Exceptional profits mean exceptional Tax Shelter yields!

The overall net gain may exceed 20% for companies that return exceptional results.

12.94% overall net gain for companies taxed at the standard rate

If the guaranteed tax yield of a Tax Shelter investment is set at 5.25% of the sum invested, the overall net gain of the operation, taking into account the financial premium paid to the investor by the producer of the work after 18 months, amounts to 12.94%.

The guaranteed return is intended for any company taxed at the standard rate of 25% (the rate in effect since the 2021 tax year).

Last update on : 13.03.2023

The rate is increased if insufficient or no advance tax payments are made

But what is the yield from the Tax Shelter if the company making the investment is subject to a tax rate in excess of 25%?
Mechanically, in this instance, the tax yield for the operation will follow a rising curve, because each euro immunised in this way will save the company a greater amount of tax.
This is particularly the case for companies whose tax calculation is increased by a surcharge of 6.75% if insufficient or no advance tax payments are made.
While the ISOC reduced rate of tax has fallen in recent years, the penalties applied in the event of late payment have tripled!


Last update on : 13.03.2023

Exceptional results: a yield boosted by 20.04%

A common reason that fully justifies considering a Tax Shelter investment is exceptional or unexpected profit or result. By definition, an exceptional profit is one that is made up of unusual and/or non-recurrent components and so which is very often unpredictable or random.
In a case such as this, the company has to deal with a situation at the end of the year where it has not made sufficient advance tax payments – which will potentially expose it to a further 6.75% surcharge on the amount of tax it has to pay.
When it comes to what would constitute an exceptional profit for a company, the main reason that comes to mind immediately is the disposal of an asset, such as a real estate property. Other reasons include the unexpected recovery of a debt, receiving a payment from an insurance company or winning a payout from a court case – not forgetting an unexpected large order received at the end of the year, etc.
In situations such as this, opting to resort to the Tax Shelter will add an exceptional boost to the normal tax yield from the operation (5.25%) by reducing the impact from the surcharge of 6.75% applied on the balance of tax owed.

Last update on : 13.03.2023

A concrete example

Let’s take the example of a company that generates a pre-tax accounting profit of 1,500,000€, 1,000,000€ of which comes from the sale of a property.
We’ll start from the principle that over the course of the financial year, this company will have made advance payments of 125,000€ (or 25% of its current profit).
Without using Tax Shelter, at the end of the financial year, this company will have to pay a tax balance of 266,875€, which includes a surcharge of 16,875€ (250,000 * 6.75%).
However, at the end of the year, if this same company acts on the recommendation of its tax adviser and invests 125,000€ in the Tax Shelter, in doing so, it will reduce its taxable base to 973,750€ [1,500,000€ - (125,000€ * 421%)], which corresponds to tax owed of 243,438€.
The 6.75% surcharge will then apply to an amount limited to 118,438€ (243,438€-125,000€), or 7,995€.
This means that the saving made on the tax surcharge, made possible thanks to the Tax Shelter, is 8,880€ (16,875€ - 7,995€), which is on top of the overall standard yield from a Tax Shelter investment.

So, from 12.94% of the amount invested, the overall net gain increases as a result to 20.04%!

  • Amount invested: (125,000€)
    • Tax Shelter tax saving: 6,563€
    • Saving on the surcharge: 8,880€
    • Net financial return: 9,611€
  • Total gain: 25,054€ (20.04%)          



Last update on : 13.03.2023


Calculation tool