Version en anglais - 2016-744 DC

Decision no. 2016-744 DC of 29 December 2016 - Law on finances for 2017 -


THE CONSTITUTIONAL COUNCIL WAS ASKED TO DECIDE, under the conditions described in Article 61, second Subparagraph of the Constitution, on the Law on finances for 2017 under number 2016-744 DC. In attendance on 22 December 2016: Mr. Bruno RETAILLEAU, Mr. Pascal ALLIZARD, Mr. Gérard BAILLY, Mr. François BAROIN, Mr. Philippe BAS, Mr. Christophe BÉCHU, Mr. Jérôme BIGNON, Mr. Jean BIZET, Mr. Gilbert BOUCHET, Mr. Michel BOUVARD, Mr. François-Noël BUFFET, Mr. François CALVET, Mr. Christian CAMBON, Ms. Agnès CANAYER, Mr. Jean-Pierre CANTEGRIT, Mr. Jean-Noël CARDOUX, Mr. Jean-Claude CARLE, Ms. Caroline CAYEUX, Mr. Gérard CÉSAR, Ms. Anne CHAIN-LARCHÉ, Mr. Patrick CHAIZE, Mr. Pierre CHARON, Mr. Daniel CHASSEING, Mr. Alain CHATILLON, Mr. François COMMEINHES, Mr. Gérard CORNU, Mr. Pierre CUYPERS, Mr. Philippe DALLIER, Mr. René DANESI, Mr. Mathieu DARNAUD, Mr. Serge DASSAULT, Ms. Isabelle DEBRÉ, Mr. Francis DELATTRE, Mr. Robert DEL PICCHIA, Mr. Gérard DÉRIOT, Ms. Catherine DEROCHE, Ms. Jacky DEROMEDI, Ms. Marie-Hélène DES ESGAULX, Ms. Chantal DESEYNE, Ms. Catherine DI FOLCO, Mr. Éric DOLIGÉ, Mr. Philippe DOMINATI, Mr. Alain DUFAUT, Ms. Nicole DURANTON, Mr. Jean-Paul ÉMORINE, Ms. Dominique ESTROSI SASSONE, Mr. Michel FORISSIER, Mr. Alain FOUCHÉ, Mr. Bernard FOURNIER, Mr. Christophe FRASSA, Ms. Joëlle GARRIAUD-MAYLAM, Mr. Jean-Claude GAUDIN, Mr. Jacques GAUTIER, Mr. Jacques GENEST, Ms. Frédérique GERBAUD, Mr. Bruno GILLES, Ms. Colette GIUDICELLI, Mr. Alain GOURNAC, Mr. Jean-Pierre GRAND, Mr. Daniel GREMILLET, Mr. François GROSDIDIER, Mr. Jacques GROSPERRIN, Ms. Pascale GRUNY, Mr. Charles GUENÉ, Mr. Alain HOUPERT, Ms. Christiane HUMMEL, Mr. Benoît HURÉ, Mr. Jean-François HUSSON, Ms. Corinne IMBERT, Mr. Alain JOYANDET, Ms. Christiane KAMMERMANN, Mr. Roger KAROUTCHI, Mr. Guy-Dominique KENNEL, Mr. Marc LAMÉNIE, Ms. Élisabeth LAMURE, Mr. Daniel LAURENT, Mr. Antoine LEFÈVRE, Mr. Jacques LEGENDRE, Mr. Dominique de LEGGE, Mr. Jean-Pierre LELEUX, Mr. Jean-Baptiste LEMOYNE, Mr. Jean-Claude LENOIR, Mr. Gérard LONGUET, Ms. Vivette LOPEZ, Mr. Michel MAGRAS, Mr. Claude MALHURET, Mr. Didier MANDELLI, Mr. Jean-François MAYET, Ms. Colette MÉLOT, Ms. Marie MERCIER, Ms. Brigitte MICOULEAU, Mr. Alain MILON, Mr. Albéric de MONTGOLFIER, Ms. Patricia MORHET-RICHAUD, Mr. Jean-Marie MORISSET, Mr. Philippe MOUILLER, Mr. Philippe NACHBAR, Mr. Louis NÈGRE, Mr. Louis-Jean de NICOLA?, Mr. Claude NOUGEIN, Mr. Philippe PAUL, Mr. Jackie PIERRE, Mr. François PILLET, Mr. Rémy POINTEREAU, Mr. Ladislas PONIATOWSKI, Mr. Hugues PORTELLI, Ms. Sophie PRIMAS, Ms. Catherine PROCACCIA, Mr. Jean-Pierre RAFFARIN, Mr. Henri de RAINCOURT, Mr. Michel RAISON, Mr. Jean-François RAPIN, Mr. André REICHARDT, Mr. Charles REVET, Mr. Bernard SAUGEY, Mr. Michel SAVIN, Mr. Bruno SIDO, Mr. Abdourahamane SOILIHI, Mr. André TRILLARD, Ms. Catherine TROENDLÉ, Mr. Michel VASPART, Mr. Alain VASSELLE, Mr. Hilarion VENDEGOU, and Mr. Jean-Pierre VIAL, Senators.

