Key Benefits:
The Constitutional Council received three appeals against the original Finance Act for 2013, which was submitted for two of them by more than sixty members and for the third by more than sixty senators.
These appeals require the following comments from the Government.
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I. ― On the procedure for passing the law
Senators who made the appeal consider that a procedural misappropriation of the vote in the Senate of a pre-examination issue. It would have prevented senators from ruling on the bill referred to and exercising the right of amendment they derive from section 44 of the Constitution.
The Government does not share this view.
Section 44 of the Rules of the Senate was applied – declared in accordance with the Constitution (Constitution Council, January 15, 1992, Decision No. 91-301 DC) – which presupposes the question, in particular, to have the Senate decide that it is not necessary to continue deliberation. No particular reason is mentioned in the article to base Senators' vote in this direction.
The vote of the pre-examination question was not on first reading before the Senate, in which senators were able to make amendments and discuss the law — even if the bill was ultimately rejected — but in a new reading before the National Assembly finally ruled. The rejection of the text being presented is certain, given the public position taken by honourable senators, the amendments that could have been introduced and, if so, voted would not have been included in the final text. At this stage of the proceedings, only the amendments adopted in a text itself adopted by the Senate could have been retained by the National Assembly during final reading. In these circumstances, the vote of the pre-examination question at this final stage of the review of the law and while the time limits for the adoption of a financial law are compelled, did not affect the law that was to be passed.
Subsequently, the adoption of the pre-examination issue, in these particular circumstances, did not constitute a diversion of proceedings and did not ignore the rights of the opposition, or the right of amendment guaranteed by Article 44 of the Constitution.
II. – On the sincerity of the law
The bill referred to is based on reasonable macroeconomic assumptions, within the framework of the consensus of economists, and which, as a matter of fact, have been revised downwards before the Bill of Finance is tabled to take into account the expected changes.
In its preparatory report for the July 2012 public finance policy debate, the Government indicated that growth should be only 0.3 per cent in 2012, "a prudent assumption for the development of the bill of rectificative finance in line with the consensus of economists, and close to that anticipated by INSEE (0.4 per cent)". He also indicated that growth "would reach an annual average of 1.2 per cent in 2013" and added that "this hypothesis — in line with the forecasts of international institutions" was "safe" and was based "on a very progressive dissipation scenario of financial tensions".
To take into account the reduction in global growth prospects observed since the summer of 2012, the Government has, for the development of the year-end financial laws, lowered by 0.4 points to its growth forecast for 2013, to +0.8%, while underlining the hazards surrounding this forecast: the rate of resolution of Eurozone tensions, the behaviour of economic agents (especially the level of savings), the labour market (especially the evolution of productivity).
The macro-economic forecast of the deferred law is based on a scenario of gradual and reasonable resumption of activity in France in 2013. Global demand would be more dynamic than in 2012 and would allow export acceleration. The forecast remains cautious on the investment of companies, which would start gradually, and on the storage behaviours that would not contribute to growth. Consumption would increase a bit, the savings rate regaining its long-term average after reaching a high level.
The last consensus of economists, in December 2012, shows a forecast of growth in gross domestic product by + 0.1%. This average results from heterogeneous estimates between ―0.5% and +0.9%, which reflect a particularly uncertain and volatile international economic environment and a European stabilization context. The growth forecast on which the government's financial bill is built, at +0.8 per cent, is therefore within the economists' forecast range. By comparison, in September 2011, the gap between the Government's forecast for growth in 2012 and that of the consensus of economists was equal (+1.75 per cent for the Government in 2012; +1.2% for economists).
The recent revisions to the economic outlook that international agencies and institutions have been able to carry out have not been sufficiently significant to justify a change in macroeconomic assumptions during the discussion of the law referred to in Parliament. Overall, the European Commission, the OECD and the IMF share the diagnosis of internal demand resistance, particularly because of the high level of household savings, as well as because of the targeting of revenue measures of the PLF. Moreover, since the bill was tabled, the exchange rate of the euro and the oil prices have changed very slightly, in a generally more favorable sense to activity. Similarly, tensions on sovereign debts in the euro area have tended to fade while equity markets in France and Germany have reached higher levels since the summer of 2011. Finally, the Competitiveness and Employment Tax Credit is expected to play positively on the expectations and behaviours of companies in 2013.
For all of these reasons, the Government considers that the grievance of insincerity of the law referred cannot be retained.
III. ― On Article 3
A. ― Members of the Board of Appeal consider that the creation of an additional tranche to the income tax scale, at a rate of 45% for the share of income exceeding 150,000 euros per share, ignores the principle of equality before the tax in that corporate pensions are referred to as "retirement hat". The latter would be subject to a total sampling rate of 77.1% (21% of specific contributions, 7.1% of social deductions, 4% of the outstanding contribution on high incomes) ― and even 10.8% of the additional contribution of 30% to the employer. Such a rate would be confiscatory and would justify that article L. 137-1-1 of the Social Security Code, which created the specific tax, is also declared contrary to the Constitution, at the current rate of 21 per cent.
B. ― The Government does not share this approach to the system.
B-1. The Government intends, as an opening, to recall the framework in which respect for the principle of equality before public office and respect for Article 13 of the Declaration of Human and Citizen Rights, which results in the control of the "confisatory" character of an imposition (see Decision No. 2007-555 DC of 16 August 2007).
(a) According to a constant jurisprudence of the Constitutional Council (see, lastly, on 9 August 2012, Decision No. 2012-654 DC), respect for both the principle of equality and Article 13 of the Declaration is appreciated with respect to "each taxation taken in isolation" ― according to the specific characteristics of this tax, the objective of the legislator and the contributive powers under the taxed resource.
In principle, it is not necessary, in order to conduct a review of the principle of equality before the tax and the control of the existence of an excessive burden under their contributive faculties, to take into account other impositions or other mandatory levies, other than that which is the subject of control (see, in particular, in this sense: Constitutional Council, 18 December 1997, no. 97-393 DC, SSA In this regard, it should be noted that, with respect to the issue of the taxation of hat pensions that is the subject of the criticism of the authors of the appeal, the Constitutional Council did not take into account the removal of the employer under the employer.Article L. 137-11 of the Social Security Code to declare in conformity with the Constitution Article L. 137-11-1 of the same code, in its then current drafting, which governs the contribution to the beneficiary (Constitution Council, 13 October 2011, Decision No. 2011-180 QPC).
If, in the decision of January 16, 1986 concerning the law limiting the cumulative retirement employment (Decision No. 85-200 DC of January 16, 1986 on the "contribution of solidarity"), a lack of understanding of Article 13 of the Declaration has been adopted, it is in the light of the only particular characteristics of the contribution in question and not taking into account all taxation likely to cover the same income category.
