French General Tax Code
In forceI.-Companies subject to corporation tax or income tax according to a real taxation system may deduct from their taxable income a sum equal to 40% of the original value of assets excluding financial expenses, allocated to their business and which they acquire or manufacture from 15 April 2015 until 14 April 2017 when these assets can be depreciated according to the system provided for in Article 39 A and they fall into one of the following categories:
1° Equipment and tools used for industrial manufacturing or processing operations;
2° Handling equipment;
3° Installations intended for water purification and atmospheric purification;
4° Installations producing steam, heat or energy with the exception of installations used as part of an electrical energy production activity benefiting from the application of a regulated tariff for the purchase of production ;
5° Equipment and tools used in scientific or technical research operations;
6° Structural elements, equipment and tools used in cable transport operations and in particular by means of ski lifts within the meaning of article L. 342-7 of the Tourism Code regardless of the depreciation method used for the said structural elements, equipment and tools. The deduction referred to in the first paragraph above also applies to assets acquired or manufactured until 14 April 2017. Where the ski lift is acquired or manufactured under a leasing contract, the deduction is taken by the leaseholder;
7° Installations, equipment, lines and cabling for fibre optic electronic communications networks that are not the subject of aid paid by a public entity. These assets are eligible for the deduction regardless of how they are depreciated. In the event of the transfer of rights of use relating to the assets mentioned in the first sentence of this 7°, the amount of eligible investments is equal to the difference between the total amount of the investments made, excluding financial costs, and the amount giving entitlement to the deduction of the rights of use transferred to a third company. By way of derogation from the first paragraph of this I, companies holding a right of use relating to these assets may deduct a sum equal to 40% of the amount invoiced for this right of use for the portion relating to the acquisition or manufacturing price of the assets, including by way of derogation from the first sentence of this 7°, when these assets form part of networks that have been the subject of aid paid by a public entity. By way of derogation from the same first paragraph, the deduction applies to the goods mentioned in this 7° which are acquired or manufactured by the business as from 1 January 2016 and until 14 April 2017 and to the rights of use of the goods acquired or manufactured during the same period which are the subject of a transfer before 15 April 2017;
8° Software which contributes to industrial manufacturing and processing operations. By way of derogation from the first paragraph of this I, the deduction applies to the assets mentioned in this 8°, regardless of their depreciation methods;
9° Computing equipment intended for use within a computer rack acquired or manufactured by the business and machines intended for intensive computing acquired on an integrated basis, from 12 April 2016 until 14 April 2017. Notwithstanding the first paragraph of this I, the deduction applies to the assets mentioned in this 9°, regardless of their depreciation methods.
The deduction also applies to the goods mentioned in this I that have been the subject, before 15 April 2017, of an order accompanied by the payment of instalments of an amount at least equal to 10% of the total amount of the order and the acquisition of which occurs within a period of twenty-four months from the date of the order.
The deduction is spread on a straight-line basis over the normal useful life of the goods. If the asset is sold before the end of this period, it is only acquired by the company to the extent of the amounts already deducted from income on the date of sale, which are calculated pro rata temporis.
A business that leases a new asset mentioned in the first paragraph of this I under the conditions provided for in 1 of Article L. 313-7 of the French Monetary and Financial Code under a leasing contract or under a hire purchase agreement may deduct an amount equal to 40% of the original value of the asset, excluding finance costs, at the time the contract is signed. These contracts are those entered into from 15 April 2015 until 14 April 2017 for the assets mentioned in 1° to 6° and 8° of this I, from 1 January 2016 until 14 April 2017 for the assets mentioned in 7° and from 12 April 2016 until 14 April 2017 for the assets mentioned in 9°. This deduction is spread over the period mentioned in the twelfth paragraph of this I. If the lessor or lessee acquires the asset, it may continue to apply the deduction. The deduction ceases as from the sale or termination by it of the leasing or hire purchase option contract or the asset and cannot be applied to the new operator.
The company that leases or rents the asset with a purchase option may not apply the deduction mentioned in the first paragraph.
II.-The cooperative members of agricultural equipment use cooperatives and cooperatives governed by 2°, 3° and 3° bis of 1 of the article 207 of this code may benefit from the deduction provided for in I of this article in respect of goods acquired, manufactured or leased or rented with a purchase option by these cooperatives from 15 October 2015 to 14 April 2017, on the one hand, in respect of goods allocated exclusively to exempt operations, and on the other hand, in respect of goods allocated both to exempt operations and to taxable operations in proportion to the turnover of the exempt operations in relation to the total turnover.
Each cooperative member may deduct a share of the deduction, thus determined equal to the proportion:
1° Either of the use he makes of the asset, in the case of cooperatives for the use of agricultural equipment;
2° Or of the number of shares he holds in the capital of the cooperative, in other cases.
In the case of agricultural equipment cooperatives, the proportion of use of an asset by a cooperative member is equal to the ratio between the amount of expenses allocated to that cooperative member by the cooperative in respect of the asset and the total amount of expenses borne by the cooperative during the financial year in respect of the same asset. This ratio is determined by the cooperative at the close of each financial year.
The share is deducted from the profit for the financial year of the cooperative member during which the cooperative closed its own financial year.
Cooperatives for the use of agricultural equipment, cooperatives governed by 2°, 3° and 3° bis of 1 of article 207 of this code and cooperative members are required to produce, at any request from the administration, the information necessary to justify the deduction made.
