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Country Rankings - France

  • Jul 06, 2018   France: complexity

    Indeed, it's been something of a mixed week for France, thanks to a single development: the country's release from the EU's excessive deficit procedure. Obviously, this is positive from the point of view that France is moving towards fiscal health, which is good news for the Eurozone and the EU in general. In fact, just one state remains under the procedure: Spain. However, the EU Council's 2018 Stability Programme for France made some quite scathing observations on France's tax regime, notably the existence of more than 190 taxes that yield small amounts of revenue. With tax expenditures set to reach a shade under EUR100bn in 2018, the report also described France's tax system as complex, bureaucratic, and stifling for employers, particularly for small firms. Much of this complexity is concentrated in France's social security system as much as its corporate tax regime. Perhaps a CCTB would enable the country to easily institute otherwise politically difficult changes to its corporate income tax regime. Nevertheless, bringing about a slimmer and trimmer French tax system remains a high priority for President Macron. And while he has barely got his feet under the desk in the Élysée, he has made some progress towards this goal. However, the Council's report shows how much more work there is to be done. And when the EU, an institution hardly known for being streamlined itself, criticizes your country for the level of red tape and legal complexity, you know things are bad!
    Source: https://www.tax-news.com/news/France_Exits_EUs_Excessive_Deficit_Procedure____86853.html

  • Jun 28, 2018   France: damp

    A bit like a gift nobody really wants and can certainly live without, proposals for a common corporate tax base in the European Union have been repackaged and re-presented multiple times. And it looks like the CCTB could be the gift that keeps on giving for us commentators, after the French and German governments recently got their hands on the Commission's draft proposal and decided to make an already complicated issue more complex. One observation to make is that the Franco-German CCTB position paper was probably significant for what it didn't mention. Much to the relief of Ireland, Hungary, and Bulgaria, there was no mention of a minimum EU corporate rate of corporate tax, a measure that would have been intended to put a stop to aggressive tax rate competition and the "race to the bottom" on the corporate tax rates. Nevertheless, for an idea that is already hugely ambitious, controversial, and divisive, the position paper probably couldn't have helped the common tax base cause by substantially departing from the Commission's draft directive in some key areas, notably by calling for all companies liable for corporate tax to be included in the common tax base, regardless of size, and by envisaging a CCTB without tax incentives such as R&D incentives. As such, by wrapping up the idea of a CCTB in the wider project for deeper EU harmonization, France and Germany may merely have succeeded in prolonging what are likely to be very protracted discussions in the matter. Indeed, it has been suggested that the Franco-German position paper is such a substantial departure from the Commission's recently repackaged proposal, it may well need to be re-re-packaged, and re-re-re-launched. If so, I recommend that the EU makes it a low-key affair. For one thing, everyone now knows what's behind the packaging – they've seen most of it before and were pretty disappointed then. What's more, the timing isn't great. Apparently, there's something of a CO2 shortage in Europe at the moment, so this is one launch party that could go down like a damp squib rather than a pop in more ways than one.
    Source: https://www.tax-news.com/news/Germany_France_Issue_New_EU_Common_Corporate_Tax_Proposals____86849.html

  • Sep 06, 2017   France: credit

    On a similar note, high taxes and high government spending doesn't seem to be working for France at the moment. However, things may about to change. Following the recent announcement that France's social security burden will be reduced from next year, the French Government has followed up with confirmation that several important tax measures will be included in the upcoming finance bill for 2018. This caps off another good week in this ranking for France, which appears to be making good on its promises to liberalize aspects of a tightly regulated economy, a state of affairs which many agree has been responsible for low growth and periods of economic stagnation. Of note is the proposal to cut France's corporate tax, which at 33.33 percent is one of the highest in the developed world (in the OECD, only Belgium and the United States have higher corporate taxes), to 25 percent by 2022, and so bring France into the mainstream of countries with corporate taxes of 15 to 25 percent, or thereabouts. Another notable policy is the dismantling of the CICE tax credit for employment, which was arguably President Holland's flagship tax measure following his tax policy epiphany, and could therefore be considered something of a risky move. Then again, the CICE tax credit always did feel like a complicated solution to a simple problem – that of France's high payroll tax burden. So perhaps business in France would welcome the prospect of lower payroll taxes, as Macron's Government is promising, instead of going through the motions of applying for the CICE credit. Indeed, in general, tax credits can be a lot more trouble than they're worth. Just look at the billions of dollars wasted in the United States due to erroneous and fraudulent tax credit claims, and the United Kingdom too, where the individual tax credit system has been beset by technical and administrative problems from day one. No wonder tax reformers in the US are so keen to get rid of most of them!
    Source: https://www.tax-news.com/news/Le_Maire_Outlines_French_Corporate_Tax_Cut_Plans____75135.html

  • Sep 01, 2017   France: beautiful

    To France now, and as presidential or prime ministerial honeymoon periods go, Emmanuel Macron's was particularly short and sweet. Supposedly a breath of fresh air when he put himself forward for the French presidency, the atmosphere is already beginning to curdle as his approval ratings take a tumble. Reports that the President has spent EUR26,000 on makeup since May certainly won't help matters. Although at least this wasn't as much as the EUR10,000 his predecessor, Francois Hollande, reportedly spent on barbers' bills each month to tidy his ever-receding hair. No wonder he had to put up taxes so much! And no wonder French presidents tend to end up so unpopular! So, it was with unfortunate timing that the Government announced, amid the furor and bewilderment over the grooming habits of French leaders, changes to the social security system, aimed at reducing the vice-like grip of mandatory contributions on French workers' incomes. Due to take effect next year, these measures will supposedly put EUR7bn back in the pockets of 21m employees, according to the Ministry of Finance, and therefore represent a major step in the Government's promised program of tax cuts. However, the program won't be easy to deliver. The proposed EUR20bn in tax cuts will need offsetting with painful public spending cuts, and rumblings of discontent over these have already begun. Maybe Macron could help his cause by opting for a less expensive preening regime.
    Source: https://www.tax-news.com/news/France_Confirms_Social_Security_Tax_Changes____75080.html