(b) It is true that, in Decision No. 2012-654 DC of 9 August 2012, the appreciation of both the principle of equality before the tax and the "confisatory" character of the exceptional contribution on the property due for the year 2012 alone took into account the separate taxation under the capital tax. This approach is explained by the specific characteristics of this taxation whose determination was based on a differential calculation with the solidarity tax on fortune ― as the decision itself specifies, it was "established after deduction of the solidarity tax on fortune". The overall control is explained by this particularity of two taxations that are closely intersected.
It can only be inferred from this decision now, on the one hand, the encompassing control would be the rule for any type of taxation, regardless of its characteristics, and on the other hand, that control should be based on the approximation of marginal tax rates, as it is repeatedly suggested by the authors of the appeals. Apart from the specific case of the contribution that the Constitutional Council made in August 2012, the cumulative approach to taxation is difficult because many parameters must be taken into account to make a relevant comparison in constitutional terms. At the very least, the appreciation of a general tax rate for the same property or income imposes a reasoning that not only integrates the rate of each tax, but also the characteristics of its plate, integrating the various cuts and reductions that the taxpayer can benefit from. There is also a need to ensure the terms of a comprehensive approach, including whether tax or social contributions are integrated only, i.e., all mandatory levies.
In all cases, the control of the "confisatory" character of an taxation can only be based on actual tax rates, not on the marginal tax rates alone. This applies in particular to direct taxes that are calculated from a global assessment of the taxpayer's capacity to contribute. In addition, given the opportunity recognized to legislators to determine a specific taxation to guide behaviours or target a general interest objective (see July 28, 2011, Decision No. 2011-638 DC) and the necessary conciliation with the constitutionally valued objective of combating tax evasion and fraud (16 July 2011, Decision No. 2011-165 QPC), the assessment must also include the objective pursued by the legislator.
B-2. In this context, the Government considers that the article referred to is not contrary to the Constitution.
(a) Section 4 creates a new income tax bracket to 45% for taxable incomes greater than 150,000 euros per share. This rate, which applies to all incomes subject to taxation on income and which is only four points, does not, in itself, ignore the principle of equality before public expense and has no "confisatory" character. In fact, significantly higher rates have been retained by the legislature in the past, without censorship of the constitutional judge.
The authors of the appeal consider, however, that the effect of this rate increase on the overall level of taxation of so-called "retirement hat" pensions would be, taking into account other existing taxation (art. L. 137-11 and L. 137-11-1 of the Social Security Code), " confiscatory". However, for the reasons mentioned above, respect for constitutional guarantees is, in principle, tax-taxed and not cumulative.
It is also impossible to consider only the articles of the Social Security Code, which set the level of employers' and wage contributions due to this type of pension, see their area of application "affected" by the creation of a new income tax scale, within the meaning of the case law (Constitution Council, 25 January 1985, Decision No. 85-187 DC, Emergency Act in New Caledonia and Dependencies). Nothing in section 4 is directly or indirectly related to these provisions, which are in no way affected — in this regard, the situation is different from that given in Decision No. 2012-659 DC of 13 December 2012. Following this reasoning would mean that, in the contestation of an imposition, created or amended, any other tax provision relating to property and income entering the contested tax base could itself be challenged. This would be a considerable enlargement of the office of the judge of the constitutionality of the finance law, which would have to decide on every reform on the entire taxation of the goods and revenues concerned, even though the other arrangements would not be affected by the law.
In any case, the Constitutional Council had the opportunity to declare theArticle L. 137-11-1 of the Social Security Code, in its then applicable drafting, in accordance with the Constitution (v. supra) and the Council of State also ruled that respect for the Constitution by the same article, in its current drafting, as well as by article L. 137-11 of the same Code did not pose any serious difficulties justifying that a priority issue of constitutionality be transmitted to the Constitutional Council (Council of State, 23 July 2012, Association de défense des pensionss hats et autres, n° 35). This last decision is precisely based on the constant logic of an assessment of constitutional guarantees based on each tax.
(b) If it is estimated, however, that the overall approach taken by the authors of the appeal must be led, the Government considers, in any event, that the tax rate of that type of pension, especially in respect of the amounts from which the highest rate is likely to apply, is not contrary to the principle of equality before the public expense.
It should also be recalled that the wage contribution to theArticle L. 137-11-1 of the Social Security Code is a substitute for salary social contributions that have not been paid. Indeed, given the random nature of the hat pension mechanism, the beneficiaries of these benefits did not contribute, while they were active in acquiring their rights, nor did they pay contributions, CSG or CRDS on the funding that dedicated their employer. This is a major difference with what is happening in conventional pension systems. Within the basic plans and complementary plans, the salary funding for pensions is at 8% rates and the CSG-CRDS rate is also 8%. The comparison with the rate of the pay contribution (7%, 14% or 21% the last rate for hat pension – which should be remembered that they constitute a third or fourth pension ― of more than 288 000 euros per year) must take into account that the dates of perception are different: at the entry for contributions and outwards for the contribution expected to the contribution expected to theArticle L. 137-11-1 of the Social Security Code. The deferral of sampling leads to the need to retain higher rates.
As a result, a superannuation recipient pays aggregate levies similar to those of an employee with conventional pensions, once the mandatory salary contributions are taken into account and the contribution is replaced by the contribution provided for in theArticle L. 137-11-1 of the Social Security Code.
For all these reasons, the Government considers that this article does not ignore the Constitution.
IV. ― On Article 4
A. ― According to the authors of the appeals, the lowering of the ceiling of the family quotient to which this article is made would be contrary to section 13 of the Declaration, which requires that consideration be given to the contributive capacity of the home and aimed at "a tax rate equal to the level of equal living". Assuming that the principle of a family quotient cap is accepted, the ceiling set out in section 4 would ignore equality before tax.
B. ― The contested provision provides for lowering the ceiling of the benefit granted by the family quotient by lowering its ceiling from Euro2,336 to Euro2,000 per half-part.
The family quotient system is one of the ways to adapt the amount of tax to the contributive faculties of each home. Because it is based on the taxable income division based on the number of shares of the tax home, the family quotient mitigates the scope of the tax progressiveness principle on the basis of income. This is why the benefits of the family quotient have been capped since 1982 (art. 12 Act No. 81-1160 of 30 December 1981). If the Constitutional Council has not ruled on this last law, the decrease in the amount of the ceiling of the benefit provided by the quotient family ―related to the deletion, by the Social Security Financing Act for 1999, of any condition of resources for the allocation of family allowances ― was validated (29 December 1998, Decision No. 98-405 DC).
Therefore, the very principle of capping was found to be in conformity with the Constitution. And it is permissible for the legislator, in order to guarantee the progressiveness of the tax, which is a constitutional requirement of income taxation, to reduce the general ceiling in order to increase the participation of families in high incomes.
