with purchase option, entered into from 1 January 2022 until 31 December 2024. The company may deduct an amount equal to 85% of the original value, excluding financial costs, of the assets mentioned in the second paragraph of 4° of I of this article, when it leases a new asset mentioned in the same I under the conditions provided for in 1 of article L. 313-7 of the French Monetary and Financial Code, as part of a leasing or rental agreement with a purchase option, entered into between 1 January 2022 and 31 December 2024. This deduction is spread pro rata temporis over the normal period of use of the asset from the date of commencement of the lease. If the lessee or tenant acquires the asset and meets the conditions, it may continue to apply the deduction. In the event of the sale or termination of the leasing or hire-purchase contract or the sale of the asset, the deduction is only acquired by the company to the extent of the amounts already deducted from profit or loss at the date of the sale or termination, which are calculated pro rata temporis.
The additional investment costs of the equipment mentioned in 1°, 2° and 3° of I as well as the original value of the assets mentioned in the second paragraph of 4° of the same I leased under a finance lease or a lease with a purchase option are determined in accordance with the conditions set out in the last three paragraphs of I.
The company that gives the asset as an asset under a finance lease or a lease with a purchase option is the owner of the asset. A company that leases or rents an asset with a purchase option may make the deductions referred to in I above, subject to the following conditions being met:
1° The lessee or lessee has opted for the regime provided for in Article 209-0 B;
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2° the tax advantage provided by the deductions made under this article is passed on in full to the lessee or lessee company in the form of a reduction in rent granted at the same time and at the same rate as that at which the deduction is made.
IV. IV -At the request of the tax authorities, the taxpayer must produce any document approved by the authorities responsible for maritime transport, certifying that the condition set out in the eleventh paragraph of I has been met.
V -If one of the conditions set out in the eleventh paragraph of I has been met, the taxpayer must produce any document approved by the authorities responsible for maritime transport. V.-If one of the conditions set out in I to IV ceases to be met during the normal period of use of the vessel as set out in II and III, the taxpayer loses the right to the deduction set out in I and III and the sums deducted during the financial year and previous financial years are added back to the taxable income of the company that benefited from them for the financial year during which this event occurs.
VI. - The benefit of the deduction is subject to compliance with Article 36 of Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty.