  • Jun 21, 2017   France: judicial

    Indeed, the word substance has become integral to the base erosion and profit shifting project. But it's also one that appears to be causing businesses and tax authorities the world over significant problems. Of course, one of the core aims of BEPS is to prevent situations whereby taxpayers get away with double non-taxation. However, as the International Chamber of Commerce pointed out last week, the increased focus by revenue authorities on economic substance combined with a lack of clarity on the definition of the term across jurisdictions is leading to more cases of income being doubly taxed, rather than the other way around. Facing the prospect of being wrongly taxed, taxpayers have little choice but to fight it out in the tax tribunals and appeals courts, which even in the most advanced countries is usually an expensive, time-consuming process, and risky if litigation goes the way of the tax authority. But what's sauce for the goose is sauce for the gander, and the BEPS project appears to have given many tax authorities license to challenge the tax positions of multinationals in court on a more regular basis also. However, similarly, this litigious attitude also comes with risk attached. For governments aren't guaranteed to win in court, despite often spending vast sums of taxpayers' money in pursuing tax cases. In France for example, the tax authority could be heading for defeat in a high-profile case against Google if judges accept the recent opinion of a court adviser in a case which centers on whether the company had a permanent establishment in France. This is also further evidence of the unintended consequences unleashed by the BEPS project. And while some observers may feel satisfied that the tax tables are turning on big corporations, the danger is the effect such developments have on trade, investment, and economic growth. And it's dangerous for governments to have things mostly their own way, which is why courts act as a vital check on power in most advanced economies. BEPS is of course focused almost entirely on tax avoidance by multinational corporations. But this isn't to say that the OECD hasn't taken its eye off the ball when it comes to tax avoidance by wealthy individuals (many of whom may use corporate structures to protect their income and assets from high taxation). Indeed, there seems to have been a renewed focus on the appropriate level of tax on the rich in recent months. Debate is raging in the United States about the Republicans' tax proposals, and how they might cut taxes for the wealthy. Similarly, a debate was had in the lead-up to the UK general election on the level of income at which an individual is considered well off enough to pay more income tax. In case you're interested, the Labour Party says it is GBP80,000 (USD102,000) per year. Meanwhile, the OECD has released two papers on the matter since April.
    Source: http://www.tax-news.com/news/IPoker_Withdraws_From_Polish_Gambling_Market_Over_Tax____74151.htmlwww.tax-news.com/news/Google_Not_Liable_For_French_Back_Tax_Says_Court_Adviser____74489.html

  • Jun 13, 2017   France: refreshed

    I'm still not entirely sure whether last week's general election in the United Kingdom was a democratic exercise, or a mass psychological experiment, so often did Prime minister Theresa May try and penetrate the electorate's skulls with the mantra "strong and stable" in the hope they would vote Conservative. If it was, it failed. Weak and wobbly is what they voted for, if anything. Almost needless to say, these are hardly ideal foundations on which to conduct the Brexit negotiations. Indeed, the whole idea behind the calling of the snap election was to strengthen the position of the Conservative Government, based on a healthy lead then in opinion polls, and by extension the UK's hand at the Brexit negotiating table. This episode heaps yet more doubt on the direction of UK tax policy. The 2017 Finance Bill has already become a casualty of the election, and corporate taxpayers will be interested to hear if a number of business-related measures will make it back into the second bill, assuming one is introduced. Furthermore, the new deliberations about what sort of Brexit the UK should aim for has ramifications for long-term tax policy, since the strength of the remaining ties the country has with the European Union will determine such important things as legal supremacy, the jurisdiction of the European court, existing and future case law, and the applicability of EU tax legislation and regulations, notably in the area of value-added tax. There is already some evidence that these events are worrying businesses in the UK, which could obviously have repercussions for private sector investment in the country. According to a recent survey by EY, the UK, the US and Australia are now top tax risk jurisdictions as a result of legislative and regulatory uncertainty. And that they're ranked alongside India and China in the survey shows just how chaotic things have become. Another ominous sign was the result of the latest monthly business confidence survey from the Institute of Directors, which was published in the aftermath of the election result. This showed that 57 percent of the 700 respondents were either quite pessimistic or very pessimistic about the prospects for the UK economy over the next 12 months, against 20 percent who were optimistic. This translated to a "net confidence" score of -23, whereas last month it was -3. Compare and contrast that to France, where Emmanuel Macron has apparently breezed into power like a breath of fresh air, backed up by what is likely to be a dominant majority for his fledgling En Marche! party as a result of recent legislative elections. It wasn't so long ago that we were writing how France was being led by a government seemingly determined to tax the economy out of existence, and how it therefore faced a bleak and uncertain future. Meanwhile, the UK, brash and confident, was laying out the red carpet for France's entrepreneurs and executives, having announced a series of pro-business tax policies. My word, how things can change! If there's a lesson to be learned here, it's that nothing should be taken for granted. Include in that the reliability of technology. Anybody unlucky enough to have been booked to take a British Airways flight at the end of last month will be all too painfully aware how dependent civilization has become on computer networks. It's fine when such systems have backs-ups, but if they don't, or these fail too, cue chaos, paralysis, and sleepless nights on departure hall floors. The business of taxation has also become largely computerized now, a development which has been mostly welcomed by taxpayers. Tax returns can now be downloaded and submitted to the tax authority with a few mouse clicks, so there's no need to worry about vital tax information going missing in the post. Except that tax authority computer systems and databases seem just as susceptible to glitches, error, and fraud as any other network — often with devastating results. Take Australia, for example. In February 2017, the Australian Tax Office experienced a major systems outage that it took four days to recover from, and this came just weeks after a similar failure in December 2016. In the US, the Internal Revenue Service's computer systems have seemed particularly vulnerable to fraud, with around 200,000 taxpayer accounts having been comprised in a tax refund scam last year, and billions of dollars in tax credits having been paid out as a result of fraudulent claims and error. And the UK Government is still counting the cost of a botched IT system used to administer the income tax credit system, a public-private sector initiative which was recently described as "catastrophic" by a parliamentary oversight committee.
    Source: http://www.tax-news.com/news/France_To_Delay_Pay_As_You_Earn_Tax_For_Individuals____74441.html

  • May 16, 2017   France: refreshes

    We've heard a great deal over the past year or so about the rise of nationalist political causes, and the rejection by the people of the established political and economic order, which tends to produce identikit centrist politicians. But perhaps the people aren't as angry as is being portrayed by certain political parties and the media. After all, we've only really seen the apple cart upended in two countries, albeit two influential ones, with voters in Britain opting for Brexit, and their counterparts in the United States electing President Trump. Elsewhere, you could say that it is pretty much business as usual, especially after Austria failed to follow the lead set by Britain and America by electing a nationalist leader, and the anti-immigration vote collapsed in recent German local elections. France is an interesting case though. That the former National Front leader lost the presidential run-off election was not that surprising. However, the scale of her loss surprised many, especially when her contender was a political novice yet to turn 40, whose sole experience of politics and government was a two-year stint as Economy Minister under President Hollande. And in electing Emmanuel Macron, French voters had already discarded mainstream candidates on the center-right and on the left. Indeed, Benoit Hammon, who stood for the ruling Socialist Party, polled barely six percent of the vote in the first round — an outcome that must represent a damning indictment of its track record in power. France, it seems, would prefer Macron and his cabinet of political virgins, rather than the tired old polices of the past. But then Macron himself can hardly be accused of being an anti-establishment rebel himself, given his career background and largely mainstream economic philosophy. Certainly, his rise to power follows the precedents set in the UK and the US, but in a very French kind of way. It will be interesting to see if he can deliver on his promise to cut corporate and individual income taxes without the sort of barriers that have prevented President Trump pushing through his economic agenda.
    Source: http://www.tax-news.com/news/The_Tax_Proposals_Of_French_PresidentElect_Macron____74193.html