Finally, it can be said that the family quotient, which is a traditional feature of income tax in France, is only a modality of compliance with the requirements of the tenth and eleventh preambular paragraphs of 1946. If they require consideration of family charges, they do not imply the form that they must take. Compliance with Article 13 of the Declaration also does not require it (Constitution Council, September 29, 2010, Decision No. 2010-44 QPC).
V. ― On Article 6
The objective of the contested measure is to establish a cap on the deductibility of the amount of professional fees declared to the real when the power of the vehicle used by the employees is greater than seven tax horses and would be based on the distance travelled. It also plans to fix the kilometric scale by order and not by doctrinal way as it is today.
In the application of these new provisions, employees and self-employed persons are not in the same situation under their tax conditions. Self-employed workers, in particular, can only deduct expenses incurred in the interest of the company, while employees deduct their transportation costs regardless of the vehicle used.
The different treatment of employees and self-employed workers is therefore not contrary to the fact that the members of Parliament who are the authors of the appeal are advancing, not contrary to the principle of equality.
VI. ― On Article 8
This article, whose I and II are inseparable, modifies theArticle 11-4 of Act No. 88-227 of 11 March 1988 on the financial transparency of political life.
The purpose of this article is to enhance the effectiveness of the rules limiting the amount of donations that individuals can give to political parties by reducing the possibilities of bypassing the multiplication of microparts whose main purpose seems to be to allow a duplication of donations in favour of the same current of opinion. Far from violating the pluralism of ideas and opinions, it aims to ensure greater transparency and equality between political parties.
VII. ― On Article 9
A. ― Members of the Board of Appeal criticize this article in several ways, which submits to the income tax scale for dividends and fixed income investment products.
Revenues subject to generalized social contribution at different rates now benefit from an identical deductibility of 5.1%, which would create an uneven differential treatment of identical incomes.
The differential of generalized social contribution rates (CSG) and social levies applicable to the income of heritage and investment on the one hand (15.5 per cent) and incomes on the other hand (8 per cent) would ignore the principle of equality before tax.
Its application effective January 1, 2012 would be retroactive, without justification of general interest.
B. ― By section 9, the legislator wished to align the tax with the income of the heritage with the income of the work. It is in this context that it has been decided that the income of the dividends and fixed income investment products, which so far benefited from a free-rate lump sum deduction, would now be subject to the income tax scale.
(a) In the first place, it cannot be grieved by the law referred to having provided for the same rate of deductibility of the CSG or having maintained the existing social levies unchanged.
On the one hand, it was rational and objective, with regard to the objective of aligning the taxation of capital revenues with that of work, to set the same deductibility rate to income tax for generalized social contributions based on capital and labour income (which are clearly distinct: see Decision No. 90-285 DC). This measure allows, precisely, to align the treatment with the income tax that is the subject of the deferred section of the general social contribution. Thus, on the same income, income tax on a taxpayer earning capital income will be the same as that on a taxpayer earning labour income in the same amount.
On the other hand, the legislator did not wish to change the rates of social levies applicable to each of these income categories. No constitutional principle or requirement, including the principle of equality before the tax that, as stated, is tax-based, required legislators to reason in an identical manner for all other types of collection. In particular, there was no need to address the existing differences in social levies highlighted by the authors of the appeal.
In any case, the terms of the comparison are not adapted. If the capital's income supports higher social levies (15.5%, instead of 8%), it is because they do not support social dues that are also mandatory levies even if they are creating social law.
In general, many capital revenues will retain specific taxation terms. This is the case for the products of life insurance vouchers or contracts that still benefit from a reduced tax, the Share Savings Plan (exempt after five years), the Housing Savings Plan (exempt income tax for the first twelve years), regulated savings products (exempt income tax and social tax) and finally dividends (which benefit from a discount) With respect to fixed income investment products, an option was provided for a flat tax of 24% for households receiving less than €2,000 of interest per year.
(b) Secondly, if the application on 1 January 2012 of the measure of submission to the rate of income that was before the subject of a flat-rate debit is retroactive, an appropriate general interest justifies this measure – being recalled that, outside the repressive matter, retroactivity is allowed if there is sufficient general interest (see, inter alia: Constitutional Council, 29 December 1989, Decision No. 89-268).
This measure, although unfavourable to taxpayers imposed in the upper portions of the scale, will allow more than four million taxpayers who have chosen the liberatory sample while it was not in their interest to make it eligible for a tax credit. The general interest is thus focused on strengthening the fairness of taxation and restoring its progressivity, which is a constitutional requirement. This means that the retroactivity of the measure allows for better application of the principle of equality before the tax.
In addition, no double taxation of the same income is possible. A mandatory deposit of 24% on the amount of interest paid was provided (I of theArticle 125-0 A and article 117 quater the general tax code). This deposit will be charged on the tax on income paid in 2013 under the same income. The surplus will be returned.
(c) As to the tax of the income of the derogatory capital, the legislator did not wish to change it, in view of their own objectives. With regard specifically to the one on life insurance investments, its particularity is that it is a product that promotes long-term savings, which is essential to the financing of the economy. Similarly, the tax system of the Share Savings Plan has not been changed in respect of capital gains. In doing so, the legislator did not misunderstand the principle of equality, as it was stated that, on identical investments, all taxpayers would be treated in the same way.
For all of these reasons, the Government considers that the grievances must be dismissed.
VIII. ― On Article 10
A. ― Members of the Board of Appeal believe that this article, which provides for the taxation of the income tax scale for the transfer of securities and social rights to individuals, would be contrary to the Constitution from two main points:
― the complexity of the optional tax mechanism at the rate of 19%, when certain conditions of activity, duration and control are met, would make it intelligible and ignore the principle of equality;
― the transition from 19% to 24% of the rate of free-of-charge lump-sum debit for securities disposal surpluses in 2012 would ignore the principle of equality and be retroactive.
B. ― The Government is not of this opinion.
B-1. With respect to the 19% flat rate option, the objective is to provide a more favourable tax for taxpayers who surrender the securities of the corporation they created and for which they took risks.
(a) The device, first of all, does not ignore the principle of equality. The difference between contractors and taxpayers who would be subject to the marginal rate of 45% is based on the general interest consideration that is to encourage risk-taking and entrepreneurial spirit. The difference between these two categories does not appear disproportionate. On the one hand, the lump-sum tax is not cumulative with the detainment cuts applicable to taxpayers who could not opt for this tax rate and, therefore, would be imposed on the progressive income tax scale. On the other hand, they will be able to receive a 40% discount on their mobile surplus-value as long as the securities have been held for at least six years — by comparison, the 19% rate will only apply if, in particular, the securities have been held for more than five years. The actual tax rate of entrepreneurs whose incomes fall under the income tax scale will therefore be significantly lower than the marginal rate of 45%. Therefore, the difference in treatment between the common regime and the derogatory regime remains proportionate.
