Cara Avocats

Day: November 13, 2025

Multinationals taxed at 25%: a fiscal thunderclap that upsets the international order

Posted on by admin1708

An amendment adopted against the grain. Against all expectations, the National Assembly has adopted an amendment put forward by the La France Insoumise group, introducing a tax on the global profits of multinationals at an effective rate of 25%.

This measure, introduced in article 209, XI of the General Tax Code, was voted through despite the unfavorable opinion of the Government and the General Rapporteur - and is already shaking the foundations of international tax law.

By breaking with the tax treaties signed by France and with the OECD's multilateral consensus on Pillar II (minimum worldwide rate of 15%), France would be isolating itself fiscally, at the risk of ushering in an era of unprecedented litigation and double taxation.

An amendment outside conventional limits

Under the voted mechanism, French companies would be taxed on their worldwide profits, broken down according to a "French sales/world sales" ratio. The portion thus attributed to France would then be taxed at 25%.


The intention is clear: to tackle aggressive tax optimization, estimated by the amendment's authors at between 80 and 100 billion euros a year, notably through transfer pricing.

But the system runs up against two cardinal principles:

  • Bilateral tax treaties: these allocate taxing powers according to the location of activities, and prohibit double taxation. Under Article 55 of the French Constitution, these treaties take precedence over domestic law; failure to comply with them would expose the State to massive repayments.
  • The OECD/EU consensus: the Pillar 2 Directive (2022/2523) imposes a minimum rate of 15%, the fruit of a worldwide agreement painstakingly reached between 140 countries. Unilateral taxation at 25% upsets this fragile balance and exposes France to economic reprisals or company migration to "conventional" jurisdictions.

Between political voluntarism and legal isolation

This is not the first time that France has shown its determination to go further than its partners in terms of tax justice.

But in this case, the step taken is unprecedented: we are moving from a logic of international cooperation to one of punitive sovereignty.

The General Rapporteur himself warned of the mechanical double taxation that would result from the system: the same fraction of profit could be taxed both in the country of origin and in France, in the absence of an elimination agreement.

As for the Minister of the Economy, he summed up the situation with a lapidary formula: "This text will not bring in 20 billion euros, but 20 billion in trouble".

The fragile balance of Pillar II under threat

For the record, OECD Pillar II is based on a minimum effective tax rate of 15% for groups with consolidated sales in excess of €750 million.The aim is to put an end to the global race to lower rates and ensure consistent minimum taxation.

By setting a unilateral floor rate of 25%, France would expose itself not only to investment withdrawals, but also to constitutional invalidation.Indeed, the measure directly contradicts the hierarchy of norms: a tax law cannot set aside the stipulations of a duly ratified treaty.

Critical analysis: a symbol of fiscal malaise

Behind this initiative lies the whole debate on the legitimacy of international taxation: between perceived injustice and respect for multilateral commitments.

Political voluntarism cannot ignore the arm's length principle, the cornerstone of contractual and transfer pricing law.

In the absence of a coordinated overhaul, France's unilateralism risks weakening the country's credibility on the international stage and fuelling a new tax arbitration dispute.

Our reading

This "surprise" adoption illustrates a recurring phenomenon: the temptation to use tax law as a political lever, even if it means ignoring the constraints of international law.The quest for tax justice is no substitute for legal consistency, and it is in this area that the measure is most fragile.

To be continued, then, between the parliamentary shuttle and review by the Constitutional Council.But one thing is certain: the clash of doctrines between fiscal sovereignty and OECD consensus has reached a new level.

CIR and offshoring: the new tax boomerang adopted against the Government's advice

Posted on by admin1708

The French National Assembly has adopted an anti-delocalization amendment making entitlement to the Research Tax Credit (Crédit d'Impôt Recherche - CIR) conditional on maintaining R&D activities in France.

The Government and the General Rapporteur opposed the measure, warning that it would be "counter-productive" and likely to dissuade international groups from investing in France.

Despite these reservations, the amendment was adopted (93 votes in favor, 63 against) and now introduces a penalty system for companies which, after having benefited from the CIR, transfer their activities abroad.

A double penalty for relocation

Without modifying the calculation of the CIR, the text introduces a repayment clause accompanied by a temporary ban:

Full repayment of tax credits received in respect of the previous three years ;

Exclusion from the scheme for the following three years.

In other words, a company that relocates its R&D exposes itself to a tax boomerang effect: not only does it lose the future benefit, but it also has to pay back past gains.

Triggering the sanction requires two cumulative conditions:

  1. Total or partial closure of an R&D site in France;
  2. A significant reduction in the number of employees in the region.

The stated aim is to target "economically and socially harmful" relocations, i.e. those that result in job losses and a weakening of the French industrial fabric.

Contested retroactive application

Even more surprising: the amendment provides for retroactive application from January 1, 2024.

In practical terms, a company transferring R&D activity in 2024 or early 2025 could be forced to repay CIRs received in 2021, 2022 and 2023.


Such retroactivity, which is rarely accepted in tax matters, is likely to raise serious constitutional difficulties, particularly with regard to the principle of legal certainty and the non-retroactivity of tax laws.

Two opposing visions of industrial policy

This adoption illustrates the divide between two approaches:
The attractiveness rationale defended by the Government: the CIR must remain a lever for attracting international investment and encouraging the creation of R&D centers in France. Adding punitive constraints would undermine this competitive advantage.

The logic of conditionality advocated by the authors of the amendment: the 7 to 8 billion euros of public money devoted each year to the CIR must not finance companies which, in the end, cut French jobs to develop their research abroad.

Critical analysis: between political symbolism and legal risk

This text reflects a growing unease about the effectiveness of the CIR, which is regularly accused of benefiting large corporations rather than the national innovation ecosystem.But by linking the tax advantage to an obligation to maintain activity, the legislator has transformed an incentive into a punitive instrument.

In addition to the difficulties of interpretation (what proportion of activity constitutes "relocation"? What is the timeframe for control?), the risk is twofold:

A lack of interest on the part of foreign investors, for whom a stable and predictable tax framework is essential;

An avalanche of litigation, notably concerning the retroactivity and proportionality of sanctions.

Our reading

Under the guise of economic patriotism, the scheme threatens to weaken one of the few tax instruments unanimously acclaimed for its impact on research.The debate has only just begun, but the symbolism is strong: theera of unconditional incentives seems to be coming to an end.

We'll be keeping an eye on this issue as it makes its way through parliament... and probably before the French Constitutional Council.