  • May 02, 2017   France: shake-up

    At least things seem fairly predictable in France at the moment, and pollsters – a profession which has taken something of a reputational knock recently – must have breathed a sigh of relief when the first round of the French elections ended as predicted, with Emmanuel Macron and Marine Le Pen through to the upcoming run-off vote. Yet, there's an element of the unknown about both choices. For this isn't the usual straight fight between mainstream left and right; it's a contest between a relatively politically inexperienced unaffiliated centrist and a firebrand nationalist. In an age when many politicians are accused of being cut from the same cloth and eternally vying for the middle ground, nobody can accuse Macron and Le Penn of being the same, including in the area of tax. Consequently, for business taxpayers, tax policy could go in two very different directions as a result of this election: Marcon's business-friendly tax cuts; or Len Pen's worker-friendly protectionism. Either way, the French seem to have grown tired of the political establishment after years of low growth and high taxation – the fact that Benoit Hamon, the candidate for the ruling Socialist Party, mustered just six percent of the vote, says a lot – and are looking for a shake-up. And for that an encomium is due.
    Source: http://www.tax-news.com/news/The_Tax_Policies_Of_The_French_Presidential_Candidates____74074.html

  • Feb 27, 2017   France: all or nothing

    Now to a country grappling with similar economic and fiscal problems: France. And like Italy, it is crying out for some firm and decisive leadership following President Hollande's troubled time in office, which was so often marked by divisions, u-turns, and gaffes. Political punditry has become a hazardous business these days when it comes to predicting the mood of the voters. But in an era when politicians are often accused of being bland facsimiles of one another, the French election is certainly gearing up to be a colorful one. Indeed, you could say that the full spectrum of the political rainbow is represented, from a candidate on the left who wants a 90 percent income tax, to a candidate on the hard right who wants to tax foreign workers. Controversy and radicalism also abounds in between, from Benoit Hamon's brand of utopian socialism, to Francois Fillon's distinctly Anglo Saxon fix to France's economic problems. However, perhaps the one to watch is anchored in the middle. Emmanuel Macron. Macron describes himself as neither left nor right, and as such he could be accused of trying to please everyone, proposing to cut taxes and spending, yet increase the size of the social security net. As a former banker, at least he should be good at making things up – sorry, that should have read making things add up. Although, frankly, these days, "banker" isn't the best thing to put on your job resume's employment history when beginning a career in politics. Macron is also staunchly pro-EU, and a supporter of free trade and globalization – the sort of views, in fact, that are more likely to get one unelected these days. Heck, he wasn't even a member of a political party until he recently started his own, so surely he doesn't stand a chance! Certainly, Macron's background and lack of experience may count against him, but this could also be a virtue in a world growing weary of career politicians. And while he does have some political clout having served as Economy Minister for two years, he's risen rapidly from rank outsider to a front-running candidate in the space of a few weeks (remind you of anyone?). We're all expecting France to lurch to the right in one way or another. But, if recent political trends are anything to go by, that's exactly what won't happen! Not that I'm trying to call the result. But in a contest of radicals, how about a victory for the bland!
    Source: http://www.tax-news.com/news/French_Left_Candidate_Proposes_90_Percent_Tax____73545.html

  • Feb 21, 2017   France: threatening

    Now, should innovative new business models adapt to the tax system, or should governments and tax authorities adapt to innovative new business models? I rather think, for the sake of human progress, that, for the most part, the latter should apply. But perhaps we are at risk of allowing the former to happen more and more. This especially seems to be the case in the so-called "sharing economy." Take Airbnb for example. It recently announced that by the spring of 2017 it will have the systems in place to remit and collect France's various local hotel and occupancy taxes in 50 cities. In other words, the company has spent considerable time and effort on a project that is nothing to do with its core business activities, and all to do the French tax authorities' jobs for them. Of course, the traditional hotel and hospitality industry would soon be up in arms if this uneven playing field were to persist, and I'm not suggesting taxes shouldn't be paid when they are due. But I posit that avoiding local tourist taxes is not the first thing on most people's minds when they hire or rent out accommodation in this way. It almost feels as if the authorities think you're cheating if you spend a few days in someone's apartment, rather than in a city center hotel at exorbitant rates. It is perhaps unfair of me to single out France here. Airbnb is doing this worldwide, and intends to have arrangements in place in 700 locations. That's going to be some feat, but It's also going to be a necessary one. For Airbnb Chief Executive Brian Chesky revealed in an interview with the Financial Times last year that wherever it has a tax agreement in place, an "existential" threat is removed. My word: it's coming to something when paying tourist taxes is seen as a matter of life or death!
    Source: http://www.tax-news.com/news/Airbnb_To_Collect_More_French_Tourist_Taxes____73471.html

  • Jan 05, 2017   France: constitutional

    Surveys show that a great deal of affected companies are scrambling to align their systems with the new rules. So just imagine if CbC reports were made public. That certainly would represent something of a paradigm shift in tax transparency. Supporters of such proposals – which include the European Commission – argue that, with reputations such a valuable currency these days, tax avoidance would be discouraged because the public would be able to see how a company conducts its financial affairs, and where it pays its taxes. On the other hand, companies subject to CbC reporting regimes would, as the French Constitutional Court concluded recently, be put a major competitive disadvantage to those that aren't, while opening themselves and their employees up to other risks. What's more, how many people are going to fully understand such complex financial data? Not many, I suspect. And if this is the case, what value would public CbC reports really have? With Wolfgang Schäuble and other European finance ministers skeptical about public CbC reporting, there is by no means a consensus on this issue. We also await the position of the incoming United States administration on CbC reporting, and BEPS in general (although it's probably safe to assume that Republicans are cautious over many aspects of BEPS, judging by the comments of senior party figures in the past couple of years). But with tax transparency arguably never higher on the political agenda and in the public consciousness all over the world, this will continue to be a hotly debated topic in 2017, even if most members of the general public – the one's supposed to benefit the most from increased transparency – probably couldn't make head nor tail of a CbC report in the first place.
    Source: http://www.tax-news.com/news/ICC_Lauds_French_Ruling_Outlawing_Public_CbC_Reporting____73038.html

  • Nov 07, 2016   France: prescriptive

    Now we move more decisively into the digital realm, and while some countries are busy trying to tax, restrict, or shut down innovative new businesses in the so-called sharing economy, such as Airbnb and Uber, others are attempting to remove obstacles to their growth. On the one hand, we heard recently that French lawmakers voted for a bill that would subject to professional tax those making a significant amount from "sharing." One could argue that this is only fair, for there is a difference between a taxpayer renting out their home for a couple of weeks in a year and, say, for half the year. On the other hand, some countries are taking a more hands-off approach to the issue. Rather than being so prescriptive in this area, some tax authorities have issued new guidance to inform people where the line between "pocket money" and declarable income exists, including the US Internal Revenue Service, the UK tax authority, and the Australian Tax Office. Still, guidance or no guidance, ultimately it will be the tax authorities that will decide where the line exists, so the trapdoors haven't been entirely removed for taxpayers.
    Source: http://www.tax-news.com/news/French_Lawmakers_Approve_Tax_Hike_On_Sharing_Economy____72629.html