Also in attendance on that day: Mr. Christian JACOB, Mr. Damien ABAD, Mr. Bernard ACCOYER, Mr. Yves ALBARELLO, Mr. Benoist APPARU, Ms. Laurence ARRIBAGÉ, Mr. Julien AUBERT, Mr. Olivier AUDIBERT-TROIN, Mr. Patrick BALKANY, Mr. Jacques-Alain BÉNISTI, Mr. Sylvain BERRIOS, Ms. Valérie BOYER, Ms. Marine BRENIER, Mr. Xavier BRETON, Mr. Philippe BRIAND, Mr. Olivier CARRÉ, Mr. Gilles CARREZ, Mr. Yves CENSI, Mr. Guillaume CHEVROLLIER, Mr. Alain CHRÉTIEN, Mr. Jean-Louis CHRIST, Mr. Dino CINIERI, Mr. Philippe COCHET, Mr. François CORNUT-GENTILLE, Mr. Jean-Michel COUVE, Ms. Marie-Christine DALLOZ, Mr. Bernard DEFLESSELLES, Mr. Julien DIVE, Mr. Jean-Pierre DOOR, Mr. David DOUILLET, Ms. Virginie DUBY-MULLER, Mr. Daniel FASQUELLE, Mr. Georges FENECH, Ms. Marie-Louise FORT, Mr. Yves FOULON, Mr. Marc FRANCINA, Mr. Yves FROMION, Mr. Laurent FURST, Mr. Claude de GANAY, Mr. Sauveur GANDOLFI-SCHEIT, Mr. Guy GEOFFROY, Mr. Bernard GÉRARD, Mr. Alain GEST, Mr. Franck GILARD, Mr. Georges GINESTA, Mr. Claude GOASGUEN, Mr. Philippe GOSSELIN, Mr. Philippe GOUJON, Ms. Claude GREFF, Ms. Arlette GROSSKOST, Mr. Serge GROUARD, Ms. Françoise GUÉGOT, Mr. Michel HERBILLON, Mr. Antoine HERTH, Mr. Patrick HETZEL, Mr. Guénhaël HUET, Mr. Sébastien HUYGHE, Mr. Denis JACQUAT, Mr. Christian KERT, Mr. Jacques KOSSOWSKI, Mr. Valérie LACROUTE, Mr. Jean-François LAMOUR, Ms. Laure de LA RAUDIÈRE, Mr. Guillaume LARRIVÉ, Mr. Charles de LA VERPILLIÈRE, Mr. Alain LEBOEUF, Ms. Isabelle LE CALLENNEC, Mr. Marc LE FUR, Mr. Jean LEONETTI, Mr. Pierre LEQUILLER, Ms. Véronique LOUWAGIE, Mr. Thierry MARIANI, Mr. Hervé MARITON, Mr. Olivier MARLEIX, Mr. Alain MARSAUD, Mr. Patrice MARTIN-LALANDE, Mr. Alain MARTY, Mr. Jean-Claude MATHIS, Mr. François de MAZIÈRES, Mr. Gérard MENUEL, Mr. Damien MESLOT, Mr. Philippe MEUNIER, Mr. Jean-Claude MIGNON, Mr. Pierre MORANGE, Mr. Yannick MOREAU, Mr. Alain MOYNE-BRESSAND, Mr. Jacques MYARD, Ms. Dominique NACHURY, Mr. Patrick OLLIER, Mr. Bernard PERRUT, Mr. Jean-Frédéric POISSON, Mr. Arnaud ROBINET, Mr. Paul SALEN, Ms. Claudine SCHMID, Mr. André SCHNEIDER, Mr. Thierry SOLÈRE, Mr. Claude STURNI, Mr. Alain SUGUENOT, Mr. Jonas TAHUAITU, Mr. Guy TEISSIER, Mr. Jean-Marie TÉTART, Mr. Pascal THÉVENOT, Ms. Catherine VAUTRIN, Mr. Arnaud VIALA, Mr. Philippe VITEL, Mr. Michel VOISIN, Mr. Éric WOERTH, Ms. Marie-Jo ZIMMERMANN, Mr. Thierry BENOÎT, Mr. Charles de COURSON, Mr. Laurent DEGALLAIX, Mr. Yannick FAVENNEC, Mr. Philippe FOLLIOT, Mr. Meyer HABIB, Mr. Jean-Christophe LAGARDE, Mr. Bernard PANCHER, Mr. Michel PIRON, Mr. Arnaud RICHARD, Mr. François ROCHEBLOINE, Mr. André SANTINI, Mr. Francis VERCAMER, Mr. Philippe VIGIER and Mr. Patrick WEITEN, Members of the National Assembly.

In light of the following texts and items:
- the Constitution;
- Ordinance no. 58-1067 of 7 November 1958 as amended, concerning the Organic Law on the Constitutional Council;
- Organic law no. 2001-692 of 1 August 2001 regarding the laws on finance;
- Organic law no. 2012-1403 of 17 December 2012 regarding planning and governing public finances;
- the Commercial Code;
- the General Tax Code;
- the Fiscal Procedures Register;
- Law no. 72-657 of 13 July 1972 enacting measures that benefit certain categories of older merchants and artisans;
- Law no. 2012-1509 of 29 December 2012 on finances for 2013, along with Decision no. 2012-662 DC of 29 December 2012 of the Constitutional Council;
- Law no. 2013-1278 of 29 December 2013 on finances for 2014, along with Decision no. 2013-685 DC of 29 December 2013 of the Constitutional Council; Law no. 2014-1653 of 29 December 2014 on planning public finances for the years 2014 to 2019;
- Notice no. 2016-3 of 24 September 2016 from the High Council of Public Finances, regarding draft laws on finances and financing social security for the year 2017.
- the observations of the Government, registered on 26 December 2016;
And having heard the rapporteur;
THE CONSTITUTIONAL COUNCIL DECIDED ON THE FOLLOWING:

1. The applicant Senators and Members of the National Assembly refer to the Constitutional Council the Law on finances for 2017. They question its sincerity. They contest certain provisions of its Article 7, and its Articles 12, 21 and 62. The applicant Senators contest its Articles 61 and 78 and certain provisions of its Article 105. The applicant Members of the National Assembly contest its Article 33 and certain provisions of its Article 60.

- On the sincerity of the Law on finances:

2. The applicant Senators and Members of the National Assembly claim that the Law on finances for 2017 violates the principle of budgetary sincerity. They criticise it for relying on overestimated assumptions for growth. They criticise the report on the expenses and expected income that artificially increases the budget balance for 2017 as well as the underestimation of public expenses. According to the Notice from the High Council of Public Finances of 24 September 2016, mentioned herein above, they claim that the Law on finances, specifically in that it contains fiscal measures that do not take effect until 2018, compromises compliance with the multi-annual course regarding the changes in public finances planned by the Law of 29 December 2014 mentioned herein above.

3. According to Article 32 of the Organic Law of 1 August 2001 mentioned herein above: "the laws on finance shall sincerely present all of the resources and expenses of the State. This sincerity shall be based on taking into account the available information and the estimates that may reasonably be the result of it." It follows from this that the sincerity of the Law on finances for the year shall be characterised by the absence of any intent to falsify the key objectives of balance that is being determined.