(b) Secondly, the criteria selected are objective and rational and in line with the legislator's objective of promoting investment in innovative companies.
Like the so-called "Madelin" and ISF-PME benefits, the legislator's desire is to promote equity investment in the capital of companies with difficulties accessing financing. The combination of these three schemes will be a lever for growth and job creation for small and medium-sized enterprises carrying out activities with proven equity needs.
In this regard, real estate activities, as well as financial activities, which include lending and leasing activities, do not require specific support in equity as long as market financing covers their needs. This is why real estate and financial activities were excluded from the device. It is not specific to the new "entrepreneurs" regime and nothing would justify, whereas it already applies, for example, to the benefits mentioned before, that it does not apply to this new favor device.
(c) Finally, the device is not intelligible. Indeed, the conditions for the benefit of the derogatory regime are clearly established. It is possible for the taxpayer to know whether or not the activity of its corporation allows it to benefit from this plan. He may also know whether he held the transferred securities five years prior to the assignment and should not have any difficulty either to determine whether he held at least 10% of the company's voting rights for at least two years. In addition, at the time of the assignment, he should know whether or not he owns 2% of the corporation whose securities are disposed of. Finally, he will obviously know the function he exercises in society.
It should be noted above all that the criteria for eligibility for the derogatory regime are all based on information that is directly relevant to the taxpayer and the companies in which it has invested and exercised its activity, information that is easily mobilized by the interested party to ensure that it meets the above criteria.
B-2. With respect to the second series of grievances, the Government considers that they are not more justified.
The deferred section provides that from 19% to 24% the lump-sum rate applicable to surplus-values made in 2012, with the exception of those that may be subject to optional taxation.
It is true that the rate applicable to the gains made by non-residents remains at 19% – this is a source sample. This is because the increase in the rate for 2012 to non-resident taxpayers in France would have been very complex to implement and therefore very costly. In addition, these provisions apply subject to international conventions that most often attribute tax jurisdiction to the taxpayer's home State. Given the weakness of the amounts at stake and the management costs that would result in a similar change in the rate for transfers made in 2012, this difference in treatment between residents and non-residents, which remain in different situations, is justified.
The application of the new rate in 2012 is not retroactive. This would be the case if the reform had been adopted after the tax-generating act (see Constitutional Council, 9 August 2002, Decision No. 2012-654 DC). However, the fact that income tax is generated over the entire calendar year, as long as the Financial Act for 2013 was enacted before the end of 2012, the change in the tax rules for surplus-values on disposal transactions that occurred as of January 1, 2012 is not retroactive. Such an amendment has already taken place in comparable terms in the creation of the exceptional contribution on high incomes by Act No. 2011-1972 of 28 December 2011.
For these reasons, the Government considers that the article complies with the Constitution.
IX. — On Article 11
A. ― Members of the Board of Appeal believe that this article, which submits to the income tax scale the gains related to the lifting of subscription or stock options (the stock options) and the acquisition gains related to free stock assignments, do not know the Constitution, in particular in that the incomes referred to would be subject to a global rate, all excessive debits, which would be misused The scheme would also affect the right to property.
B. ― This challenge calls the following remarks.
B-1. It is useful first to specify the scope of the device.
The title options and free share allocations give rise to two separate gains:
– a pay-of-kind gain on the occasion of the final acquisition of the title (loss of the option or final acquisition of the free action) that is equal to the difference between the purchase price (not for free action) and the actual value of the share on the date of the acquisition;
– a gain of a heritage nature on the occasion of the assignment of the title (plus or less-value of assignment equal to the difference between the real value of the title on the date of the acquisition and the sale price). This gain benefits from the detainment period.
The optional lifting or awarding of free, pay-in-kind shares are imposed on the progressive income tax scale in the salary and salary category. They cannot therefore benefit from the deduction applicable to the disposal surpluses. On the other hand, they will be able to benefit from the 10% slaughter (now up to 12,000 euros) for professional costs.
The second category of gain benefits from detainment. The taxpayer becomes the owner of the title when the option is lifted or when the free action is finalised, it is from that date that the rebate is deducted for the taxation of the surplus-value of assignment of that title.
Finally, it should be noted that the benefit of the partial deductibility of the generalized social contribution (CSG), established by the deferred article, will apply only to the CSG deducted from the optional lifting and acquisition of free shares referred to in the CSG 6° of Article L. 136-2 of the Social Security Code. The CSG on the revenues of the heritage that weighs on the surplus-value of assignment and that is provided for in theArticle L. 136-6 of the Social Security Code is already deductible the year of its payment under the II of CGI article 154 quinquies.
B-2. As these points are specified, the Government considers that the grievances against the article are not justified.
(a) For the reasons already mentioned above, the Government considers that the assessment of compliance with the requirements of Article 13 of the Declaration, therefore of the "confisatory" nature of an taxation, is in principle held in relation to the characteristics of each tax. Here, the higher marginal rate of 45% is not excessive.
If one wanted, as well as the authors of the appeal, to consider all taxation, the Government does not consider that the maximum marginal rate of 77.205 per cent, which is only achieved if the person is subject to the last instalment of the income tax and has not met the new period of retention of securities, can be considered as "confisatory". However, the evolution in relation to the existing law is limited; it only appears from the increase of four points in the marginal tax rate higher than income tax.
(b) In addition, if all surplus-values for the disposal of securities, whether or not derived from stock-options, follow the same tax regime, on the other hand, the optional lifting gains, of a salary and non-property nature, follow a regime close to that of salaries and wages in accordance with their nature. This distinction does not create a breach of equality with respect to taxation, but on the contrary allows a convergence of the taxation of these income elements according to their real nature.
(c) As for the separate treatment according to the dates of attribution of the stock-options, it is the result that several changes in the tax regime of these revenues have taken place.
It is therefore anticipated that the previous regime for the taxation of option lifting and acquisition of free shares will continue to apply for free options and shares issued prior to September 28, 2012, the date of submission of the Minister's Finance Bill in Council, including when the termination, final acquisition or assignment will occur after that date.
On the other hand, the tax system for disposal surplus-values for gains made on or after January 1, 2013 is amended—for those imposed on the scale. This reform will apply to free options and actions regardless of their attribution date, including those issued before September 28, 2012. It is recalled that the fact generating the surplus-value of the assignment is constituted during the year of assignment, regardless of the date of acquisition. As a result, disposal gains will be imposed on the IRB scale if the assignment is effective January 1, 2013.
In any event, Article 11 does not infringe on the rights acquired to the extent that it does not challenge the periods of unavailability and retention only for the titles awarded as of September 28, 2012, i.e., as of the official announcement of the Government of Regime Reform.
(d) Two details are still needed.