  • Oct 04, 2016   France: petit mercies

    There has been a generally underwhelming response from businesses in France about the Government's long-trumpeted plans to install a 28 percent intermediate rate of corporate tax. Earlier this year, Medef, the main employers' association in France, slammed the proposal as a "half-measure" that would provide only a modicum of tax relief to a relatively small number of companies, much of which will be offset by the increased complexity and compliance costs brought about by having to account for an additional tax rate. That may be true, but the 2017 Budget could have been a lot worse for taxpayers, especially if the current Government had gone on as it started back in 2011, when it began its life raising tax left, right, and center. Indeed, if it had carried on in that vein, there would have been scarcely anything left untaxed by now. So perhaps French companies should be grateful for small mercies. Not many governments in the history of the world have backpedalled faster on tax policy – and largely for the better – than the Government of President Hollande.
    Source: http://www.tax-news.com/news/French_2017_Budget_Confirms_Corporate_Tax_Cut____72346.html

  • Aug 31, 2016   France: half-baked

    In more ways than one, France and the United States are a long way apart. 3,000 miles of ocean separates Nantes from New York, and there are obvious linguistic and cultural differences between the two. They do share one thing in common though: high rates of corporate tax. According to a recent report by the Tax Foundation, the United States has the world's third-highest corporate tax rate, when the federal and average states rates are combined. However, France is not far behind, in sixth with a total rate of 34.4 percent. Companies in France also bear a heavy burden in social contributions and red tape. So it's little wonder that Flamel Technologies, which has operations in France and the United States, and which had an effective tax rate of 48 percent last year, is following a well-trodden path to Ireland. Both countries are also well aware of their shortcomings on tax, and are trying hard to rectify the situation. However, each country is finding it difficult to bring about long-called-for change. In the United States, this is largely the result of political gridlock, although the presence of a budget deficit expected to exceed three percent of gross domestic product this year makes many pause for thought when considering tax reform. Fiscal problems of a similar nature in France also constrain tax policy. It is these constraints that have led France to propose only a partial reduction in corporate tax, which Prime Minister Manuel Valls revealed would be included in the finance bill for 2017. The Government has yet to put flesh on the bones of the proposal, but the basic premise is the insertion of an intermediate 28 percent rate in between the lower rate of 15 percent and the full rate of 33.33 percent. And it seems like there may be strings attached to restrict the number of companies that benefit from it. That is, if there is any benefit to be had at all. As Medef, the French employers' association pointed out in its scathing response to the proposal, this "half measure" will just add complexity to France's already onerous tax system. Until the full details of the proposed measure emerge, it is difficult to see how it will do much good. It's certainly not going to help France compete with the likes of Ireland, the UK, and Canada on tax.
    Source: http://www.tax-news.com/news/French_Employers_NonPlussed_By_SME_Tax_Cut_Plan____72073.html

  • Aug 04, 2016   France: burdened

    As we turn our gaze across the Channel, the French could be entitled to say that they have little to show for their own sweat and toil. This is because France now has the dubious honor of taxing its workers the most out of any country in the EU. Yet the study which came to this conclusion suggests that all this tax hasn't necessarily been spent wisely by the Government (really?). Perhaps it is too simplistic an extrapolation to make, but you'd think a country at the top of the tax league table would reward its citizens with first class public services. But it doesn't necessarily follow. In a 2007 study by Canada's Fraser Institute, France came 17th out of 23 industrialized nations for public sector efficiency. It is difficult to imagine that things have changed much almost a decade on, with public spending the equivalent of 56 percent of gross domestic product in 2014, according to the Heritage Foundation and the Wall Street Journal.
    Source: http://www.tax-news.com/news/French_Workers_Pay_Highest_Taxes_In_Europe____71818.html

  • Jun 20, 2016   France: allez!

    Indeed, governments seem to be in thrall of the movie industry, and have been falling over themselves to offer tax incentives to producers and investors in recent years. Iceland has an impressive list of movies that have used its dramatic icy vistas as a backdrop, yet still saw fit to improve its incentive scheme further recently — and likewise France. So why do governments seem obsessed with attracting "runaway" production, as it is called. The theory goes that this industry creates just the sort of highly skilled, highly remunerated and often technically orientated jobs that governments love to take the credit for making. Plus, big-budget productions need an army of ancillary workers to sustain them, so it is said that the benefits ripple out into the wider economy. An added bonus is that the industry often acts as a shop window for tourists – just look at how The Lord of the Rings and The Hobbit trilogies showcased New Zealand. But the theory doesn't always stack up, according to some studies. This has especially been the case in the United States, which looked to have reached the end of its film tax credit mania at state level about five years ago. Many states are now pulling the plug on these schemes after cost-benefit analyses revealed they had performed pretty dismally, and had generally been a wasteful use of taxpayer dollars. For example, Connecticut's incentive scheme generated a mere seven cents for every dollar spent. So, I suppose with these types of incentives, it boils down to horses for courses. France can pass for many different places with its varied landscape. And in the sci-fi genre, Iceland can double as just about any planet you dream up with its moon-like appearance. Indeed, it doesn't really matter what a country looks like if it has the skills base the industry requires, and well-targeted tax breaks to smooth the path. Connecticut, on the other hand, is a very nice place, but there's only so many movies you can make about hedge fund managers.
    Source: http://www.tax-news.com/news/Movie_Projects_Lured_To_France_By_Tax_Incentives____71470.html

  • May 16, 2016   France: flexible

    Depending on which of two recent conflicting reports you believe, France may or may not bring forward corporate tax cuts scheduled to be phased in over the next three years. While Finance Minister Michel Sapin later dismissed an accelerated cut, there's no smoke without fire, and for such a report to have reached the French media in the first place indicates that the idea must have been discussed in the upper echelons of the French Government. This is a good thing for French taxpayers because it's evidence that some in the Government feel the pace of reform is going too slow. And it is. Under the Growth and Responsibility Pact, corporate tax is due to be cut from 33.33 percent to 28 percent still high by international standards by 2020. If fact, it seems to me that President Hollande has experienced some kind of ideological epiphany. Because his current policies, compared with those when he first came to power four years ago, are almost like night and day. Somewhere along the line, the old-style French socialist turned into Margaret Thatcher. Okay, that's stretching things a bit. But he does seem to have recognized, perhaps belatedly, that France could be condemned to years of low growth and stagnation unless some of the sacred cows of the French way of life are sacrificed. With unemployment running at 10 percent, and one-quarter of under 25s without a job, France's rigid labor code said to deter the hiring of new staff is one of them. And Hollande has acted decisively to deliver change, dispatching the sacrosanct 35-hour week by decree in a highly controversial move last week. How very Thatcher-esque! On a personal level though, this is likely to be a Pyrrhic victory for Hollande. While Thatcher grew in popularity as she took on the trade unions, winning three elections in the process, Hollande is running out of friends fast, on both the left and the right. With his popularity ratings on the floor, he is very unlikely to win a second term.
    Source: http://www.tax-news.com/news/France_May_Accelerate_Corporate_Tax_Cut____71219.html