4. The draft law on finances is based on initial estimates for growth of gross domestic product of 1.5% for the year 2016 as for the year 2017. In its Notice of 24 September 2016, the High Council of Public Finances deemed that the estimate for 2016 was "a bit elevated in terms of the information available at this time" and "higher than the majority of the estimates that have been recently published". They felt that those for 2017 were "optimistic given the downward factors that have occurred these past few months". Furthermore, the High Council of Public Finances estimates that "the return in 2017 of the nominal deficit to below the threshold of 3 GDP points is uncertain", given the risks on the expenses and expected income.

5. First of all, on the one hand, at the new reading of the contested Law at the National Assembly, the Government's amendments to the Introductory Article and the Balance Article drew the conclusion of revising estimated growth for 2016 to 1.4% associated with a corrective draft law on finances for 2016 under discussion, based on the evaluation of income. These changes implement the imperative for sincerity that is part of evaluating financial laws during their entire evaluation.

6. On the other hand, if the estimates for 2016 and 2017 may be seen as optimistic, specifically as pertains to the deficit for 2017, such as established by the High Council of Public Finances, it cannot be seen from either their Notice or other elements available to the Constitutional Council -- specifically the estimates for growth of gross domestic product for 2016 and 2017 established by different institutions (such as the European Commission, the Banque de France, the International Monetary Fund and the Organisation for Economic Co-operation and Development) -- that the economic estimates upon which the Law on finances is based are undermined by any intent to falsify the key objectives of balance of the contested Law.

7. Secondly, as the High Council of Public Finances observed, if several provisions of the Law on finances have the effect of increasing 2017 income by advancing by one year certain tax revenue and if the risks affecting public expenses are higher in 2017 than for previous years, it does not follow from the elements the Constitutional Council had access to that the resources and the expenses of the State for 2017 are presented in an insincere manner.

8. Thirdly, certain fiscal expenses and measures will not have an effect on the budget balance until 2018, which makes it more difficult to comply with the multi-annual guidelines for public finances defined by the planning Law of 29 December 2014. However, this does not result in any infringement on a constitutional requirement.

9. Lastly, if the change in expenses or resources were such that they changed the key objectives of budgetary balance, in any event, it is up to the Government to submit to Parliament a corrective draft law on finances.

10. It follows from the foregoing that this claim should be set aside.

- On Paragraph I of Article 7:

11. Paragraph I of Article 7 of the contested Law modifies Article 885 V bis of the General Tax Code in order to supplement the listing of revenue taken into account to calculate the cap on the solidarity tax on wealth. It establishes that, included in this revenue is the revenue distributed to a company that is liable for paying corporate tax on companies controlled by the taxpayer if the existence of this company and the choice to use it has the main objective of evading all or part of the solidarity tax on wealth.

12. According to the applicant Members of the National Assembly, by adopting the provisions of Paragraph I of Article 7, the legislature infringed on the authority attached to the Constitutional Council's Decisions of 29 December 2012 and of 29 December 2013 mentioned herein above. The applicant Senators claim, for their part, that these provisions infringe on the requirement of taking into account contributory capacities in that they integrate into the calculation for the cap on the solidarity tax on wealth revenue that has not been earned and that the taxpayer has not had available. They also claim that these provisions impose a sanction and, because of the imprecision of the notion of the "main objective", they violate the principle that offences and penalties must be defined by law. For the same reason, they claim that, if these provisions are interpreted as instituting a base rule, they sidestep the objective of the constitutional value of accessibility and comprehensibility of the law as well as Article 34 of the Constitution. . Regarding the claim of the infringement of the authority of res judicata:

13. According to the third Subparagraph of Article 62 of the Constitution: "The Constitutional Council's decisions are not subject to appeal. They are binding on public authorities and all administrative and judicial bodies." The authority of the decisions described by this provision includes not only their measures but also their grounds, which is the necessary support and makes up their very foundation.

14. If the authority attached to a decision of the Constitutional Council, which declares the provisions of a law unconstitutional, cannot in principle be usefully invoked against another law that has been distinctly conceived, the same does not apply when the provisions of this law, even though they are written in different terms, in substance have a similar objective to that of the legislative provisions that have been declared unconstitutional.

15. First of all, in its Decision of 29 December 2012, the Constitutional Council examined the provisions of Article 13 of the Law on finances for 2013 mentioned herein above which specifically had the objective of including with the revenue taken into account to calculate the cap on the solidarity tax on wealth and on revenue "the repurchase of capital bonds or contracts, investments of the same type, specifically life-insurance contracts, as well as financial instruments of any type that seek to capitalise revenues, taken out with companies in France or outside of France, between 1 January and 31 December of the previous year, net of payments and buybacks taking place between these same dates". According to Paragraph 95 of this Decision, the Constitutional Council decided "that thus including, in the taxpayer's income to calculate the cap on the solidarity tax on wealth and the totality of the taxes due on other revenue, sums that do not correspond to the profits or revenues that the taxpayer made or had available over the term of the same year, the legislature based its assessment on criteria that infringe on the requirement to take into account contributory capacities".

16. The revenues described in these contested provisions are different than those that fall under the objectives of provisions that have been declared unconstitutional by the Decision of 29 December 2012.

17. Secondly, in its Decision of 29 December 2013, the Constitutional Council examined the provisions of Article 100 on the Law on finances for 2014 mentioned herein above that modify the definition of the acts that constitute an abuse of law, as appearing in the first Subparagraph of Article L. 64 of the Fiscal Procedures Register. Under the terms of Articles 4, 5, 6, 8 and 16 of the Declaration of the Rights of Man and the Citizen of 1789 and Article 34 of the Constitution, it decided that "on the one hand, the procedure regarding the abuse of fiscal law applies to all taxes levied on companies and on individuals; and on the other, the implementation of this procedure also includes, in addition to re-establishing the tax that is usually due and the payment of late interest at 0.40% per month under Paragraph III of Article 1727 of the General Tax Code, an increase, under Article 1729 of this same Code, of 80% of the tax due, brought to 40% 'when it has not been established that the taxpayer did not intend one or more acts of abuse of the law or was the main benefactor thereof'" and "given the consequences thus attached to the procedure regarding the abuse of fiscal law, the legislature, without infringing on the aforementioned constitutional requirements, may only include within acts that are considered an abuse of the law those acts that have 'as the main motive' to evade or reduce the fiscal requirements that the party in question normally has to bear". The Constitutional Council thus declared the provisions of Article 100 of the Law on finances for 2014 unconstitutional.