On the one hand, the addition of a paragraph to paragraph I of Article 80 bis of the CGI (by the b of 1° of the A of paragraph I of Article 11), specifying the definition of the acquisition price of the shares acquired before 1 January 1990, is a simple resumption of a mention in 6 of the current CGI article 200 A. For shares acquired prior to January 1, 1990, the option lifting gain is deemed to be zero, this provision is retained in the condition.
On the other hand, the sixth E paragraph of section 10, paragraph I, provides that the detainment "does not apply to the benefit referred to in section 80 bis that was found on the occasion of the lifting of the options assigned before June 20, 2007". This restriction has been provided as the gain for the lifting of options granted prior to June 20, 2007 is imposed according to the rules of securities surplus-values (but at specific flat rates). In the absence of this, he could have wrongly benefited from the detention period provided for in section 10 of the Financial Act for 2013 if that mention had not been added. On the other hand, the regime of options issued as of June 20, 2007 derived from the Labour, Employment and Purchasing Power Act (TEPA) of August 21, 2007 is no longer the regime of securities surplus-values, but a sui generis regime or, on option, the salary and wage regime, for which it is logical to apply the abatement for the period of detention.
Subsequently, the Government considers that Article 11 must be declared in accordance with the Constitution.
X. ― On Article 12
A. ― Deputies and Senators adjudicating this article, which provides an exceptional contribution of solidarity on the very high incomes of activity, is contrary to the Constitution for the following reasons:
- the contribution, as an additional to income tax, could not be separate from that tax;
– the overall taxation of revenues covered by this tax would be at least 75%, taking into account other taxation; such a level would be "confisatory", both in relation to Article 13 of the Declaration and the right to property;
― the exceptional contribution would ignore equality before public charges, failing to take into account family charges, through a domestic and family quotient, and to see its capped amount;
― excluding from the base of the exceptional contribution of revenues that do not have a professional character, as well as certain business incomes, would be contrary to the principle of equality before the tax;
― the breakdown of equality before public charges would be particularly characterized for employees with income from the lifting of options on the purchase of shares from plans prior to October 16, 2007; it would also be characterized between beneficiaries of these plans according to the date of their plan; on this point, the application of the new rule to gains from plans prior to 16 October 2007 would be accompanied by unjustified retroactivity;
― the section would ignore the principle of annuality of the tax in that it specifies that the contribution will be applicable to revenues collected in 2014.
B. ― These grievances call the following remarks.
The contested contribution is distinct from income tax and captures the exceptional contributive capacity of an individual's perception of activity income over €1,000 000. Its rate is 18% and its plate, if it is seated by reference to the net taxable amount on the income of professional activity income, for simplicity of management, has its own characteristics and is therefore distinct.
1. This contribution is, as was said, individual and not common to a home.
Spousal quotient is not a constitutional requirement for taxing income. In the particular case of an imposition on the sole income of activity, spousalization would be artificial in nature by adding only the portion of the income attached to the personal activity of each household member.
It is true that a provision has been censored to reduce the amount of CSG from taxpayers with activity revenues below a certain amount for not taking into account the contributive faculties (19 December 2000, Decision 2000-437 DC); see 16 August 2007, decision No. 2007-555 DC. However, by this decision, the Constitutional Council only ruled that by opening the tax reduction on the basis of activity income alone, without taking into account the other resources of the tax home, the legislator had derogated from the characteristics of the generalized social contribution. The effect of this decision is to promote proportional, universal taxation in its principle. It is paradoxical to conclude that it imposes taxation on the basis of household income.
On the contrary, the Constitutional Council has endeavoured to ensure that the tax advantage associated with the spousalization of income tax does not create an unjustified advantage in relation to the situation where the two members of the couple would be imposed separately (see 9 November 1999, Decision No. 99-419 DC, Civil Solidarity Pact Act). In this case, it cannot be estimated, given the importance of the income in question, that the contribution capacity is reduced by the presence, within the same tax home, of a person with lower income.
There is no constitutional principle or rule to assess the contributive capacity associated with a set of incomes by tax household rather than by taxpayer. By subscribing activity revenues exceeding one million euros, the legislator estimated that this level of income alone represented a contributory capacity of each person receiving such a level of income. This assessment does not exceed the margin of appreciation recognized by the jurisprudence and does not create a marked rupture of equality before public office.
Therefore, the fact that the contribution does not take into account family responsibilities does not ignore the Constitution.
2. For the reasons already mentioned, compliance with Article 13 of the Declaration must be assessed in relation to the characteristics of this exceptional contribution, at a rate of 18%, not based on an inclusive approach and the rate advanced by the authors of the referral of 75%. The terms of the comparison are not adapted, both in terms of the principle of equality and ownership. In any case, a rate of 18% for a contributory capacity constituted by an activity income of more than 1,000 000 euros cannot be considered as "confisatory".
Assuming that one enters into an overall reasoning, the addition of the rates of the different taxations striking the same income, including the exceptional contribution of 18%, results in a result that should be nuanced. The sum of the taxes on activity income is the result of taxes on plates and rules of calculation (by household or income, proportional or progressive rate, with abatement or without abatement) which do not sum up to the only addition of marginal rates. For example, the average tax rate of a single employee receiving 1.1 million euros is 55%, whereas the average tax rate is increased to 60.5 per cent for income of 1.4 million euros. For these two taxpayers, the outstanding contribution remains 18%.
However, it may be recalled that the Constitutional Council has ruled in accordance with the Constitution (11 February 2011, Decision No.2010-99 QPC), especially with regard to Article 13 of the Declaration, a cap for the imposition of the solidarity tax on the property to 85% of the total net income of the taxpayer — which in fact resulted in an imposition that in some particular cases could lead to a tax rate of 85 per cent. This rate was not deemed excessive, even though it was calculated on the basis of the taxpayer's available income and that the particular nature of a heritage tax was not determined by the decision.
3. In general, it is permissible for legislators to create an taxation by choosing taxpayers with a particular contributive faculty, if the taxpayers selected are placed in the same situation and the tax base does not create inequality (see, in particular, March 3, 2009, Decision No. 2009-577 DC, considering 24-26).
This framework has been respected. Given the objective pursued by the legislator, the plate is limited to incomes of professional activity, which constitute a homogeneous category based on objective and rational criteria. It therefore does not take into account the replacement income received after the final cessation of the activity: unemployment benefits, pre-retirement, retirement or disability pensions but incorporates the daily allowances in case of illness that constitute income of activity.
However, if certain activity incomes are excluded from the base, it is because they are subject to specific taxes at specific rates and the legislator felt that this difference of situation warranted that they are excluded from the base of the exceptional contribution.