  • Apr 25, 2016   France: double standards

    To continue this Scandinavian theme, I jokingly proposed when considering the Panama Papers episode in last week's entry that we all follow the Norwegian way, and make available our tax returns to be scrutinized by all and sundry in order to put a stop to tax avoidance. However, it turns out that total tax transparency is not the goal after all, at least as far as some governments are concerned. France, for instance, has refused to comment on allegations that it has billed McDonalds EUR300m (USD340m) in back taxes citing "tax secrecy." What it really means is, tax cases, as in most places, are confidential. And so they should be. But it does smack of double standards. France is one of five countries to soon begin sharing beneficial ownership data. Yet is uses confidentiality rules to duck awkward questions. What's the French Government got to hide I wonder?
    Source: http://www.tax-news.com/news/Five_EU_Countries_Agree_To_Share_Beneficial_Ownership_Data____70979.html

  • Sep 15, 2015   France: morale booster

    It's remarkable that I've gone almost six months without mentioning France in this column. But perhaps this was a subconscious act of mercy on my part, with Francois Hollande's ailing presidency lurching from one crisis to the next, and France well adrift of the competition at the foot of our country rankings. But, what's this I see? "Tax cut" and "France" in the same headline? No, my eyes do not deceive me! It is predicted that the income tax cut, to be included in the forthcoming finance bill, will benefit 8m French households. The caveat is that at EUR2bn in total, said households will benefit to the tune of a measly EUR250 each. Not to be sniffed at I suppose, but I expect this tax cut will be recouped in some way in the fine print of the 2016 Finance Bill. However, it is somewhat encouraging that over recent months, the Government has stopped raising taxes, and is talking more about reducing them. Although, in terms of Hollande's popularity, the damage was done long ago, and his legacy will be to leave France with a tax burden about ten percent of GDP higher than the euro area average. What's more, France finds itself bottom of the eurozone league in terms of economic growth, with all other countries having reported data for the second quarter having reported growth. As sports pundits are fond of telling as, as an indicator of performance, league tables don't lie. Nevertheless, it's an encomium this time round, if only as a morale booster.
    Source: www.tax-news.com/news/Frances_President_Details_Income_Tax_Cuts_For_2016____69106.html

  • Apr 13, 2015   France: rigid

    And, so, from Italy we cross into France – in economic and fiscal terms, out of the frying pan and into the fire you might say. If they had any aristos left in France, it's feasible that the mandarins in the French Ministry of Finance would be drawing up a French version of Grimoldi's plan right now. Unfortunately, they guillotined most of them in the 1780s. Anyway, Hollande has promised to stop taxing the life out of the French economy. And not before time. For when a body like the OECD says that, as a country, you take too much off the citizenry and businesses in tax, as it did last week, perhaps it is time to sit up and take notice. The OECD isn't noted for its plain speaking, often going round the houses before it gets to the point it wants to make. But, in this assessment, the Organization was quite strident, criticizing France's "excessive tax burden" and regulations that stifle competition. It's time for the pace of economic reform to be accelerated, said the OECD. The French Government could rightly respond that it is doing precisely this. The CICE employment tax credit is designed to encourage employment and is due to rise to nine percent in 2016 from 7.5 percent this year. And the so-called Responsibility and Solidarity Pact will cut companies' liability to compulsory levies by EUR14bn (USD15.1bn) between 2015 and 2017, according to estimates from the French Court of Auditors. An additional package of tax reforms and incentives was announced by Prime Minister Manuel Valles last week, and described by the Government as "radical." But, will these measures, welcome as they are, be enough to fix the economy? Just as big a problem, if not more so from an employer's point of view, is France's rigid and overbearing labor regulations. It is actually not that difficult to form a company in France; there is no minimum capital requirement, and formation procedures are fairly light. Just don't try and employ anybody. Unless you're a glutton for punishment that is, and wish to immerse yourself in the 3,000-page French labor code. Employ more than 10 people and your workforce will need an elected representative. Employ more than 50 people and 35 additional requirements kick in, including a workers' council and mandatory collective bargaining. Is it any wonder that, according to France's SME association CGPME, there are twice as many companies with 49 employees than with 50? Trouble is that the Government, if it really does want to change things, is up against powerful trade union interests, and it is debatable how much it really wants to take them on. A discussion on France's 35-hour week was shut down almost immediately after recently appointed economy minister Emmanuel Macron suggested the idea last year. This almost-sacrosanct part of French life is non-negotiable as far as the unions are concerned. And with Hollande's stock already low among the electorate – the Socialist Party trailed in third behind the far right in last month's local elections – surely such measures will merely alienate the Socialists further from their support base. So it's difficult to envisage much change in the foreseeable. The most likely scenario is that the Government will stumble on until the next presidential election in 2017, when the Socialists will probably be booted out in convincing fashion. What comes after that is an unknown quantity. A comeback for Nicolas Sarkozy? Or, heaven forbid, an Elysee Palace inhabited by Marine Le Pen? For France, worrying times indeed.
    Source: http://www.tax-news.com/news/French_Government_Sets_Out_Stall_For_Radical_Reforms____67784.html

  • Mar 12, 2015   France: "sorry"

    If you follow politics and current affairs, you tend to hear the word "sorry" uttered at regular intervals these days. Gaffe-prone politicians are often found to be profoundly sorry when unwittingly recorded saying – in a not-very-politically-correct way – what they actually mean for a change. Public institutions are sorry when they screw things up and ruin lives. The bankers of course were also sorry after they nearly brought the world economy to its knees. However, over-used words and phrases tend to eventually lose their impact, and oftentimes the apologies issued by ministers, senior bureaucrats, and bankers just sound like empty, robotic gestures. This leads me to the case of Michel Sapin, France's Finance Minister. Although he didn't actually use the word "sorry" in relation to the latest fudging of France's budget deficit target, he effectively apologized to the rest of Europe for the country's ongoing fiscal indiscipline with his observation that "there's a sort of irritation with France" at the moment. Sapin is confident that this time, France will meet its revised deficit target: 3 percent of GDP by 2017. And apparently the Government won't even need to raise taxes or cut spending meaningfully because existing budget plans will do the job. Really? According to Sapin, himself, France hasn't met any of its fiscal targets, either self-imposed or set by the European Commission since 2003. So his admission of France's recalcitrant ways and his rather blasé assurances that everything will work out in the end somehow don't convince. The problem is France has painted itself into a fiscal corner. Having almost taxed the life out of the French economy already, the Government is reluctant to increase tax further because it knows such a course could amount to economic suicide. The Government has also placed a lot of faith in a campaign against tax avoidance and evasion, the results of which were trumpeted recently by President Hollande. However, this will only make the merest of dents into the deficit. So that just leaves spending cuts. France can't possibly hope to achieve fiscal consolidation when it spends the equivalent of 56 percent of gross domestic product on the state. But the Government is also only too aware that cuts of the scale needed to accelerate deficit reduction would be political suicide, and Hollande has repeatedly said that there will be no Greek-style austerity in France. However, if the markets lose faith in the French Government's ability to deal with its fiscal problems, it may not have a choice.
    Source: www.tax-news.com/news/French_Finance_Minister_Shrugs_Off_Tax_Hike_Calls____67443.html