18. The contested provisions do not modify the provisions of Article L. 64 of the Fiscal Procedures Register. They are limited to establishing a rule to avoid certain misappropriations of the methods for calculating the cap on revenue subject to the tax on wealth. Thus these provisions determine a base rule. Any lack of compliance with this condition does not lead to enforcing the increases described in Section b of the Article 1729 of the General Tax Code in the case of the abuse of law under the meaning in Article L. 64 of the Fiscal Procedures Register. The contested provisions have a different objective from that of the provisions that were declared unconstitutional by the Constitutional Council's Decision of 29 December 2013.

19. The claim of infringement on the authority of res judicata should thus be set aside.

. Regarding the claim of infringement on the principle of equality in relation to public burdens:

20. According to Article 13 of the 1789 Declaration: "To maintain the public force and administrative expenditures, a common contribution is necessary, and it must be equally shared by all citizens, according to their means". Pursuant to Article 34 of the Constitution, it is the legislature's right to determine, with respect to constitutional principles and taking into account the characteristics of each tax, the rules according to which contributory capacities are assessed. Specifically, to ensure compliance with the principle of equality, it must base its assessment on objective and rational criteria according to the goals it seeks. However, this assessment must not lead to a rupture of equality in relation to public burdens.

21. The contested provisions only establish the inclusion of revenue distributed to a company if this company is liable for the solidarity tax on wealth. Furthermore, they only apply if the existence of this company and the choice to use it is characterised by the key principle of evading all or part of the solidarity tax on wealth by benefiting from a fiscal advantage against the objective or the finality of the cap. Finally, only a part of the revenues distributed are included that correspond to an artificial decrease in the revenue taken into account to calculate the cap.

22. However, these provisions cannot have the effect, without infringing on the respect for the taxpayer's contributory capacities, of including in the taxpayer revenue the calculation of the cap for the solidarity tax on wealth the amounts that do not correspond to profits or revenues that the taxpayer made or had available over the term of the same tax year. Consequently, the inclusion of the calculation of the cap on revenues distributed to companies controlled by the taxpayer entails that the administration illustrate that the expenses or revenues of the latter, during the term of the year for the cap and up to this inclusion, are ensured, directly or indirectly, by this company in an artificial way.

23. Additionally, subject to the preceding Paragraph, the contested provisions are not counter to the principle of equality in relation to public burdens. . Regarding the other claims:

24. According to Article 8 of the 1789 Declaration: "The law shall only establish penalties that are strictly and clearly necessary, and one shall only be punished under a law that has been established and enacted prior to the criminal offence, and that is legally applicable". The principles thus established do not only relate to penalties established by criminal courts but extend to any sanction that is a punishment.

25. The contested provisions, which do not institute a sanction that is a punishment, determine a sufficiently precise base rule. As a result, the claims of infringement on Article 8 of the Declaration of 1789 and Article 34 of the Constitution should be set aside.

26. The provisions of Paragraph I of Article 7 of the contested Law, which do not infringe on the objective of the constitutional value of accessibility and comprehensibility of the law, or on any other constitutional requirement, should be deemed constitutional.

- On Article 12:

27. Article 12 of the contested Law modifies the regime for the final corporate tax instalment applicable to large companies, established in Article 1668 of the General Tax Code. According to this Article, in its writing in force, for companies whose revenue for the last fiscal year ended is at least 250 million euros, the amount of the last instalment is adjusted according to the amount of the estimated tax for the current fiscal year. Additionally, for companies whose revenue falls between 250 million euros and one billion euros, the instalment amount is equal to the difference between 75% of the amount of the estimated tax and the instalments already paid. To calculate this, the part of the estimated tax is brought to 85% for the companies whose revenue is above one billion euros and at most equal to five billion euros and at 95% for those whose revenue exceeds five million euros.

28. By modifying Article 1668 of the General Tax Code, Section 1° of Paragraph I of Article 12 of the contested Law increases the amount of the last instalment, by bringing these amounts, respectively, to 80%, 90% and 98%. Section 2° of the same Paragraph I modifies by coordination Article 1731 A of the General Tax Code, in order to take these modifications into account in calculating the late interests and the increases for late payment due in the case of a significant error in calculating the last instalment.

29. The applicant Senators and Members of the National Assembly claim, first of all, that these provisions sidestep the principle of equality in relation to public burdens. By bringing the amount that must be paid, at the end of the last instalment, to 98% of the estimated tax, for companies whose revenue is above five billion euros, these provisions infringe on the contributory capacities of these companies. The applicant Senators further claim that these provisions are undermined by incompetence, because the tax base due by these companies is poorly defined. Finally, the applicant Senators and Members of the National Assembly claim infringement on the principle of the necessity of offences and penalties, because the legislature did not reveal the minimum thresholds under which a company that may have made an error in calculating the last instalment is exempt from the late interest payment and the increase.

. Regarding the claim of infringement on the principle of equality in relation to public burdens:

30. The contested provisions modify the methods for determining the last instalment of corporate tax payments applicable to large companies, without increasing their fiscal burden, in order to increase the budgetary payment of this tax for the fiscal year during which the taxable profits are made. By increasing it, for companies whose revenue is above five billion euros, to 98% of the amount of estimated tax paid for the current fiscal year, the legislature based its assessment on objective and rational criteria in respect to the objective of the Law. The fact that this amount must be paid at the latest just before the end of the fiscal year, when the income may not have definitively been accounted for, does not burden these companies with excessive payments in light of their contributory capacities.

31. It follows that the claim of infringement on the principle of equality in relation to public burdens should be set aside. . Regarding the claim of infringement on Article 34 of the Constitution:

32. According to Article 34 of the Constitution, "the law sets the rules concerning... the base, the rate and the methods for collecting taxes of any kind". It falls on the legislature to fully exercise the competence granted to it under the Constitution, specifically Article 34.

33. The contested provisions define in a sufficiently precise manner the methods for collecting corporate taxes of large companies. Neither their objective nor their effect is to modify their base. Consequently, the claim of infringement relating to the legislature's competence should be set aside.

. Regarding the claim of infringement on the principle of the necessity of offences and penalties:

34. On the one hand, the late interest due in the case of a significant error in calculating the last tax instalment, pursuant to Article 1727 of the General Tax Code, has the goal of compensating any harm to the State caused by the late payment of taxes. Thus it does not constitute a sanction that is a punishment.

