In the event of direct subscription, the tax reduction applies for the year during which the payment is made.
In the event of subscription to the share capital of a non-coordinating holding company, the tax reduction applies for the year of closing of the financial year of the holding company when this is aligned with the calendar year. When the financial year is not aligned with the calendar year, the tax reduction applies for the year during which the payment was made, provided that:
- That the holding company has also paid all of the subscriptions it received before the end of that same calendar year, and that the payments (from the taxpayer and the holding company) are made over the same fiscal year.
- Otherwise, the tax reduction will apply for the year of closing of the holding company.
Calculation of the tax reduction
The IR-PME tax reduction is calculated by applying a rate equal to 18% on the basis of calculation defined above.
The global cap on tax loopholes
An annual cap on certain tax benefits (deductions, tax reductions and tax credits) is applied to each taxpayer. This cap is presented in more detail: Ceiling of tax loopholes.
The total of the tax advantages cannot result in a reduction in the amount of tax due greater than 10,000 euros (or 18,000 euros in the presence of overseas investments). Use tax return estimator for the right solution.
The portion of the tax reduction that cannot be charged due to the application of the global cap on tax loopholes may be carried over to the tax due for the following 5 years.
How to benefit from the IR-PME tax reduction?
We explain in this part how the taxpayer must request the application of the IR-PME tax reduction as well as the obligation to retain securities for non-reimbursement of contributions weighing on the taxpayer who requests the tax reduction.
The formalities to benefit from the IR-PME reduction
The taxpayer must request the application of the IR-PME tax reduction on his personal income tax return. He must attach to his declaration the individual statement provided by the company which received the payments. At the request of the tax administration, other documents must be communicated.
When the company that receives the payments eligible for the IR-PME tax reduction scheme is a non-coordinating holding company, it must send an information document to each investor before subscribing for its securities. Otherwise, the tax reduction is not applicable.
The commitment to retain securities and non-repayment of contributions
The benefit of the tax reduction for a taxpayer is subject to:
To the conservation of shares subscribed until the expiration of the 5 the year following the year in which the capital subscription has been completed.
In the event of a merger or demerger of the company in which the subscription was made (the mandatory retention of securities is then transferred to the securities received in exchange).
In the event of cancellation of securities due to losses or judicial liquidation of the company in which the subscription was made.