  • Mar 05, 2015   France: two wrongs

    Where I come from, handling stolen goods is a crime, punishable in severe cases by serious jail time. Governments, however, are increasingly proving themselves to be above the law, especially in relation to this particular offense. I refer here to the report that France will allow the United Kingdom to share data stolen from a bank by an ex-employee. And yes – you've guessed it – the medium in question contained the details of people who used the services of a particular bank allegedly to avoid tax. Doubtless the more well-heeled and high-profile clients will be named and shamed into paying back taxes and more. "Serves them right," you might say. But hang on a minute. Suppose I broke into my neighbor's house when he was out because I suspected he was up to no good. Do you think I'd be given a pat on the back or even a reward by the authorities when I present them with the evidence? No, I don't think so either. Two wrongs don't make a right in my book. However, when it comes to tax avoidance, it's as if all sense of proportionality gets thrown out of the window as politicians and liberal commentators whip themselves up into a frenzy of righteous indignation against tax-dodging fat cats. Nobody seems to question where the information came from, or how the authorities came by it, or how much they paid the perpetrator of the leak. It's almost incentivizing people to break data protection and privacy laws. It doesn't say much for the claims of governments that our data will be safe and secure when it's transmitted from pillar to post under automatic information exchange.
    Source: www.tax-news.com/news/France_Allows_UK_To_Share_Stolen_Bank_Data____67406.html

  • Feb 05, 2015   France: another time waster

    Rarely do I get the chance to do a "two for the price of one" execration, so I should quite enjoy this. France and Austria are the particular targets for my ire, and I've a feeling it's going to be hard to miss! That's because the European financial transactions tax is involved, and seldom has there been a tax easier to shoot down. Because nobody can agree on such fundamentals like what to tax and at what rate, and in order to spur along the deadlocked FTT negotiations between the 11 participating member states (or is it 10 now, after the Slovenian Government had a sudden attack of common sense following a Council meeting last May, and refused to sign a joint declaration?), France and Austria have come up with the idea of lowering the level of the proposed FTT and widening its scope. Given that the way in which the original proposal was drafted gives the FTT enormous extra-territorial reach, does the FTT really need wider application? Obviously my answer to that is no, it doesn't. Because the whole thing breaks a multitude of laws, including the EU's own treaties, anyway, and is unworkable no matter how much you mess about with it. Introducing the FTT within parts of the EU would illegally exceed member states' jurisdiction for taxation and create distortions to the detriment of non-participating EU member states, while the "deemed residency" principle would contravene customary international law. And those aren't my words. They come, paraphrased, from a legal opinion by the EU Council's own lawyers, leaked to the Financial Times in 2013. Worse, the finance industry has already concluded, more or less, that the FTT countries will be committing economic suicide if the tax is ever introduced. In fact, the list of flaws is so long there's no room here to list them all. It saddens me and maddens me in approximately equal measures though, that the EU's top bureaucrats and politicians are so obstinate in pursuing what is clearly a politically-popular, but economically misguided tax, spending a lot of time and resources in the process. So, Austria and France, I have a better suggestion to take to the EU11 (or perhaps it should be named the EU10.5 now): give up, go back home and think of another way to punish the bankers.
    Source: www.tax-news.com/news/France_Austria_Seek_EU_FTT_Breakthrough____67073.html

  • Dec 29, 2014   France: for sucking up to the fairies

    Well, that has been quite a diversion through territory you may not have been expecting, but it brings us back to terra firma. The first thing to do is to get rid of all the shadow people and their organizations. Send them back to the universities and institutions they came from, where they can continue to win imaginary prizes for scratching each others' backs. As for our elected leaders, the second thing is that we need to tell them to stop spending money, and in particular to stop getting into debt. If we don't do those two things, then within two to three years the fairies will have succeeded in destroying the laboriously constructed international business house which sits today protectively over the heads of cross-border traders big and small, and it will be open season for every government inside and outside the OECD to take what it fancies under any old pretext, and fight it out in court with any taxpayer who is rich enough to stand up for themselves. If you doubt me, then just look at the behaviour of the British Government over the last two weeks, which has cast off the last fig-leaf of legal propriety and is allowing and perhaps even encouraging HMRC to introduce a series of ever more Draconian anti-business laws. By now, it probably calculates, might is right, and it will get first mover advantage, while other countries, which are in an even worse fiscal state than the UK, will have to play catch-up and won't dare to be as grasping as Perfidious Albion. We can expect to see Italy and France, both of which are going to be in desperate need of assistance from the unmentionables, persist with the statist game whatever the colour of their Governments. Russia now finds itself in the same camp, unexpectedly enough, although it has had a bad year in terms of international trade rules. So, execrations for all four of them. Australia, which is by now a sort of pallid resource reflection of China, hardly has a short-term future at all. Most of South and Central America has been practising being anti-internationalist for so long now that it should be becoming almost second-nature for them. India has lately shown the world just what it thinks of international law; so no surprises in that direction.
    Source: www.tax-news.com/news/Italy_Approves_2015_Budget____66800.html

  • Aug 28, 2014   France: l'éléphant

    In life, you tend to reap what you sow, and there are few better demonstrations of how accurate this idiom can be than the condition that France finds itself in. Francois Hollande came to power openly promising to squeeze every last cent from the wealthy and from wealth creators in taxes as a means to repair France's tattered public finances. As recent eurozone growth (or non-growth) statistics suggest, all this policy has succeeded in doing is throttling the economy. Yet worringly, despite raising France's tax burden to painful levels, the Government still looks like missing its budget deficit target this year, and Paris is pleading with the European Commission for a more flexible approach to fiscal discipline. Meanwhile, Hollande's popularity ratings have sunk in tandem with the French economy, and, in one of the most complete u-turns in political history, the President now claims to be a firm friend of enterprise, pledging tens of billions in tax cuts in an attempt to spur jobs growth. But alas, the damage looks to have been done. Hollande's apparent swing to the right has alienated him from a large swathe of the ruling Socialist Party, and after a drubbing in last year's local elections, he is fast runing out of friends. And as if economic forecasts weren't gloomy enough, there has been a dramatic rise in the number of people unable to meet their tax obligations in France. It's all very depressing, not only for French taxpayers, but also for the EU, which has its own concerns about France's ability to pay its way. It's not for nothing that privately, many senior EU officials say that France is the eurozone's "elephant in the room."
    Source: www.tax-news.com/news/Rise_In_French_Taxpayers_Struggling_To_Pay____65569.html

  • Jun 26, 2014   France: and la vie en rose

    Since it's still before breakfast (for me, that is) I will choose to believe something impossible, which is that the French Government is going to cut its expenses and reduce taxes. The Court of Auditors, having had a very substantial breakfast, doesn't believe the Government, however, and in the past the Court has consistently been more accurate than the Finance Ministry. It's impossible to discern where the President is standing in this: he began from a very far-Left position more or less indistinguishable from Communism, but has been rocked by adverse election results and the lowest approval rating of any President, ever. "I hear you," he says, but presumably only because he has no choice. The choices are going to be made at the Matignon, whence the Prime Minister will be leaning on the Finance Minister, Michel Sapin, to come up with the goods, being a package which will satisfy both the electorate and the EU Commission – and that's where the impossibility comes in. The Auditors say that the Government will miss its 3.8 percent deficit target this year, which is already far higher than what the Commission had been promised, and could lead the country into an "excessive deficit procedure" in which the Troika or some other extra-national task force imposes tighter fiscal discipline on a miscreant country. But such measures would cause riots in France, or worse, and would surely lead to a summary end to Francois Hollande's tenure of the Elysee. Therefore the Commission will do what it did after Maastricht, when it was Germany that broke the fiscal rules, and bend them, especially if arch-fixer Jean-Claude Juncker has been installed as President, because France is too big to be crossed. Well, here comes my breakfast, so I will mark up France's bonus point while I still have belief and before I tuck into that scrumptious croissant au chocolat.
    Source: www.tax-news.com/news/France_Planning_EUR14bn_In_Tax_Cuts_By_2017____65018.html