35. On the other hand, the companies whose revenue is above one billion euros are only subject to the increase for late payment in the case of a significant error in the calculation of the last instalment, pursuant to Articles 1731 and 1731 A of the General Tax Code, if the difference between the estimated tax once this instalment is paid and the tax due exceeds both 20% of the amount of the tax due and eight million euros. These provisions guarantee that only insufficient payments will be sanctioned, which is not called into question by the contested provisions. In addition, in regard to companies whose revenue is above 18 million euros, the increase is not applicable when the tax was estimated based on the provisional income statement, as mentioned in Article L. 232-2 of the Commercial Code, revised within the four months following the beginning of the second half-year, before deducting the corporate tax. Hence, the contested provisions do not infringe on the principle of the necessity of offences and penalties.

36. The complaint of infringement on Article 8 of the Declaration of 1789 should thus be set aside.

37. It follows from the foregoing that Article 12 of the contested Law, which does not infringe upon any other constitutional requirement, should be deemed constitutional.

- On Article 21:

38. Article 21 of the contested Law modifies Article 4 of the Law of 13 July 1972 mentioned herein above, in order to subject certain taxpayers to pay an instalment of the tax on commercial premises. The amount of this tax is determined based on the retail sales area of commercial establishment that are liable for a variable fee in relation to the annual revenue by square meter of the surface area and the activity. Establishments having a sales surface area larger than 2,500 square meters are subject to an increased tax. Article 21 of the contested Law establishes that paying the increased tax is undertaken by a payment of an instalment equal to 50% of its amount. This instalment is based on the amount of tax due on 1 January of the following year. In the case that activity stops over the course of the year when the instalment was paid, this instalment is attributable to the amount of the tax due following this stoppage. If the amount paid is above that which it is based on, the overpayment will be refunded.

39. The applicant Senators claim that the legislature is faulty in its competence, insofar as it did not specify the methods for calculating the instalment, the date of its payment and the sanctions applicable in the case of late payments or the lack thereof. Likewise for the definition of the tax base, insofar as the payment of the instalment precedes its generating event. For this same reason, the applicant Members of the National Assembly make a claim of infringement on the objective of the constitutional value of accessibility and comprehensibility of the law. Finally, the applicant Senators claim that the contested provisions create a difference in treatment between the tax liabilities of commercial premises that are subject to this increase and all others, and that this is counter to the principle of equality in relation to public burdens.

. Regarding the claims of infringement on Article 34 of the Constitution and the constitutional objective of accessibility and comprehensibility of the law:

40. The objective of the constitutional value of accessibility and comprehensibility of the law, as written in Articles 4, 5, 6, and 16 of the Declaration of 1789, requires that the legislature adopt provisions that are sufficiently precise and unambiguous formulations. In fact, it must protect subjects of the law against unconstitutional interpretation and arbitrary risk, without entrusting administrative or judicial authorities with the responsibility for establishing the rules and fundamental principles, which the Constitution determines should only be entrusted to the law.

41. On the one hand, the methods for calculating the tax instalment for commercial premises are clearly defined in the contested provisions.

42. On the other, the instalment is subject to the same regime as the tax itself. Also, pursuant to Article 4 and 6 of the Law of 13 July 1972, it is due on 15 May and must be paid before 15 June of the year in which the tax is due. Pursuant to Article 7 of the same Law, it is collected and monitored according to the same procedures and subject to the same sanction regime as the value added tax.

43. Finally, the fact that the payment of the instalment precedes the generating event does not undermine the contested provisions by incompetence or incomprehensibility.

44. It follows that the claims of infringement on Article 34 of the Constitution and the constitutional objective of accessibility and comprehensibility of the law should be set aside.

. Regarding the claim of infringement on the principle of equality in relation to public burdens:

45. First of all, by adopting the contested provisions, the legislature sought, without modifying either the base or the rate of the tax on commercial premises, to increase the public revenue for fiscal year 2017, the State and the communes or their groupings benefiting from an advance on the payment of the tax due for the following year. To do this, it chose to charge an instalment for commercial retail establishments having a large sales area.

46. Secondly, by setting the amount of the instalment at 50% of the increased tax, the legislature took into consideration the fact that at the date of its payment, the taxpayers will have already earned a part of the revenue on which the tax is due for the following year.

47. Finally, the legislature established that paying this tax instalment for the next taxable period and, as the case may be, its partial or total refund will occur the following year, or in the case that activity has stopped, within six months of this stoppage.

48. The amount of the instalment or the effects of the threshold do not introduce any rupture to the principle of equality in relation to public burdens. The complaint of infringement on Article 13 of the Declaration of 1789 should thus be set aside.

49. Consequently, Article 21 of the contested Law, which does not infringe upon any other constitutional requirement, should be deemed constitutional.

- On Article 33:

50. Paragraph I of Article 33 sets the amount of the total operating allowance for the year 2017 at 30,860,013,000 euros. This amount is 2,361,801,000 euros less than that of the total operating allowance for the year 2016. Paragraph II of this Article 33 details the distribution of the reduction of this allowance between different compensation mechanisms and the allowance by the State for territorial authorities, subject to the rates set in Paragraphs III to X of this same Article.

51. The applicant Members of the National Assembly claim that, given the consequences to the weakest territorial authorities' budgets, this reduction in allowances infringes on the principle of their free administration. Furthermore, according to them, the decrease in the allowance for compensating the reform of the professional tax and the allowance for the transfer of local direct taxation compensation exemptions is not based on objective and rational criteria. The result is an increase in inequality of resources between territorial authorities, contrary to the principle of equality in relation to public burdens.

52. First of all, Article 34 of the Constitution grants to the legislature the right to determine the fundamental principles of the free administration of territorial authorities, their capacities and their resources. Pursuant to Articles 72 and 72-2 of the Constitution, the territorial authorities may "govern themselves freely through elected officials" and "benefit from the resources that they may freely make use of" and they do this "under the conditions established by the law".

53. The amount of reduction of the total operating allowance represents 1% of the revenues of territorial authorities. This reduction is not of a magnitude that will infringe on the free administration of territorial authorities.

