Incentives for rent waivers in favor of companies

As part of the discussions on the finance bill for 2021, our deputies adopted amendment n ° II-3640 which proposes, in accordance with the Government's announcements, to support tenant companies with less than five thousand employees by creating a tax credit granted to landlords who abandon the rents owed by their tenants. 

This incentive mechanism for donors supplements Article 3 of the 2nd amending finance law for 2020 which provided for the fiscal neutralization of a rent waiver for donors. 

Reminder of the existing system

Article 3 of the aforementioned law allows landlords to deduct from their taxable income the write-offs of rent receivables and accessories relating to buildings rented out to a company and granted between April 15 and December 31, 2020. 

This deduction can be made without the lessor having to justify a particular interest in this abandonment, in opposition to the case law which wants to be regarded as a donation the rents abandoned without interest for the lessor in the absence of circumstances. independent of his will. 

The deductible expense will be opposed to the income recorded in the accounts at the rate of the rental receivable. 

Finally, it is specified that this incentive measure is not applicable when there are links of dependence between the tenant and the lessor, except to demonstrate that the tenant is encountering financial and / or cash difficulties.

New tax credit mechanism of the finance bill for 2021

Donors 

Natural or legal persons governed by private law would be eligible for the tax credit, which would seem to exclude communities and other public persons, whose eligibility for the system could nevertheless be subject to review after evaluation by Bercy. 

Abandoned and local rents 

The rent waivers should have been granted within the period of application of the reconfinement, i.e. as of October 30, 2020. 

They should relate to premises which are the subject of a ban on reception of the public during the reconfinement, or where an activity is carried out in a sector listed by decree, either mainly the premises of companies in the hotel, café, catering, cinemas and performance halls sectors, as well as sports halls and tour operators. 

Tenants

Only rent waivers granted to a tenant who meets the following criteria would be eligible for the tax credit:

• Have a workforce of less than 5 employees (with an exemption for associations subject to commercial taxes), it being specified that all employees of related entities control or are controlled by another legal person are taken into account; 

• Not be in difficulty as of December 31, 2019 with regard to European regulations on state aid;

• Not be in compulsory liquidation on March 1, 2020.

It is specified that when the tenant company is operated by an ascendant, descendant or member of the tax household of the lessor, or if there are dependency links between them, the lessor must justify by all means the tenant's cash flow difficulties to be able to benefit from the tax credit. 

Amount and use of the tax credit 

The tax credit would be equal to 50% of the total sum of withdrawals or waivers. 

For tenant companies with at least 250 employees, the abandonment amount would only be retained within the limit of two-thirds of the amount provided for in the lease. 

Note that the total amount of rent waivers or waivers giving rise to a tax credit from which each tenant company benefits cannot exceed € 800. 

The tax credit is charged against corporation tax due for the year during which the abandonments were granted, the excess being able to be returned. 

By way of derogation, it would be charged against corporation tax due for fiscal years ending on or after December 31, 2021, i.e. on the tax due in 2022 for the 2021 financial year. It emerges from parliamentary discussions that the measure is intended to remain active if confinement should last for certain companies. A new amendment could be presented in order to be able to use the tax credit from the fiscal year ended in 2020, so as not to unnecessarily delay the benefit of this measure.

In the context of tax consolidation, the parent company would be substituted for the subsidiaries for the allocation to the amount of corporation tax of the tax credits generated by each company in the group. 

Finally, a special declaration must be submitted by the donors within the same timeframe as the annual declaration of results. If there is integration, the parent company would declare the tax credits on behalf of the companies of the group when filing the declaration of the overall result. 

By virtue of its refundable nature, the tax credit should facilitate rent waivers by lessors in a deficit situation. They would then be assured of receiving via the tax credit 50% of the abandoned rent. For taxable landlords, since the tax credit, unlike the rent received, is not taxable, the benefit derived from this measure will be all the more important the higher the landlord's tax rate.