Former business tax has been replaced with 2 components during 2.1.:
- CFE: This tax, the tax rate of which varies from one municipality to another, is based on the rental value of the business premises occupied by the company
- CVAE: This contribution is calculated according to the value added produced by the company. It is part of the taxes payable by companies to the local competent authorities.
CFE is calculated by municipality at the end of the year.
For example, for 2020, the CFE has been issued at the middle of December.
Payments were done as following:
- June 15th 2020: 1st instalment of CFE = 50% of CFE of 2019
- December 15th 2020: balance of CFE 2020 = 100% of CFE 2020 minus instalments of June
- This tax is a non-income tax. That is why I do not include it as corporate tax.
CVAE is calculated on the basis of the added value produced, according to the following transaction: (value added x effective tax rate) + [(value added x effective tax rate) x 1%].
Only expenses and income relating to taxable activities (in the scope of the CFE, and which are not exempt) are taken into account.
CVAE is calculated at year end and payments are don as following:
- June 15th 2020: 1st instalment of CVAE = 50% of CVAE of 2019
- September 15th 2020: 1st instalment of CVAE = 50% of CVAE of 2019
- April 31th 2021: calculation of CVAE 2020
- May 15th 2021: balance of CVAE 2020 = 100% of CVAE 2020 minus instalments paid during 2020
This tax is treated as income tax for US Gaap.