France to reduce corporate tax surcharge, ease employee buyouts in 2027 budget

In a latest update French Prime minister has introduced a new Corporate Tax Surcharge Reduction and Employee Buyout Incentives in 2027 Draft Budget.

French Prime Minister Sébastien Lecornu confirmed in a letter to business leaders that the government will propose a reduction in the exceptional corporate tax contribution levied on large companies when the 2027 draft finance bill is presented.

The upcoming budget will also introduce a new legal and financial mechanism designed to actively encourage and facilitate the takeover of enterprises by their employees.

Formulated as a "reversible" budget ahead of broader upcoming political shifts, the package aims to avoid new general tax hikes and signal a more welcoming climate to international investors after two years of heavy temporary levies on major corporations.

The government, which lacks a majority in the lower house, is set to propose its budget in the coming weeks though several opposition ⁠parties have already said they would reject it.

France introduced the temporary surtax on large companies in 2025 that was only supposed to last a year, but was rolled over into 2026 under a budget compromise.

In the letter, Lecornu also said that the government planned to introduce a new tax incentive to encourage business transfers, particularly to employees.

Key Takeaways:

Under the planned "Papin Pact", ⁠companies taken over by staff would benefit from accelerated depreciation of new equipment needed for production, with enhanced support for small businesses.

Lecornu said the government would review state support for businesses to ⁠determine whether they genuinely promoted investment, innovation, decarbonization or production in France, or had become ineffective windfalls.

He said there would be no ⁠new taxes in the 2027 budget, arguing that France could not restore its public finances by undermining economic growth.

France's ⁠largest employers’ organization Medef said it welcomed Lecornu’s message, saying it was necessary to address the concerns of business leaders.