2018 experts news - groupe cofimé · 2018-01-05 · experts news - international desk newsletter...

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EXPERTS NEWSInternational Desk Newsletterof GROUPE COFIMÉ

CONTENTSS.2> INVESTING:France increasingly attractive

S.3> DEMATERIALISATION:Electronic invoices: what issues are at stake?

S.4> SOCIAL:Posted workers: checks and counter-fraud measures

S.5> SOCIAL:Labor law: an in-depth reform

S.6> TAXATION:The notion of „mixed domicile“ couples in tax law

In May last, the French people elected a new President of the Republic in the person of Emmanuel Macron. How will this President, elected on the basis of an economic programme qualified as liberal and fairly favourable to companies, satisfy the expectations of corporate managers?

When presenting his economic and social programme his main focus was on improving the competitiveness of companies on the international front, the need to reduce unemployment levels and reinforcement of the attractiveness of France to draw in more foreign investors.

A certain number of measures already in force or about to take effect in the next few months have resulted from these objectives.As a result, the decrease in contributions by companies embarked upon by the previous government is to continue. The tax credit for company competitiveness introduced in 2013 to reduce the cost of labour is to continue to apply until 2018 and then be transformed into permanent reductions in social contributions. Similarly, the gradual decrease in corporate income tax, voted in by the 2017 Finance Act and expected to reduce the rate to 28%, will be speeded up to reach a level of 25% by 2022.

Another major project announced was the reform of the Labour Code to give employment a boost and make the labour market

more flexible. This reform was put in place very swiftly by means of official Orders signed on 22 September.

These Orders contain a number of measures, the most significant of which concern

the possibility of negotiating directly with company employees (in companies under 50 employees) without trade unions, a ceiling applied to labour tribunal indemnities in the event of a dispute with an employee, a reduction in employee appeal timeframes, merger of the various employee representation bodies, recognition of the economic difficulties of groups making employees in France redundant only on a nationwide rather than worldwide level, leniency for technicality flaws, etc..

To encourage risk taking, taxes on capital, which rose significantly during the previous period of government (in some cases taxed at a rate of close to 60%), have also been reformed. Income from capital investments will now be subject to tax at a flat rate of 30% which is within the average for Europe.

Finally, the most unpopular reform undertaken up to now from a public opinion standpoint is undoubtedly the elimination of the solidarity tax on wealth (ISF) as this is a symbolic issue. This reform was guided by the idea that preference should be given to investment in economic activities in industrial, commercial, artisanal, agricultural or professional service sectors to the detriment of rental income situations symbolised by property investment. However, this idea has led to a partial reform as the ISF has been replaced with a new tax called the Wealth Tax on Property (IFI) to be applied to property not attributed to an economic activity. However, one might legitimately ask the question as to whether the property sector as a whole does not participate in economic development.

#6January2018

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Alain MAHLER,Chartered accountant and auditor, GROUPE COFIMÉ associate: [email protected]

For further information:

EDITORIAL

How the Government is reforming France

EXPERTS NEWS - International Desk Newsletter of GROUPE COFMÉ

www.hlb-groupecofime.com

> INVESTING:

France increasingly attractive

Europe’s third most attractive nation for international investors, France has seen a significant rise in the number of foreign investment projects in the country: 779 in 2016 compared with 598 in 2015.This is the highest increase across the ten most attractive countries in Europe (+30%, compared with 12% for Germany and +7% for the United Kingdom). Moreover, France is still the leader among European countries for the highest number of industrial and logistics sites. Among the plus points of France, innovation was apparently quoted the principal competitive

benefit for half of the decision-ma-kers surveyed, followed by its appeal to tourists and the quality of its infras-tructures.In parallel, France’s image abroad continues to progress and has reached its pre-crisis level (73% of favourable opinions compared with 64% in 2014). In particular, it is gaining in popularity with international investors without facilities in France (61% consider the country attractive). And, while the ef-fects of Brexit on British investment in France do not seem as fast as for other European capitals, the city of Paris and Paris Europlace have seen the installa-

tion of asset management companies and the relocation of companies with the promise of jobs.

