June 30, 2022

CVAE and LégiFiscal public service delegation fees

In February 2020, the Council of State estimated that the fees for public service delegation paid by a company for provision of more than 6 months could not be deducted for the calculation of the CVAE. The tax administration has therefore just updated its documentation (BOFiP news of December 22, 2021).

Added value and rentals of more than 6 months ¶

Professionals whose turnover exceeds € 500,000 are liable for the CVAE (contribution on the added value of companies). It is based on the tax added value produced by the company. It is defined as the difference between the company’s production (sales, stored production, capitalized production, operating subsidy) and deductible expenses consisting mainly of purchases from suppliers (purchases of goods and external services).

On the other hand, charges deductible from added value, rents and fees paid when the following 2 conditions are met are excluded:

  • The agreement concluded must relate at least in part to the provision of tangible property
  • The agreement must have a duration of more than 6 months.

For companies under the real normal regime, the added value is calculated on the 2059-E form of the tax return.

Public service delegation fees ¶

During several judgments delivered on February 24, 2020 (n ° 433881, n ° 433882 and n ° 433883), the Council of State considered that companies paying royalties in execution of a public service delegation contract no. were not deductible from the added value when the agreement covered a period of more than 6 months.

Thus, the legal qualification of the agreement has no effect on the 6-month rule. Are non-deductible, leasing, rental, sublet, management and therefore concession or delegation of public service agreements (concession, affermage or management).

Before the ruling by the Council of State, tax doctrine considered fees for delegation of public service as deductible from added value. Since an update of the BOFiP dated December 22, 2021, this is no longer the case. These changes will apply for taxes due from 2022.

Source: BOFiP news of December 22, 2021