On the 18th November 2016 the Amending Finance Bill for 2016, known as Projet de loi de finances rectificative pour 2016 (PLFR), was presented by the government and submitted to the National Assembly.
The key measures of the Bill regarding individual taxation are summarised below.
Subscriptions into innovative SMEs
In order to encourage business angels to reinvest their capital gains into new companies, a specific tax regime is introduced with respect to subscriptions made into innovative small and medium-sized enterprises. Under the "SME innovation savings plan", compte PME innovation, CPI, capital gains from certain sales of shares will be exempt from individual income tax if, and as long as, they are reinvested into new innovative SMEs. All capital gains and losses made within this savings plan will be added and taxed when the plan is no longer applicable. However, social security contributions continue to apply and will be immediately levied by the bank upon the realisation of the capital gains (article 21 of the Bill).
Net wealth tax
Several provisions are introduced to specify the scope of the net wealth tax exemptions applicable to shares held by employees or executives, in order to avoid abusive arrangements. In particular, the exemption of shares held by taxpayers in their own company will be limited to the value of the shares corresponding to the value of the underlying business assets, excluding private assets contributed by the taxpayers to their company (article 20 of the Bill).
Sanctions for failure to report foreign assets
Following a decision given by the Constitutional Court on 22 July 2016, the existing proportional fines applicable to taxpayers who failed to report their foreign assets (bank accounts, life insurance contracts or trusts) are abolished. However, the existing lump-sum fines remain applicable and may, in particular, be applied where the income derived from foreign assets is reported but not the foreign assets themselves. The penalty applicable in the case of a tax reassessment is increased to 80 per cent of the additional taxes on the unreported foreign income (article 32 of the Bill).