4. With respect to the particular issue of the treatment of free stock options or shares, in addition to the elements already mentioned, the Government intends to specify that the distinction between the tax of the benefits or gains related to these shares, as they are prior to 2007 (submitted to the exceptional contribution of 18%) or acquired between 2007 and 2012 (which remain subject to the contribution of 10% of theArticle L. 137-14 of the Social Security Code, relies not on the attribution date of these benefits but on the tax system that applies to it. The tax system was changed over time. The lack of retroactivity that has focused on these changes in tax regimes results in the coexistence of separate regimes based on the attribution date of these benefits, the exceptional contribution of which takes into account.
5. The only fact that the legislator has specified that this exceptional contribution is established for two years, under income 2012 and 2013, does not ignore any constitutional principle or requirement. As with any taxation, it can only be taken in 2014 if the Finance Act for this year authorizes its collection.
For all these reasons, Article 12 is in conformity with the Constitution.
XI. ― On Article 13
A. ― Deputies and Senators who make the appeal articulate several grievances against this article, which sets out the rules for the imposition of solidarity on fortune (ISF):
― the new scale of the IFS would give this tax a "confisatory" character, particularly in view of the taxation of the revenues of the capital that results from the law referred and the current state of the yield of the heritage.
― deletion of tax deduction by dependant would not recognize the requirement to take account of contributive faculties;
― the cap of taxation would ignore the principle of equality before public expense as long as the calculation incorporates latent revenues that may not be realized or available, which could lead some people to sell property in order to pay a tax debt higher than their actual income; In the end, the cap would not be for income but for heritage.
B. ― These challenges call the following remarks.
B-1. The new scale of this tax is progressive and is based on that of the solidarity tax on the applicable fortune until 2011, the maximum marginal rate of which was 1.8 per cent, which was deemed to be in accordance with the Constitution by the Constitutional Council in its decision of 29 December 1998, at a time when the marginal income tax rate was 54 per cent. With regard to this former rule of law ― and to assume even that one reasons in a comprehensive manner, with regard to the evolution of taxation on income, for which the law referred aligns the taxation of capital revenues with that of labour income ― the new scale cannot be considered as contrary to section 13 of the Declaration.
In addition, for the most important heritages, the rates of this new scale are lower than those of the scale applicable up to 2011 (1.5 per cent beyond 10 million euros of heritage, provided for by the finance law, compared with 1.65 per cent between 7,710,000 euros and 16,790,000 euros of heritage and 1.80 per cent beyond 16,790,000 euros of heritage for the solidarity tax applicable in 2011). Finally, section 13 restores a cap of the solidarity tax on capital based on income.
The Government therefore considers that the selected rates do not constitute a breach of the principle of equality or an infringement of the right to property.
B-2. As to whether the legislator could, for the determination of the SFI base, integrate into the property of the owners of the shares or shares a fraction of the value of certain elements of the social heritage independently of the value of the shares or shares held (new draft of 885 O ter), the Government considers that this is the case.
Professional property is excluded from the solidarity tax base on fortune. In order to avoid diversion of this exemption, the assets not necessary for the exercise of a professional activity held by a company are reintegrated into the heritage of persons holding shares of that society. Currently, this reintegration is carried out by an integration, in the heritage subject to the solidarity tax on the property of the owner of the shares or shares of a society possessing such assets, of a fraction of the value of these shares or shares representative of these properties, a very complex operation for the companies not listed.
Taking into account such assets therefore requires to give a specific value, for the establishment of the solidarity tax on fortune, to these shares or shares. For the purposes of simplification, both for the taxpayer and for the administration, of the valuation of the assets imposed on the solidarity tax on fortune, section 13 of the Financial Act for 2013 supersedes these modalities of taking into account by direct integration of the value of these assets on January 1 of the taxation year in the taxpayer's heritage to the extent of its participation in the corporation. This new arrangement therefore makes no use of a valuation of the shares or shares held by the taxpayer and constituting professional property.
These valuation modalities are not manifestly incorrect insofar as they correspond to the real valuation of the property owned by the company, they consist, on the one hand, of the goods necessary for the exercise of the activity and, on the other, of the goods that are not necessary for this exercise. In addition, it should be noted that the rule defined by former section 885 O ter had different considerations of the same property depending on whether it was held in a company or directly, including allowing the debts of the company to be imputed on the value of the property. The new arrangement provides for direct consideration of the property and liabilities attached to it, such as a borrowing; It establishes a perfect equality between the different modes of detention of property.
B-3. As the Constitutional Council ruled (September 29, 2010, Decision No. 2010-44 QPC), by creating a solidarity tax on wealth, the legislator considered that the composition of the tax home did not, for the determination of the contributory capacity of the tax home, have the same impact as on income tax. He has retained the principle of a home-based taxation without establishing a family quotient mechanism, which is only one of the possible ways to take into account contributory capacities. For a tax on heritage, seizing the contributive capacities of assets greater than €1,300,000, it cannot be considered that consideration of dependants is a constitutional requirement. As a result, the legislator was able to remove the tax reduction per dependant without prejudice to equality before public charges.
B-4. Finally, with respect to the terms and conditions for determining the cap on the basis of the incomes of the amount of the tax on the fortune, several details are required.
(a) The purpose of this cap is different from the one that the "tax shield" had pursued, provided by thearticle 1649-0 A of the general tax code, which was intended to limit the total amount of direct taxes paid by a taxpayer. This difference of purpose explains that the cap of the solidarity tax on fortune takes into account the sum of this tax and the only taxes on income, not all direct taxes, including local taxes, paid by the taxpayer.
(b) As previously stated, the Constitutional Council, in its decision No. 2010-99 QPC, considered that the legislator had been able to capped the cap of the solidarity tax on fortune. He was able to limit "the benefit of the holders of the most important assets of the tax cap in relation to the taxpayer's income" in order to "impede that these taxpayers do not alter their situation by focusing on the possession of property that does not provide taxable income." The criteria were deemed objective and rational and in relation to the contributive faculties of these taxpayers.
The provisions of the disputed article ensure the same objective, but according to a different logic and, in several respects, more objective. The tax is capped, but at a rate of 75%, below the existing rate until 2011 and without capsizing this cap. However, in order to avoid privileged possession of property that does not provide taxable income, the legislator wished to introduce in the determination of the cap of products and revenues that were not collected by the taxpayer because of a management choice. Essentially, the holdings of assets are subject to exclusions under the second paragraph of section 13, paragraph III, of the referred Act. In this regard, the determination of a threshold of 33% to establish that the debtor exercises control of the corporation is not unpublished. While it does not allow total control over society, it allows in most cases the minority shareholder to have a certain decision-making power within society (see, for thresholds at 20% or 25%: 29 December 1983, Decision No. 83-164 DC; 29 December 1999, Decision No. 99-425 DC; see for a 25 per cent threshold: articles 39 quinquies D, 44 septies, 44 octies, 44 octies A or 217 sexdecies of the general tax code.