54. Secondly, the exemptions and deductions of local taxation established by the legislature are compensated by the State through the total operating allowance. The increase in the allowance that results is itself counterbalanced, under Article 33 of the contested Law, by the decrease in other allowances included in the same budgetary package. The transfer of local direct taxation compensation exemptions counts among these decreased allowances. Article 33 includes allowances subject to the decrease it compensates for reform of the professional tax. Furthermore, rather than withholding, as in previous years, an identical reduction coefficient for all allowances, the legislature, in Paragraphs III to X of Article 33, established subjecting the allowance for transferring the local direct taxation compensation exemptions and the allowance for compensating reform of the professional tax to particular reduction coefficients. It also sought, on the one hand, to take into account the disparities of the same category of territorial authorities and, on the other, to adapt the reduction of these allowances to the changes in their real operating revenue noted in 2015. In so doing, the legislature based this on objective and rational criteria, in line with the objectives sought. There is no rupture in the equality in relation to public burdens for territorial authorities that follows from this.

55. Consequently, Article 33 of the contested Law, which does not infringe upon any other constitutional requirement, should be deemed constitutional.

- On certain provisions of Article 60:

56. Article 60 establishes, from the revenues of the year 2018 and for those that fall within their scope, that income tax be withheld at the source. This withholding shall be carried out, for salaried employees' income and replacement income, by the paying employer or organisation. For other income, particularly that which corresponds to professional profits, this withholding shall take the form of an advance instalment. The provisions of Paragraph I of Article 60 determine the methods for this withholding. The provisions of Paragraph II sets the methods of the transition between the current rules for income tax payment and the method for withholding at the source, so that the taxpayer does not pay, in 2018, income tax due for the year 2017 and income tax for the year 2018 both at the same time.

57. The applicant Members of the National Assembly claim that the provisions of Article 60 infringe on Article 34 of the Constitution and the objective of the constitutional value of accessibility and comprehensibility of the law given the complexity of the different rates of withholding at the source and the imprecision of the notion of "non-exceptional" income. Furthermore, according to them, withholding at the source of salaried employees' income and replacement income carried out by a third-party collector infringes on the rule according to which taxes may only be collected by the State. They also claim that by establishing "collection modernisation tax credit" the legislature infringed on the principle of equality in relation to public burdens in that certain taxpayers are able to optimise the level of their income with the goal of reducing their taxable amount by taking advantage of the transition year. This principle is also infringed by the lack of compensation granted to third-party collectors for the expenses arising from this duty. . Regarding the claims of infringement on the objective of the constitutional value of accessibility and comprehensibility of the law and Article 34 of the Constitution:

58. First of all, Articles 204 H, 204 I, 204 J and 204 M of the General Tax Code, created by Section A of Paragraph I of Article 60, relate to the rate of withholding at the source. Article 204 H establishes an ordinary tax rate, which corresponds to the rate applicable on all of the household income, and a default rate, which corresponds to the rate applicable to the income threshold for withholding. Employees wishing, because of confidentiality, that their tax rate not be known by their employer, may opt for the default tax rate. Article 204 I establishes changes in the withholding rate to take into account changes in the make-up of the household. Article 204 J allows the taxpayer to request modulation, either lower or higher, of his or her withholding rate. Article 204 M allows taxpayers who are taxed jointly to opt for an individualised rate, which corresponds to his or her own income level.

59. The provisions of Article 60, which institutes different rates to apply withholding at the source on salaried income and replacing the methods for setting them, is not incomprehensible.

60. Secondly, Section A of Paragraph II of Article 60 establishes a "modernisation of the collection of tax credit" to ensure, for non-exceptional income, that there is no double contribution for the public burden in 2018 for income taxes. Section C of this same Paragraph II lists the exceptional income. Consequently, by referencing the notion of non-exceptional income to apply the "modernisation of the collection of tax credit", the legislature did not infringe on the scope of its authority nor did it adopt incomprehensible provisions.

. Regarding the claim of infringement on the right of respect for private life:

61. Pursuant to Article 2 of the 1789 Declaration: "The aim of any political association is the preservation of the natural and imprescriptible rights of man. These rights are freedom, property, security, and resistance to oppression?. The freedom proclaimed by this article implies the right to respect for private life. Owing to this, collecting, recording, keeping, consulting and communicating information of a personal nature must be justified by general interest and implemented in an adequate and proportional manner.

62. The first Subparagraph of Part 1 of Article 1671 of the General Tax Code, re-established by Section 17° of B of Paragraph I of Article 60, allows for withholding at the source of salaried income and substituting this to the withholder. To do so, the first sentence of the first Subparagraph of Part 2 of Article 1671 of the General Tax Code establishes that this latter apply the rate calculated and transmitted by the administration.

63. By establishing, in principle, communication by the administration to the withholder of salaried income and substituting it by a rate applicable to withholding, the legislature infringed on the right of respect for private life of the taxpayer. However, on the one hand, this infringement is justified by public interest in so far as it is related to putting in place a withholding at the source to avoid the taxpayer being subject to an offset for one year between the collection of income and the payment of taxes. On the other hand, the taxpayer that has salaried or replacement income may, pursuant to Article 204 H of the General Tax Code, opt for the default tax rate, which does not reveal the tax rate of his or her household. Consequently, the first sentence of the first Subparagraph of Part 2 of Article 1671 of the General Tax Code does not infringe on the right of respect for private life. . Regarding the claim of infringement on the principle of equality in relation to public burdens:

64. On the one hand, the provisions of Part 2 of Section F of Paragraph II of Article 60 establish that the managers of companies as well as the members of their families are subject to specific methods for taking account of their income during the transition year. These measures are designed to prevent them from being able, by drawing part of the exceptional income, to arbitrate in favour of a higher remuneration for the year 2017 in order to benefit from a tax credit for the transition year. So the rupture in equality in relation to public burdens is wrong on the facts. The provisions of Part 2 of Section F of Paragraph II of Article 60 do not infringe on the principle of equality in relation to public burdens.

65. On the other hand, neither the principle of equality in relation to public burdens nor any other constitutional requirement establishes that the legislature should have to compensate third-party collectors for the burden of withholding at the source. Furthermore, if withholding at the source of salaried and replacement income is undertaken by the withholder of these amounts, the latter is required to repay, as it has been the case for other taxes, the tax collected to the administration services. Consequently, the legislature has not conferred tax collection to anyone other than the State. As a result, the first Subparagraph of Part 1 of Article 1671 of the General Tax Code does not infringe on the principle of equality in relation to public burdens.

