Due to the unconstitutionality of the 3% tax on dividend distributions outside the French group based on the equality principle, the French Parliament has imposed an additional surtax to rectify its budget deficit.
This legislation will increase, for large companies, the effective tax rate to 39.4% or 44.4% depending on the size of the turnover. Unfortunately, this additional tax will be imposed on the relevant large companies that did not make a prior distribution subject to the 3% tax that will now be refunded.
This tax increase was necessitated by the unconstitutionality of the original 3% tax; which imposes a learning that such taxes that may be unconstitutional should be claimed as a refund early in the process notwithstanding the final developments.
Deloitte’s summaries provide further details on this development for reference.