In doing so, the legislator wanted to prevent taxpayers from abusing the cap system by organizing their assets in order to artificially reduce the amount of income they receive, either by using financial instruments with characteristics that would achieve this objective, or by deciding on the non-distribution of the profits of the companies they control.
Finally, it should be noted that in the case that all or part of the latent revenues taken into account under the FSI cap would ultimately not be realized, less-values of assignment would be imputed to the calculation of the cap in the year of realization.
For all these reasons, the Government considers that Article 13 must be declared in accordance with the Constitution.
XII. — On Article 15
A. ― Members of the Board of Appeal believe that this article, which reformes the real estate surplus-value regime, establishes a "confisatory" taxation, taking into account other taxations, does not take into account the real contributory capacity of taxpayers and introduces, without justification, an excessive difference between the regimes applicable to built and unbuilt buildings. In addition, the exemption of real estate surplus-values when the assignment is carried out for the benefit of a social lessor to realize social housing ignores the principle of equality before public charges.
B. ― The Government considers these criticisms to be unfounded.
B-1. As has already been said, respect for the principle of equality and Article 13 of the Declaration is in principle appreciated in relation to the characteristics of each tax. As a result, by being subject to the income tax scale for real estate surplus-values on land to be built, the taxpayer, if imposed at the highest marginal rate, does not undergo a "confisatory" taxation.
If one wanted to consider the different taxations, as suggested by the authors of the appeal, the assumptions presented must be highly relativized.
On the one hand, the taxes articles 1529 and 1609 CGI nonies F are optional. Indeed, the lump-sum tax on the nude constructible plots known as "TFTC tax" (CGI article 1529) applies on deliberation of municipalities or CFEs since January 1, 2007 (for memory, 6,100 municipalities established the TFTC as of November 5, 2012). Similarly, the so-called "Granelle II" tax (CGI article 1609 nonies F) applies on deliberation of the urban transport organizing authorities (AOTU), the state or the regions since 14 July 2010 (for memory, no deliberation establishing the Grenelle II tax has been taken to date).
On the other hand, the field of the various taxes mentioned is restricted and may be different: the lump-sum tax on the nude constructible lands known as the "TFTC tax" is due to the title of the first assignment of bare lands that became constructible; the mandatory tax collected for the benefit of the Agency of Services and Payment, established by the Act of Modernization of Agriculture and Fisheries (Act No. 2010-874 of 27 July 2010) says "LMA tax", codified under thearticle 1605 CGI nonies, applies in full right since July 29, 2010 to the first assignment of bare land constructed after January 13, 2010; the Grenelle II tax deals with the proceeds of the valuation of bare lands and built buildings located at a distance of less than 1,200 metres from new public transport infrastructure on site or railway infrastructure and applies since July 14, 2010.
In addition, the taxable base of the three taxes is less than the tax base of real estate surplus-values on assignments of building land resulting from the provisions of section 15 of the Financial Act for 2013. And mechanisms for exoneration or slaughter exist for the TFTC (exemption for assignments on land classified as building plots for more than eighteen years) and the LMA tax (reduction of the tax plate of one-tenth per year since the date on which the land was made constructible, after an exemplary period of 13 January 2010, beyond the 8th year of the total tax). Several other cases of specific exemptions may apply to land transfers to be built.
Finally, the three taxes cannot be combined simultaneously. The TFTC cannot be combined with the Grenelle II tax but can be combined with the LMA tax. The LMA tax can be combined either with the TFTC or with the Grenelle II tax. However, this cumulation can only meet for the first assignment of a bare land provided that it was made constructible from January 14, 2010. The Grenelle II tax is exclusive to TFTC but can be combined with the LMA tax (but in fact, cumulative cases are very limited).
Therefore, the approach suggested by the authors of the appeal cannot be retained.
B-2. The objective of the legislator is to encourage owners to sell land to build in order to increase the supply of housing to reduce the shortage in this sector. For this purpose, the detainment period is abolished effective January 1, 2013, and the imposition of surplus-values for the assignments of these lands will be subject to the income tax scale effective January 1, 2015. These two combined provisions will have the effect of encouraging landowners to build them to put them on the market as soon as possible.
It is consistent jurisprudence that the legislator can encourage taxpayers in situations that are almost identical to others in order to encourage them to take behaviour that is consistent with the general interest (see, in particular, on December 27, 2002, Decision No. 2002-464 DC). The difference in treatment mentioned between land to be built and other property is therefore not of a nature to manifestly break the principle of equality.
The same logic explains the introduction of a 20 per cent general slaughter on the taxable net surplus-value for assignments, realized during the year 2013, of property rights and properties other than building land (II of section 15).
And if the legislator has planned the deletion of the detainment period for the assignments of land to be built effective January 1, 2013, while a slaughter is maintained for those for which a promise of sale has acquired, before that certain date and that the act of sale is signed before January 1, 2015, it is to take into account the current situations.
B-3. With regard to the exemption of real estate surplus-values in favour of transfers made directly or indirectly to the benefit of the social donors intervened in 2013 and 2014 to realize social housing, whereas this exemption is not provided for private donors (II bis of section 15), it finds its justification in the particularity of the status and mode of operation of the former, which clearly make it a separate class of taxpayers. It is also the reactivation of a device that already existed.
For all these reasons, Article 15 is in conformity with the Constitution.
XIII. — On Articles 22, 23 and 24
Unlike what is supported, the devices introduced by these three articles have no retroactive scope.
A provision is retroactive when it comes into effect on a date prior to the publication of the Act. In tax matters, this effect is appreciated on the date of the tax-generating fact, understood as the event or act that generates tax debt. For corporate tax, the fact generator is the year's closing either in most cases on December 31 of the year. Therefore, for the year 2012, the legislator can amend the tax base rules until December 31, 2012.
The three measures that apply to the fiscal year ended December 31, 2012 are not retroactive.
XIV. — On Article 25
A. ― The purpose of this article is not to introduce indirect taxation on life insurance contracts, contrary to what is supported. The contribution is a direct tax whose debts are insurance companies. In addition, the contribution is not made up solely of amounts capitalized on life insurance contracts. Indeed, the constitution of the capitalization reserve is required for all insurance companies, for their life and non-life insurance activities, but also for the mutual and unions of Book II of the mutuality code and for the institutions of foresight.