France offers a number of advantages, often underscored by foreigners who choose to invest, travel, study or live in the country: well-developed in-frastructures and networks, setting France at the heart of the European economy; competitive energy prices; qualified, productive personnel; a sense of creativity and modern design; a rich, diversified cultural offering; an efficient, affordable healthcare sys-tem and top-quality university trai-ning. All of these strong points attract foreigners to France.

Specifically, in terms of innovation, the taxation system applied to re-search and development activities makes France even more attractive to foreign investors who see in this an additional financial plus point. The tax credit scheme for research initially targets companies or sectors of acti-vity dedicated to research and deve-lopment of an innovative nature. The rate meets 30% of eligible expenses. Over the years it has been extended to take in collection expenses in the textile and clothing sector, also at a rate of 30%, and innovation expenses more specifically targeting new pro-duct prototypes and pilot installa-tions, at a rate of 20%.On principle, the tax credit scheme reduces the amount of tax paid. It may give rise to reimbursement if it exceeds the annual amount of tax, for new companies in particular - for four years, new innovative companies with 15% of their expenses made in the research and development sector - for eight years, and small and medium-sized companies defined as per EU stipulations.

Jérôme BERNARD,Chartered accountant, GROUPE COFIMÉ associate: [email protected]


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In 2015, to modernise the economy and gain in efficiency, security and productivity, the Authorities made a commit-ment to ensure public players dematerialise their docu-ment flows. Therefore, in the context of public contracts, companies in the private sector that work for French public entities are required to dematerialise the invoices. Applica-tion of this obligation will be staggered between 2017 and 2020, according to the size of companies.

Another law, the “Macron Act”, has even defined the obli-gation for companies in the private sector to accept elec-tronic invoices in line with the same calendar. However, as no valid Decree has been issued, this point of law cannot currently be applied.

With regard to official Order 697-2014 dated 26 June, 2014 and Law 2015-990 dated 6 August, 2015, stipulating that invoices exchanged between public entities and their sup-pliers must be dematerialised between now and 2020, de-

materialisation has become an issue for organisations. Even though the change is to be implemented in stages for the near future, organisations are facing 3 challenges.

First of all, tax requirements have been adapted to this change and, while adhering to the principles of content authenticity, integrity and readability, the Authorities have adopted three methods to ensure the security of the invoices received1; invoices received in electronic format based on a technical solution, invoices with an advanced electronic signature procedure and messages structured according to an agreed standard (EDI). Depending on the technical solution chosen, the Authorities require checks and retention obligations, ranging from a “qualified” si-gnature to a reliable “audit trail”. The issue at stake for the company is VAT deduction eligibility2.

Secondly, this regulatory constraint enters into a logic to seek efficiency as invoice dematerialisation generates a significant reduction in the processing costs of selling and buying processes. As a result, automation enables the time devoted to an invoice to be reduced (receipt, input, reconciliation, etc.) by around 59 to 64%3.

Finally, this solution makes for improved security as there is less human, less regular involvement and more precise steering of flows, notably thanks to market workflow tools. For stakeholders, this dematerialisation ensures the traceability of documents, their content and the checks carried out. This approach also guards against the risk of fraud thanks to improved internal control.

Our experience with support for the implementation of dematerialisation projects often shows that considerable participation is required of the organisation. This is why, apart from support from experienced consultants, an em-phasis must be put on sponsoring and the involvement of line management, communication and collaboration with the IT Department.

In light of this challenge, the most agile organisations will be those that transform this regulatory constraint into a veritable opportunity for change and greater performance efficiency.

1General Tax Code Art. 289 VII, BoFIP-TVA-DECLA-30-20-30-10-18/18/10/20132BoFIP-CF-COM-10-10-30-106 !290628/05/201432016 Billentis Report - “E-invoicng / E-billing –Digitalisation & automation”

> DEMATERIALISATION:

Electronic invoices: what issues are at stake? What is the timescale?

Alexandre ASTIER,Chartered accountant and auditor, GROUPE COFIMÉ associate: [email protected]


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> SOCIAL:

Reinforcement of measures to counter illegal posting

Until the amendment to the 1996 European Directive has been issued, France is continuing to reinforce the obliga-tions of foreign companies posting employees to France. The objective is to counter social dumping.