  • Apr 24, 2014   France: dreaming on

    We must end on a lighter note, and where else but in Paris, with Government ministers being rolled out to pull the wool over the eyes of disgruntled taxpayers by promising ever-greater tax cuts to be financed by cuts in public expenditure which they must surely know are illusory. The latest to play at this game was Michel Sapin, newly enthroned as Finance Minister, and he is offering EUR40bn of corporate tax cuts. He was previously Finance Minister under Francois Mitterand in 1993, a long time ago in politics, so people have probably forgotten all the jokes about him as a young pine tree (sapin means little fir), and his failure to deal adequately with the collapse of the ERM in 1993 which led to devaluation of the franc and electoral reverse, whereupon he resigned. He is said to have been a bosom pal of Hollande's over the years, although not quite as bosom as a certain other minister, we trust. At least now he can't do much damage to the Euro (we hope).
    Source: www.tax-news.com/news/France_To_Cut_Corporate_Tax_Burden_Sapin_Says____64409.html

  • Apr 10, 2014   France: The End Is Nigh

    It's almost a relief to turn to the comedy of Comrade Hollande's reshuffle. That he had to do one is beyond question, but in what weird universe can the President of a major economy seriously give a ministerial job to one of his ex-mistresses, having just dumped another of them, and promote a known Marxist firebrand to be Economy Minister as a part of a slate of pro-business reforms? He talks about tax cuts, but he hasn't got any money. He talks about "savings" but there aren't any. Debt, the deficit and spending are all higher than he has promised, and his masters in Brussels are at their wits' end. What are they going to do with him? At least in the comparable case of Comrade Christophias in Cyprus he was due to leave office within a year; but this apology for a leader has a full three years to run!
    Source: www.tax-news.com/news/French_President_Vows_To_Push_Through_Tax_Cuts____64238.html

  • Jan 09, 2014   France: irresponsibly yours

    It's also nice that French President For All Seasons Francois Hollande wants a "responsibility" pact with business to save the nation. He'll offer an undefined reduction in social security contributions (which have just gone up) to businesses which take on more workers and "engage in more dialogue with trade unions." When was the last time you engaged in a dialogue with a French trade union and survived? I suppose it's a step forward that Hollande has come to understand that businesses have a role to play in the nation's economy; or perhaps more likely he has been made aware by some of his less doctrinaire advisers that pretend friendship is sometimes more effective than outright enmity. At all events, I would like to be there when the first businessperson asks Force Ouvrière what they have to offer in exchange for another 1,000 jobs in a decaying automobile plant which even Fiat won't buy.
    Source: www.tax-news.com/news/Hollande_Calls_On_Businesses_To_Solve_Frances_Woes____63220.html

  • Jan 09, 2014   France: wants to learn

    It's nice to be able to welcome France's support for apprenticeship as a means for assisting youngsters into the workforce, even if the Constitutional Court had to stop the Government from doing a bit of gerrymandering by distributing its largesse mostly to friendly regions. The failure of other nations to copy Germany in its devotion to the concept of apprenticeship is nearly inexplicable. Actually, I can see where it's coming from: if you are a fan of equality, opportunity for all and the rest, then you want to give less bright children and those from poorer backgrounds the opportunity to shine at senior school, and go to University (to get a useless degree in media studies). Unfortunately, the result is to deprive the "old" industries of skilled workers, and to inflate the pool of unemployed and unemployable youth. This effect has been particularly marked in the UK, where "trade" was always frowned on, and class has been a barrier to advancement. Parents, rightly wanting their children to be better educated than they were themselves, fell hook, line and sinker for the egalitarian heresy, and subscribed to the Government's "comprehensive education" propaganda, resulting in a generation of young people who can neither spell nor add up, let alone use a wrench. It's hardly surprising that no-one wants to employ them.
    Source: www.tax-news.com/news/France_Presses_Ahead_With_Apprenticeship_Tax_Reform____63226.html

  • Dec 30, 2013   France: being "brutal"

    It's Christmas week, isn't it, so obviously lots of governments will be making goodwill gestures to their stressed-out, over-taxed citizens, to show how grateful they are for the tax money that pays for their big, black cars, the trips to G3, G5, G8, G20, G30 junkets in beautiful places with long-legged personal assistants and the rest. Well, let's see: Mexico is increasing the scope of VAT and has gone back on some promised tax reductions; Max Baucus wants to reduce energy tax incentives (increase taxes, in other words and am I seeing things, or does he have a double who's going to be the Ambassador to China – that definitely proves that the President has gone off the TPP); community taxes are increasing right across Belgium; and France (that traditional home of Christmas bonhomie) is going to scale back the increases it is planning to the electricity contribution (but not for households), after the politician piloting the latest Finance Bill through parliament admitted that the rises were "brutal." So, a savage sovereign Bah, Humbug is what we're going to get. Well, politicians know all about humbug, I suppose.
    Source: http://www.tax-news.com/news/French_Lawmakers_Ease_CSPE_Tax_Hike_For_Industry____63086.html

  • Dec 12, 2013   France: strapped for cash

    The French are considering jettisoning one of the few favorable aspects of their individual taxation system, being the fact that personal income tax is payable a year in arrears, rather than being witheld from salary, as is the case in almost all "advanced" nations, and as is the case for social contributions, even in France. Probably they are being forced into it by a looming deficit in 2014 – the change would give a massive boost to revenues in the year in which it took place, well, years, probably, because it would have to be phased in gradually. That's far from the only revenue-boosting initiative being cooked up in Paris: fines and penalties are being increased for many types of tax misdemeanor (although the Constitutional Court, to its credit, slapped down some of the Government's more illiberal measures); next year's social security law has been passed, including increases to a range of contributions and a "fat tax" on sugary drinks; and the 2013 "supplementary" finance law has toughened exit tax rules, lowering the threshold and increasing time periods for realization. All this in just one week – no wonder that the employers' association is shrieking for tax cuts. But it won't get them; the Government can't afford it after two years of socialist largesse. The most it offers is the famous "pause" in tax increases in 2015.
    Source: www.tax-news.com/news/France_Mulls_Simpler_Withholding_Tax_On_Income____62937.html