The additional contribution to the exceptional tax on the capitalization reserve established by section 25 of the 2013 Finance Bill applies in particular to persons referred to in 1° to 6° of the B of the I of Article L. 612-2 of the monetary and financial code under the jurisdiction of the prudential control authority in the insurance sector:
― companies carrying out a direct insurance activity referred to inArticle L. 310-1 of the Insurance Code and the companies mentioned in the last paragraph of the same article, i.e., the companies approved on the date of January 1, 1993 that make public use of savings for capitalization without subscribing certain commitments;
― companies carrying out reinsurance activities with headquarters in France;
- the mutuals and unions governed by Book II of the mutuality code and the unions managing the federal guarantee systems mentioned in theArticle L. 111-6 of the mutuality codeas well as the mutualist group unions mentioned in article L. 111-4-2 of the same code;
- the mutuals and unions of Book I, which manage mutualist regulations and contracts on behalf of the mutuals and unions under Book II, for the only provisions of Title VI of Book V of the Monetary and Financial Code;
- the institutions of foresight, unions and parity groups governed by title III of Book IX of the Social Security Code;
― the insurance group companies and the joint insurance group companies mentioned in theArticle L. 322-1-2 of the Insurance Code.
These provisions are therefore not intended to introduce an indirect contribution to life insurance contracts.
B. ― In addition, these provisions do not introduce any difference in treatment between insurance companies as they are or are not established in France.
Persons subject to the contribution are persons operating an insurance business in France within the meaning ofArticle 209 of the General Tax Code. In accordance with the general principle of territoriality of tax, insurance companies established in France are subject to the complementary contribution only because of their activity in France. Correlatively, the French branches of foreign insurance companies enter the scope of the complementary contribution as soon as they are subject to the control of the Autorité de contrôle prudentiel.
With regard to French taxes, the operation of a company in France is an objective and rational criterion justifying a difference of treatment. It is also the criterion determining the territoriality of corporate tax.
Article 25 is therefore in conformity with the Constitution.
XV. — On the I of Article 51
This article, which defines the conditions for the alienation of state-built real estate located in a forest, finds its place in a finance law.
TheArticle 3 of Organic Law No. 2001-692 of 1 August 2001 relating to financial laws states that: "The budgetary resources of the State include: [...]/6° The proceeds of disposal of its domain, its financial participations as well as its other assets and rights [...]". As such, the authorizations provided for in the first paragraph of Article L. 3211-5 of the General Code of Public Ownership ("The woods and forests of the State can only be alienated by virtue of a law") have been registered several times in the financial laws. So, theArticle 161 of Act No. 2011-1977 of 28 December 2011 Financial for 2012 states that: "It is authorized the transfer by the state of the woods and forests comprising the domain of Souzy-la-Briche, object of the acts of donation of 22 May 1969, 12 April 1972 and 19 December 1975. In its decision No. 2011-644 DC of 28 December 2011, the Constitutional Council did not raise this issue on its own motion.
In this case, it is the application of all the provisions of section 51 that have an impact on the balance of the Finance Act for 2013. These provisions form an indivisible whole.
As indicated in the summary statement of Government Amendment No.I-837, "the proceeds of disposal expected in 2013 for the implementation of this article are estimated to be at €30 million in 2013". The balance item was therefore amended by €30 million in revenue on the "Management of State Property" (CAS Immobilier) trust account.
The article therefore has a direct impact on the balance of the finance law. And, contrary to what is supported, the expected disposal product in 2013 of 30 M€ covers well both the assignment provided in II (site of Velaine-en-Haye), but also the assignments provided in I of Article 51.
XVI. — On Article 73
This article lowers the overall cap of certain tax benefits.
In order to avoid the fact that the accumulated tax benefits to income tax (IR) reduces the progressivity of the IR beyond what can be justified by the general interest objective of each benefit, a global cap of incentives or investment-related tax reductions and credits has been put in place as of the taxation of revenues of the year 2009. Originally set at 25,000 euros plus 10 per cent of the taxable income, this ceiling was gradually reduced. It is set at 18,000 euros plus 4% of the taxable income of the tax home for the taxation of revenues 2012.
In order to strengthen the fairness of this system and to better guarantee the progressiveness of the tax, the measure reduces the level of this overall cap by decreasing the flat share from 18,000 euros to 10,000 euros and eliminates the proportional share of 4%. Indeed, the current ceiling is set at such a level that households with the highest income continue to be the main beneficiaries of the derogatory tax benefits that enable them to reduce the progressiveness of income tax.
However, some tax benefits were not included in the ceiling; others were subject to a proportional cap. On this point, in accordance with the jurisprudence of the Constitutional Council, the legislator has a margin of appreciation, and equality cannot be seen as to be guaranteed between tax benefits (see 28 December 2010, Decision No. 2010-622 DC). The legislator may choose the method of capping a tax advantage according to a flat or proportional mode based on the objectives pursued, the nature of investments or expenses, taking into account budgetary constraints. It may also decide to leave certain tax benefits out of the overall cap or to modulate the overall cap for certain benefits it wishes to favor.
In this case, the legislator wished to preserve the attractiveness of certain investments: donations, union dues, ultramarine investments, expenses incurred for the complete restoration of a built building ("Malraux tax reduction") and for the financing of cinematographic or audiovisual works capital (" SOFICA tax reduction"). It has already been accepted that the legislator may submit these benefits to a more favourable regime than the common law regime applicable to these devices.
In addition, the Government has decided to reform the overseas investment regime under the Finance Act for 2014.
This measure is applicable as of the 2013 taxation year for expenditures paid and investments made effective January 1, 2013. The deferrals and tax reductions acquired for the first time under previous years are not affected by this measure. Finally, the tax benefits acquired from the 2013 taxation year, but which are based in a real estate investment decision prior to January 1, 2013, would not be affected by the hardening of the cap and would remain subject to the previous ceilings.
For these reasons, the system, which has no complexity, is in conformity with the Constitution.
XVII. ― On Article 104
This section finds its place in the Financial Act, as it affects the budgetary expenditures of 2013.
The objective of the legislator is to limit the burden of waterfront spending to 10% as part of the implementation of a technology risk prevention plan (TPP), by mobilizing communities and industry (40% for the State); 25% for communities and 25% for industry. Section 104 I completes the support device provided for inArticle 200 quater A of the General Tax Code by establishing a mandatory contribution from communities and businesses to the financing of the work prescribed to natural homeowners within the framework of technological risk prevention panels.
These contributions have the nature of subsidies for the owners concerned. They have a direct impact on the tax credit plate provided for in section 200 quater A above. This tax credit is calculated on the basis of expenses paid by the owner under deduction of the subsidies and/or refunds collected. Section 104, I, therefore, helps to determine the scope of the tax credit and to effectively reduce the share of the infinity cost to the residents. So he has all his place in finance law.
This provision also stabilizes the amount of eligible expenditures on the tax credit to the total cost of the prescribed work. Without this provision, the cost of the tax credit would be changed (in this case reduced by half because it would not cover 100% of the cost of the work, but 50% of the cost of the work, that is, the unsupported share of the community and industry).
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For all of these reasons, the Government considers that the three appeals against the 2013 Finance Act must be rejected.