Since 1 July, 2017, a French company using the services of a foreign company will be liable to an administrative fine of €2,000 per employee concerned if it fails to comply with any of the following obligations:

✓ Obligation of vigilance regarding posting: the pro-ject owner or principal must check with both direct and indirect subcontractors for the existence of a prior declaration of posting.

✓ Obligation to declare all work accidents: the project owner or principal must declare a work accident suf-fered by a subcontractor’s employee.

✓ Obligation to display: labour regulations must be displayed on worksites in the language of posted workers;

Furthermore, from 1 January, 2018, at the latest, any foreign company posting workers to France must pay a contribution to the State of €40 per posting declaration. Payment is to be made via a remote payment system when the electronic posting declaration is transmitted by the SIPSI online service.

Should the foreign company fail to pay, the contribution will be due by the project owner or principal.

These requirements are particularly cumbersome for com-panies generally providing services in border zones or frequently providing short-term services in France. The Government had the intention of adapting legislation to take these special situations into account. Measures have not yet been taken in this respect.

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Anne-Claire BATT,Legal Advisor: [email protected]




Five Orders were issued on 22 September, 2017, to imple-ment an in-depth reform of individual and collective la-bour relations.

Below is a summary of some of these symbolic measures.

✓ Employment contract termination safeguards

A mandatory schedule of damages to be applied by judges in the event of redundancy without any actual, serious cause will give employers greater visibility over potential legal action. The current period for disputing the grounds for redundancy is one year, irrespective of the grounds for termination. However, longer prescription periods still apply for other proceedings, notably ones relating to back pay, compensation for discrimination or harassment.

Furthermore, the Order simplifies economic redundancy procedures by reducing the coverage area to France for assessment of the economic grounds and the obligation for reclassification in international groups.

In addition, a specific status has been created for the vo-luntary departure scheme in the form of “agreed collec-tive termination”. This termination method may be imple-mented by a majority collective agreement, validated by the Work Inspectorate.

As a counterpart to these restrictions, the amount of redundancy compensation to be paid to the employee on termination of the contract has been revised slightly upwards.

✓ The creation of a unique personnel representation committee

By 31 December, 2019, a new body, the “Social and Econo-mic Committee” (SEC), must have replaced former person-nel representation bodies consisting of the Works Council, Personnel Representatives and Health & Safety Commit-tee. When there are over 50 employees, the SEC will adopt legal personality and will have its own budget.

Social partners may also decide to entrust this committee with collective agreement negotiation and decision-ma-king authority in order to introduce greater joint decision-making in the company. This is a new measure in France, inspired by the German “Betriebsräte”, the implementa-

tion of which in France is still uncertain.

✓ Reinforcement of collective negotiation at company level

As an extension of recent labour law reforms, several mea-sures have been taken to foster collective negotiation: • Facilitated conclusion of an agreement in companies with no trade union representatives; • An employer may have the company’s employees validate a minority agreement by holding a referendum; • A company agreement takes precedence over a sec-tor-specific agreement on most collective negotiation sub-jects.

✓ Modification of recourse to the use of certain speci-fic forms of work

Under certain conditions, easing of measures is planned for companies that have recourse to remote work, fixed-term or temporary contracts, worksite or mission contracts and night work, as well as for start-ups using on-loan not-for-profit labour.

> SOCIAL:

Labour law: an in-depth reform

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Anne-Claire BATT,Legal Advisor: [email protected]


> TAXATION:

The notion of “mixed domicile” couples in tax law: problems and issues at stake

It is becoming increasingly frequent for one of a couple to be working and living in a different country to their spouse. This situation may lead to complex situations, concerning taxation of the spouses’ income in their respective countries.

1. Determination of the tax domicile of spouses

Before 1983, the “head of the family” notion prevented the domicile of a couple from being assessed separately. A couple’s domicile was assessed overall according to the residence of the head of the family.

