The draft finance law for 2025 provides for the fixing of the "planchonnement" mechanism for changes in rental values for business premises, as applied until now by the tax authorities.
This change would follow a contrary interpretation by the Conseil d'Etat dated November 13, 2023, confirmed by another decision dated April 3, 2024. It would apply retroactively to taxes due as from the 2023 financial year.
Reminder of the methods used to calculate the rental value of business premises
Since 2017, business premises other than industrial premises have been assessed on the basis of the revised value, which consists of applying to their surface area a rate derived from a rate grid based on their category (depending on the use of the premises). This reform has automatically led to variations compared with the bases imposed until 2016, which consisted in applying to the surface area the rate for a typical premises valued at 1er January 1970.
To ensure that the reform is neutral for local authorities, neutralization coefficients have been introduced.
For taxpayers, the law has created two support mechanisms:
- planchonnement, which aims to halve the difference between the old rental value and the new, revised, neutralized rental value;
- smoothing, which allows changes in contributions resulting from revised rental values to be spread over a ten-year period starting in 2017.
Conseil d'Etat challenges the fixed nature of the "planchonnement" mechanism
The application of the "planchonnement" mechanism by the Direction générale des finances publiques (DGFiP) is currently "frozen" in relation to the revised rental value for 2017. The "planchonnement" mechanism is therefore not updated each year, and does not take into account any changes in rental value subsequent to this date (such as the application of a location coefficient decided after 2017 by a departmental rental value commission).
In a decision dated November 13, 2023, ruling on a request to refer a priority question of constitutionality to the Conseil constitutionnel, and confirmed by a decision dated April 4, 2024, ruling on the merits of the case, the Conseil d'Etat nevertheless considered that the wording of III of article 1518 A resulted in quinquies of the French General Tax Code (CGI) that the "planchonnement" was calculated, for each year between 2017 and 2025, by comparing the rental value of the business premises, unrevised as at 1 January 2017, with the rental value of the business premises as at 1 January 2025.er January 2017 at its revised and neutralized rental value for the year concerned and not at " rental value [...] withheld for taxes due for 2017 only ".
As a result of this contradictory interpretation by the administrative judge, the tax authorities are faced with the risk of a series of disputes challenging the fixed nature of the "planchonnement" as applied by the DGFiP. A preliminary assessment carried out by the DGFiP shows that 87 litigation cases are currently underway, for a total amount of 38.5 million euros. Given the recent nature of the Conseil d'Etat rulings, the tax authorities anticipate a significant increase in the number of contentious proceedings, as almost 84.5 % of revised business premises are subject to municipal planning, i.e. around 3.1 million premises. Of these premises, 2.9 million are affected by an increase in their rental value, giving their owners or operators an interest in bringing a claim.
The tax authorities do not yet seem to be able to forecast the amount of tax relief corresponding to these disputes, which will be borne by the State and could represent a very substantial sum. This state of affairs also places local authorities in an unstable situation in terms of the predictability of their tax resources.
Proposed device
Drawing on the consequences of the Conseil d'Etat's decision and the impossibility for the tax authorities to implement a "sliding planchonnement", this article amends article 1518 A. quinquies of the French General Tax Code to re-establish, for direct local taxes due from 2023 onwards, the fixity of the "planchonnement" as it has been applied until now.
Thus, for taxes due for the years 2023 to 2025, the "planchonnement" should be carried out by comparing the unrevised rental value as at January 1, 2023 with the rental value as at December 1, 2025.er January 2017 to the revised rental value on January 1, 2017.er January 2017.
The proposed retroactivity of the measure would apply to taxes due for the years 2023 and 2024, with the exception of those contested before October 10 - the date on which the present Finance Bill for 2025 was presented to the Council of Ministers - and court rulings that have become res judicata.
A risk of unconstitutionality?
According to parliamentary debates, the measure's retroactivity could run the risk of unconstitutionality. The Constitutional Court has always upheld the principle of non-retroactivity of laws in criminal matters, and only allows it in other areas in the event of "a breach of the law". sufficient grounds of general interest and provided that constitutional requirements are not deprived of legal guarantees. ". For its part, the DGFiP estimates that " the desire to avoid disruption in the operation of public services could constitute a sufficient reason of general interest ".
Furthermore, in its decision of November 13, 2023, the Conseil d'Etat ruled that the planchonnement system, as it results from the provisions of III of article 1518 A quinquies of the CGI, does not institute " a difference in treatment that fails to respect the principles of equality before tax law and equality before public burdens This would be to the detriment of taxpayers whose plot location coefficients were fixed after 2017, since the calculation of the "planchonnement" is updated each year. The new wording of III, which confirms the fixed nature of the "planchonnement", contrary to the interpretation of the administrative judge, could therefore be censured. However, such a risk would appear to be less serious than the previous one, as the Conseil d'Etat has ruled, with regard to the smoothing system that is fixed at 1er January 2017, that this will certainly lead to ". a difference in treatment "but that the latter " does not result from tax law but from a possible failure to implement the provisions [...] relating to the determination of rental values [of business premises]. "This is particularly true of the application of location coefficients.
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Article written by:
Adama SARR - Tax consultant at G.A.C. Group
With an MBA in Business Law, Adama has spent the last fifteen years working in the consulting field, where she enjoys offering her clients personalized tax support based on reliable, tried-and-tested processes. She pays particular attention to keeping abreast of developments in the taxation of our products. On a day-to-day basis, she acts as a tax expert, analyzing our customers' tax bases with a view to securing and optimizing their real estate taxation.
Our tax consultants offer support throughout your real estate and restructuring investments (assistance with tax returns, budgeting, development tax, archaeological tax, etc.) to ensure that your local taxes are secure. You need solid, reliable cash management to enable your business to grow: our financial performance division, made up of tax consultants backed by expert lawyers, is dedicated to securing your tax environment through a high level of expertise and personalized support.
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