Can the territorial economic contribution (TEC) be capped?

Verified 01 January 2024 - Legal and Administrative Information Directorate (Prime Minister), Ministry of Finance

Companies may benefit from relief where the sum of their CFEs and CVAEs exceeds 1.531% their added value. This is called the ETC cap. The 2022 rebate application must be filed by December 31, 2023.

How is the rebate calculated?

The capping rate shall be set at 1.531% of added value produced by the company.

The value added amount shall be determined in accordance with the rules laid down for CVAE calculation = Revenue to be withheld - Chargeable expenses.

The reference period for valueadded shall be one of the following:

  • or the taxation year, if the accounting period coincides with calendar year
  • the last 12-month financial year ended in the year, if the accounting year does not coincide with the calendar year

Warning  

By exception, for companies subject to taxation of micro-companies (micro-BIC or micro-BNC), the added value is equal to 80% the difference between the amount of revenue and the amount of purchases made in the taxation year.

The relief which the company benefits from is calculated using the following formula:

Company property tax + company value added tax - 1.531% of added value

On the other hand, the relief may not have the effect of reducing the TEC due to an amount lower than minimum contribution from CFE fixed by the municipality on which the company depends.

Example :

A company has the following characteristics:

  • Turnover = €400,000
  • Value added = €20,000
  • CFE = €600
  • Company not liable to the CVAE (because CA: titleContent less than €500,000)

The minimum contribution of CFE is set at €400 by the municipality.

The capping rate is equal to 1.531% of value added: 20 000 x 1.531% = €306.

The rebate is therefore: 600 - 306 = €294.

However, the CET payable after tax relief may not be less than the minimum contribution of CFE. The amount of the rebate (€294) granted to the company may not exceed the difference between the amount of the CET and the amount of the minimum contribution of CFE, namely: 600 - 400 = €200.

The calculation does not consider the following :

  • Tax credit for companies in defense restructuring areas (ZRD) 
  • Relief for cessation of activity
  • Consular fees (fees for chambers of commerce and industry and chambers of trades and crafts).

Half of the rebate obtained or expected for year N-1 may be deducted in advance from the CFE deposit for year N under the responsibility of the taxpayer. The tax year relief may also be deducted from the balance of the FTC for the same year.

How do I claim a rebate?

The company must apply for relief before 31 December of the year following the assessment of the CFE.

The form to be submitted differs under the tax system.

General case

The company uses the Form n°1327-CET-SD.

Application for relief (CET) - Form No 1327-CET-SD (actual profit)

Micro-BIC or Micro-BNC Regime

The company uses the Form No 1327S-CET-SD.

Application for relief (CET) - Form No 1327S-CET-SD (micro-companies)

The application is made to the company Tax Office (SIE) on which its principal place of business depends.

This application is a claim and no longer has to be accompanied by a copy of the tax notice of CFE.

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