66. It follows from the foregoing that the first Subparagraph of Part 1 and the first sentence of the first Subparagraph of Part 2 of Article 1671 of the General Tax Code, in its writing from Article 60 of the contested Law and Part 2 of Section F of Paragraph II of this Article 60, which does not infringe on any other constitutional requirement, should be deemed constitutional.

- On Article 61:

67. Article 61 modifies the regime for fiscal and social withholding to which bonus shares are subject.

68. The applicant Senators contest the procedure for adopting Article 61. They contest it because it was introduced in a new reading at the National Assembly, in violation of Article 45 of the Constitution.

69. Article 45 of the Constitution, specifically the first sentence of the first Sub-paragraph states: "Any proposition or draft law shall be successfully examined in the two Assemblies of Parliament with a view to adopt an identical text", that any additions or modifications that may be brought after the first reading by the Members of Parliament and by the Government shall be in direct relation with a provision being discussed. However, not subject to this last obligation are amendments for ensuring constitutionality, coordinating texts being reviewed or correcting a material error.

70. If Article 61, in a new reading, resulted in the adoption by the National Assembly of an amendment containing an additional Article, this amendment was, at this stage of the procedure, in direct relation with Article 4 bis appearing in the first part of the contested Law, of which it sought to transfer the content, modified, to the second part of this same Law. As a result, Article 61 was not adopted according to a procedure that is unconstitutional.

- On Article 62:

71. Article 62 modifies Article 235 ter ZD of the General Tax Code, which institutes a tax on financial transactions. It extends the scope of the acquisitions of what is called "intraday" capital securities, in return for payment, which do not give rise to a transfer of ownership. This same Article 62 establishes that a decree is to specify the nature of the information transmitted, by the person liable for the tax, to the central depository for the holder of an issuance account of capital securities. This latter is furthermore responsible for declaring and paying this tax to the fiscal administration.

72. The applicant Senators and Members of the National Assembly consider that these provisions are undermined by incompetence insofar as the legislature left it up to the regulatory authority to define the methods for collecting the tax, in relation to "intraday" transactions.

73. It follows from Article 34 of the Constitution that, when a tax is instituted, the legislature must determine the methods for collecting it, including the rules governing its monitoring, its collection and its dispute as well as the guarantees and sanctions applicable to it.

74. Paragraph VI of Article 235 ter ZD of the General Tax Code designates those responsible for paying the tax on financial transactions. It pertains to the operator providing investment services, who executed the purchase order of the security or negotiated on its behalf, or if not that, the establishments acting as custody account keepers. It is up to the person acquiring the security to supply the required information for the purposes of assessing the tax.

75. Pursuant to Paragraph VI of this same Article 235 ter ZD, in its writing resulting in Article 62 of the contested Law, the person responsible for paying the tax is required, whether the security has been transferred or not, firstly, to supply the same information to the central depository for the holder of an issuance account of securities before the 5th of the month following acquisition of it and, secondly, to designate the holder of the account from which the tax is collected. By applying these provisions together with the same Paragraph VII and Paragraph IX, the central depository or the payer, depending on the case, is responsible for declaring or paying the tax before the 25th of the same month.

76. Paragraph VIII, in its writing resulting in Article 62 of the contested Law, makes the central depository responsible for gathering from holders or payers all information relating to the operations that fall within the scope of application of the tax. It establishes a decree specifying the nature of this information "that includes the amount of the tax due on the security and the tax period, the order numbers if they exist for these operations, the date on which they were undertaken, the name, number and value of the security whose acquisition is taxable and the operations that are exempt".

77. Paragraph XI specifies the consequences for failing in these declaration and payment obligations established in Paragraphs VII and IX. Paragraph XII indicates that the tax is collected and monitored according to the procedures and under the same sanctions, guarantees and privileges as sales tax.

78. It follows from the foregoing that the legislature sufficiently specified the rules for collecting the tax on financial transactions for acquiring "intraday" securities, by adapting the rules in force.

79. Consequently, the claim of incompetence must be set aside. Article 62 of the contested Law, which does not infringe upon any other constitutional requirement, should be deemed constitutional.

- On Article 78:

80. Article 78 inserts, in the General Tax Code, an Article 209 C which establishes the corporate tax responsibility regarding companies providing services in France by a legal person living outside of France.

81. The applicant Senators claim that Article 78 of the contested Law is undermined by incompetence and infringes on the objective of the constitutional value of accessibility and comprehensibility of the law.

82. Paragraph VI of Article 209 C of the General Tax Code states: "The provisions of this Article apply in the framework of an accounting verification, by decision of the administration to impose on the taxpayer the presumption provided for in this Article". These provisions grant the administration the power to choose, from among the taxpayers in the scope of application of Article 209 C, those who are effectively subject to be taxed. If the legislature is able to modify the scope of application of the corporate tax, in order to tax benefits made in France by companies established outside of French national territory, it cannot, without infringing on the scope of its competence, subordinate a tax liability regarding the administration's decision to carry out a monitoring procedure.

83. Without the need to examine the other claim, the provisions of Paragraph VI of Article 209 C, which infringes on Article 34 of the Constitution, is unconstitutional.

84. Given these consequences, the redaction of the Paragraph VI of Article 209 C will lead to effects that do not correspond to the intention of the legislature. Consequently, all of Article 78 of the contested Law should be declared unconstitutional.

- On certain provisions of Article 105:

85. Section 1° of Paragraph I of Article 105 of the contested Law modifies the General Tax Code by introducing an Article 289 E allowing persons paying value added tax to send notification electronically on goods purchased or services provided by another taxpayer, within twenty-four hours of their registration in accounts or their registration in evaluation documents. This notification is obligatory when the amount of a purchase exceeds 863,000 euros, an amount established in the second Subparagraph of Paragraph II of Article 302 septies A, or when the total purchases from the same vendor over three months exceed this amount.

86. Section 2° of Paragraph I of Article 105 completes Articles 272 and 283 of the General Tax Code in order that the taxpayer having made notification may not, except in the case of fraudulent activities that constitute the crime of fraud, be refused the tax deduction on the value added tax or be liable for the payment of this severally with the person who owes the tax.

87. Section 3° of Paragraph I introduces in the General Tax Code an Article 1729 C bis sanctioning the lack of notification, when this is obligatory, by a fine equal to 1% of the part of the amount to be notified that exceeds 863,000 euros.

