Covid-19 measures extended until 31st December 2022

The doubling of exemption ceilings continues to apply to include 2022 tax closures.

Exemption ceilings

The main measure taken by the Government at the beginning of the pandemic in 2020 has just been extended and will run through to the tax closure date of 31st December 2022 (Law of February 14, 2022).

This means that the exemption ceiling of 1,000,000€ rises to 2,000,000€.

This, of course, affects only a small number of business because, remember, for every 1€ exempted under the tax shelter, there needs to be a minimum of 2€ of reserved profits made during the financial year.

However, this emergency measure, taken in 2020, enabled the sector to maintain a relatively stable level of activity, despite the worrying economic context linked to the pandemic.

The Government has therefore acceded to the request of producers to keep this option in place for a further 12 months, so that the largest companies can invest twice the amount when they generate profits that allow them to do so.

Last update on : 14.03.2022

Which is a genuine breath of fresh air for the sector

So, in practice, the investment ceiling enabling the maximum annual amount to be exempted is now 475,059€ (2,000,000€ / 421%).

This means that the maximum tax yield that a company can derive from this operation is 500,000€ (i.e. the tax on a profit of 2,000,000€) – 475,059€ (the maximum amount invested in tax shelter), making 24,941€ or 5.25% of the amount invested.

For producers in search of funding to finance their projects, this measure equates to a real breath of fresh air, which they will probably need if they are to keep their finances balanced.

 

Last update on : 14.03.2022

Extension of the periods for incurring eligible expenditure

The other major measure implemented by the legislator relates to the 12-month extension of the period during which producers are authorised to incur production and operating expenses for their projects while still enjoying the benefits of the tax shelter.

Initially, the lawmakers had planned to limit this exception to framework agreements signed at the latest by 30th September 2021.

But now, the measure extends to framework agreements signed 31st March 2022.

Last update on : 14.03.2022

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