Since this notion was eliminated, it is quite possible for one of the spouses in the same couple to be considered as being domiciled in France while the tax domicile of the other is located in another State

2. Joint or separate taxation

The separate domicile of each spouse does not pose any particular difficulty in the event of separate taxation. Nonetheless, it is set out in Article 6.4 of the French General Tax Code that separate taxation of spouses is only possible in three cases:

• when they are legally separated and do not live under the same roof;

• when a separation or divorce is pending, they are authorised to have separate residences;

• when, in the event of desertion of the marital home by one of the spouses, they each have separate income.

Apart from these three cases, spouses must be subject to joint taxation, despite the imbalance of treatment in terms of tax domicile.

3. Taxation of “mixed domicile” couples

Two spouses subject to joint taxation but with separate residences are respectively subject to the rules relative to people domiciled in France and those concerning taxpayers domiciled outside of France:

• the spouse domiciled in France is subject to unlimited tax obligations, that is to say, they are taxed on their worldwide income;

• the non-resident spouse, however, is only subject to a limited tax obligation; he/she is only liable to tax in France on income from French sources.

This separate tax treatment means that a clear distinction must be made between the income of each spouse which may prove particularly complex if they have joint income. The issue of joint income has still not yet been resolved. According to Bruno Gouthière, it should be considered that half the joint income comes to each spouse and should be treated separately. Nonetheless, this treatment may prove difficult to apply in practice.

Finally, it should be noted that the tax-free household allowance will be calculated by taking all members of a tax household into account, whether or not the spouse is non-resident, whereas the income from foreign

sources of the spouse domiciled outside France will not be taken into account, either for calculating the actual rate or for calculating the tax in France. This treatment is particularly favourable from a tax standpoint and may lead to substantial savings on tax, which will undoubtedly allow “mixed domicile” couples to put the issues and uncertainty relating to their situation into perspective.

S6EXPERTS NEWS - International Desk Newsletter of GROUPE COFMÉ


Claire SCHWEITZER,Legal Advisor: [email protected]




Alexandre Astier, Chartered accountant and auditor, GROUPE COFIMÉ associate

Phone: +33 (0)3 88 56 92 70- E-mail: [email protected]

Anne-Claire Batt, Legal Advisor

Phone: +33 (0)1 55 34 74 14 – E-mal: [email protected]

Jérôme Bernard, Chartered accountant, GROUPE COFIMÉ associate

Phone: +33 (0)3 89 22 99 00 – E-mail: [email protected]

Alain Mahler, Chartered accountant and auditor, GROUPE COFIMÉ associate


Claire Schweitzer, Legal Advisor


The content of this newsletter is general information not intended for application to specific cases. Although every care has been taken in compiling this content, GROUPE COFIMÉ does not guarantee its freedom from and cannot be held legally liable for any errors or inaccuracies.

>> YOUR CONTACTS >>

Jérôme BERNARDChartered accountant, GROUPE COFIMÉ associate

Phone. : +33 (0)1 55 34 74 14

E-mail : [email protected]

GROUPE COFIMÉ - PARIS INTERNATIONAL DESK23, rue Lavoisier - 75008 PARIS - FRANCEPhone. : +33 (0)1 55 34 74 14 – Fax : +33 (0)1 55 34 74 10 – E-mail : [email protected]

PARIS

Alain MAHLERChartered accountant and auditor, GROUPE COFIMÉ associate

Phone. : +33 (0)3 88 56 92 70


GROUPE COFIMÉ - STRASBOURG INTERNATIONAL DESK10, rue du Parc – 67205 OBERHAUSBERGEN – FRANCEPhone. : +33 (0)3 88 56 92 70 – fax : +33 (0)3 88 56 92 78 – E-mail : [email protected]

STRASBOURG

EXPERTS NEWS #6 - JANUARY 2018 – EDITORIAL TEAM

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Fredy FRITZINGERChartered accountant and auditor, GROUPE COFIMÉ associate

Member of HLB International Executive committee

Phone. : +33 (0)3 89 22 99 00


GROUPE COFIMÉ - COLMAR INTERNATIONAL DESK5, rue Bertrand Monnet – CS 10034 – 68025 COLMAR Cedex – FRANCETel. : +33 (0)3 89 22 99 00 – Fax : +33 (0)3 89 22 99 10 – E-mail : [email protected]

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2018 experts news - groupe cofimé · 2018-01-05 · experts news - international desk newsletter...

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