88. Paragraph II of Article 105 completes Article L. 252 B of the Fiscal Procedures Register in order to create a seizure procedure relating to the garnishee regarding the value added tax. When this tax is due in the context of delivery of goods, the accountant may, under certain circumstances, in order to collect the tax, seize the amount due by the liable party from the recipient of the delivery.

89. The applicant Senators claim that Paragraph I of Article 105 infringes on the principle of the proportionality of penalties when it institutes a sanction of a proportional fine for the simple breach of a declaration obligation. The provisions of this Paragraph also contravene the objective of the constitutional value of accessibility and comprehensibility of the law given the imprecise terms "fraudulent activities that constitute the crime of fraud" and the uncertainty of the competent authority, legal or administrative, to judge the existence of these activities.

90. The applicant Senators further consider that Paragraph II violates the obligation of the legislature to make the rules concerning the methods for collecting taxes, because of a lack of precision on the time frame that the seizure procedure be notified to the company having supplied the goods in question and to acquire these goods. The legislature also infringed the scope of its authority by allowing the administrative and legal authorities, for these provisions to be applied, a lot of leeway for assessment.

. Regarding Paragraph I of Article 105:

91. Article 8 of the Declaration of 1789 states that, if it is necessary to inflict penalties related to an infraction under the legislature's power of assessment, it falls on the Constitutional Council to ensure that there is no manifest disproportionality between the infraction and the penalties incurred.

92. The fine established by Paragraph I of Article 105 of the contested Law punishes the lack of notification by a person regarding the value added tax on goods purchased from another taxpayer when the amount of this purchase exceeds 863,000 euros or the sum of the purchases from this same vendor over a period of three months exceeds this amount. This fine is set at a percentage of the amount of the purchase after deducting the sum of 863,000 euros. This notification obligation allows the person to be protected against the consequences of participating in a fraud scheme related to the value added tax. By establishing a proportional fine with no cap, for failure to perform such notification obligation, when the person sanctioned could not know if his or her co-contractor did or did not pay the value added tax, the legislature instituted a sanction that is manifestly disproportionate to the gravity of the facts it seeks to punish.

93. Thus, without examining the other complaint, Paragraph I of Article 105 of the contested Law should be declared unconstitutional.

. Regarding Paragraph II of Article 105:

94. The contested provisions establish a process of forced enforcement to collect the value added tax. To this end, they allow the administration to order, under certain circumstances, the seizure of the debt which is owed by the value added tax payer to the recipient of the delivery. The legislature establishes that the seizure must be notified to the garnishee and to the liable creditor and that this must mention the deadline of appeal. The authorisations granted under Article 34 of the Constitution are fully exercisable.

95. Paragraph II of Article 105 of the contested Law, which does not infringe upon any other constitutional requirement, should be deemed constitutional.

- On the other provisions:

96. Paragraph I of Article 133 of the contested Law provides that from 1 January 2017, the Law on finances shall every year set caps, by ministry, on the surface area occupied by the State and its operators.

97. Pursuant to Articles 34 and 47 of the Constitution, only an organic law may establish the content of laws on finances. Consequently, Paragraph I of Article 133, which has this objective, has been adopted according to a procedure that is unconstitutional. Thus it is unconstitutional.

- Regarding the place of other provisions of the contested Law:

98. According to the first Sub-paragraph of Article 47 of the Constitution: "Parliament shall vote on financial draft laws under the conditions established by organic laws". The Organic Law of 1 August 2001 determines the content of the Law on finances.

99. Article 110 allows the services of the Ministry of the Economy and Finance to access a file named "Système d'immatriculation des véhicules" [Vehicle Registration System].

100. Article 113 establishes that Parliament be submitted a report on the review of the map of standard disadvantaged areas.

101. Article 126 modifies the legal regime for collectible coins made in precious metals made and sold by la Monnaie de Paris [the Paris Mint].

102. Article 131 extends a provision on access to positions organised in favour of certain public servant contractual agents.

103. Article 132 modifies the rules relating to monitoring work stoppages and all of the activities of public servants.

104. Article 153 modifies the methods for calculating personal resources taken into account for eligibility for handicap compensation.

105. Article 154 allows experimentation by the territorial authorities and the Caisse nationale de solidarité pour l'autonomie [the French national funding agency for the elderly and handicapped] regarding information and support for family guardians.

106. These provisions do not relate to the resources, expenses, cash management, loans, debt, guarantees or accounting of the State. They have nothing to do with taxation of any kind regarding legal persons other than the State. They do not have the goal of distributing allocations to the territorial authorities or approving financial agreements. They do not relate to the regime of the pecuniary responsibility of agents in public service or information or monitoring of the management of public finances by Parliament. Thus, they have no place in a law on finances. Therefore, they should be declared unconstitutional.

- On the other provisions:

107. The Constitutional Council raises no other issues regarding conformity with the Constitution and has no judgement on the constitutionality of any provision other than those brought up in this decision.

THE CONSTITUTIONAL COUNCIL RULES:

Article 1. - The following provisions of the Law on finances for 2017 are ruled unconstitutional:
- Article 78;
- Paragraph I of Article 105;
- Paragraph I of Article 133;
- Articles 110, 113, 126, 131, 132, 153 and 154.

Article 2. ? Subject to the reservation set out in Paragraph 22, Paragraph I of Article 7 of the same law is constitutional.

Article 3. The following provisions of the same Law are constitutional:

- Article 12;
- Article 21;
- Article 33;
- Article 60, the first Subparagraph of Part 1 and the first sentence of the first Subparagraph of Part 2 of Article 1671 of the General Tax Code and Part 2 of Section F of Paragraph II of this Article 60, Article 62;
- Paragraph II of Article 105.

Article 4. - This decision shall be published in the Journal Officiel of the French Republic.

Deliberated by the Constitutional Council in its session of 29 December 2016, in attendance: Mr. Laurent FABIUS, Chairperson, Ms. Claire BAZY MALAURIE, Ms. Nicole BELLOUBET, Mr. Michel CHARASSE, Mr. Valéry GISCARD d'ESTAING, Mr. Jean-Jacques HYEST, Mr. Lionel JOSPIN, Ms. Corinne LUQUIENS, Ms. Nicole MAESTRACCI and Mr. Michel PINAULT.