  • Nov 28, 2013   France: baby steps

    It's pleasant for once to be able to reward France for reducing some taxes, although its effort to improve the situation of entrepreneurs and tradespeople is too little, too late. It indicates that some parts of the Government at least have begun to understand the terrible damage that Francois Hollande's misconceived policies have inflicted on the country, both in real terms and in terms of reputation. Unfortunately, trapped by a declining economy and consequently shrinking revenues, the Government now doesn't have the resources to offer more than token assistance to down-trodden businesses. After ignoring repeated calls from the IMF, the OECD, the European Union and a host of economic commentators to stop raising taxes and spending money, French Budget Minister Bernard Cazeneuve had to face reality this week, revealing that there will be a revenue shortfall in France this year of approximately EUR5.5bn (USD7.4bn), compared to the initial budget forecast. He then went on to claim that the Government was controlling its expenditure so tightly that the country would reach its budget target for the year in any event. Quand les poules auront des dents, the French would say (when chickens have teeth). It's more graphic in English: when pigs fly. The most disappointing number is that of the 5.5bn, 80 percent is due to a loss of corporation tax, pointing to the low level of business activity. Indeed it's true that a dramatic reduction in State spending, and consequently in taxation, is the only escape route for France. But it has never been possible before without mayhem on the streets, and this Government definitely doesn't have the spine for that!
    Source: www.tax-news.com/news/France_Unveils_Tax_Breaks_For_Artisans_And_Traders____62783.html

  • Nov 07, 2013   France: being beautiful

    France actually provides the only mildly funny story in this week's doleful tax news, with the threat of French footballers to go on strike if the Government puts through its plans for a 75 percent tax on earnings over EUR1m. And there you were with images of plutocratic captains of industry tucking in to foie gras and champagne at Maxim's. No, it's the beautiful game where the truth is to be found! Mind you, they probably go to Maxim's as well.
    Source: www.lowtax.net/asp/story/front/French_Footballers_Protest_Against_75_Percent_Tax____62507.html

  • Oct 24, 2013   France: yet dafter

    Ah well, let's cheer ourselves up by taking a look at France, where things are even worse, indeed as a result of a full house of left-wing parliaments, presidents and press. I had a good laugh when I read a report this week by some deputies claiming that the "tax gap," that's to say, the tax that should be paid but isn't, in the European Union amounts to two trillion Euros, of which EUR80bn is in France itself. And their proposed remedy? Well, of course, it's to give the tax authority more powers and to wring more information out of corporations and banks. Naturally, in their jaundiced eyes of the deputies, it's the banks' fault in the first place. Wouldn't we be better off without them? Surely to goodness it would be better to nationalize them and be done with it? The banks, that is. The deputies are already nationalized. Mind you, it's not just the French who salivate at the thought of all that "lost" tax: Britain's HMRC published its estimate of the UK's tax gap this week, much lower than the French estimates, it's true. Never fear though, Margaret Hodge, Westminster's answer to Carl Levin, leapt to say that HMRC was grossly underestimating the tax owed by international businesses. The only problem is, for these ladies and gentlemen who would save their economies so handily, that the "tax gap" is just pie in the sky.
    Source: www.lowtax.net/asp/story/front/French_Report_On_EU_Tax_Evasion____62367.html

  • Oct 03, 2013   France: dreaming

    One country where the IMF's higher-taxation prescriptions are not required is France, where they need no encouragement to add taxes at every opportunity. This week saw the publication of the country's 2014 budget, which is full of wishful thinking and wordy prescriptions for social fairness. It is based on the assumption of 0.1 percent growth this year, and 0.9 percent in 2014, both numbers being more optimistic than the IMF's current forecasts, and those themselves often tend to be too sunny. There are a number of new and increased taxes, with a redistributive flavour overall, including the notorious 50 percent "solidarity" tax, which will raise next to nothing but amounts to a sort of socialistic declaration on the part of President Hollande. There are also, to be fair, some tax reductions benefiting the less well-off and small businesses. The Government keeps insisting that it is going to make meaningful expenditure savings of EUR15bn next year, although the high-flown wording of that section of the budget is so dense that it is impossible to make out exactly what is intended. Me, I'll believe it when I see it. Meanwhile, a plan in the budget to reform the existing corporate turnover tax came in for a pasting from the employers' federation, which said that the changes were "improvised and precipitate," while the budget in general is bad for the competitiveness of businesses, for growth, and for employment in France. And just in case you thought that the French Government is showing signs of realism (I don't), they came up with a proposal this week for an EU "data transfer" tax. Translated, that means an attempt to grab some of the profits which in French eyes are extracted unfairly from Europeans by US e-tigers such as Google, Amazon and Apple, only to be whisked away to "paradis fiscaux." They aren't taken to America, that's for sure, where the tax rate is even higher than it is in France. And then again, quite a lot of the profit ends up in Ireland and Luxembourg, which are EU member states, so they won't be in favor of the plan. Well, nobody will, except the French; it's just daft. Comme d'habitude.
    Source: www.lowtax.net/asp/story/front/France_Presents_2014_Finance_Bill____62187.html

  • Sep 26, 2013   France: is "pausing"

    I apologize for returning yet one more time to the hoary old subject of French taxation, but I can't let Prime Minister Jean-Marc Ayrault's pledge that there will be a "tax pause" in France, in 2015 rather than 2014, pass without comment. I am reminded of a famous speech by Charles James Fox in 1800 in which he is replying to a suggestion that the war with France should be "paused" rather than that there should be peace negotiations. Said Fox: "…. if a man were present now at a field of slaughter, and were to inquire for what they were fighting – ‘Fighting!’ would be the answer; they are not fighting, they are pausing.’ ‘Why is that man expiring? Why is that other writhing in agony? What means this implacable fury?’ The answer must be ‘You are wrong, sir; you deceive yourself. They are not fighting. Do not disturb them; they are merely pausing. This man is not expiring with agony – this man is not dead – he is only pausing…..All you see, sir, is nothing like fighting – there is no harm, cruelty or bloodshed in it whatever; there is nothing more than a political pause." So now M Ayrault: ". . . plans to increase value-added tax, to raise retirement contributions, and to lower the family income tax break ceiling (le quotient familial) next year, within the framework of the 2014 Budget, merely represent a "slow down" in tax hikes. There will be a slowdown in tax rises next year before moving towards an effective 'tax pause' in 2015." So the French economy is not wrecked; the national debt is not rising; taxpayers are not being crushed under the weight of imposts. No, Sir! Not at all, you are mistaken; they are merely pausing! And what when the "pause" ceases in 2016? A return to more taxes, presumably. And then M Ayrault continues by insisting that the Government has made "unprecedented savings totaling EUR15bn (USD20.3bn) in 2014, to ensure that tax rises are as small and painless as possible." As I pointed out last week, this is disinformation of a particularly shoddy kind. The Government hasn't made any savings at all: this figure is the withdrawal of tax breaks, in other words it is an increase in taxation. Ohhhhhhhh!
    Source: www.lowtax.net/asp/story/front/Frances_Ayrault_Confirms_Tax_Pause_In_2015____62098.html

  • Sep 19, 2013   France: rakes in the dosh

    The French are particularly guilty of this sleight-of-hand, and on a massive scale, talking about making savings by reducing tax breaks by as much as EUR20bn a year over the course of this year and next. Let's be clear: that's a tax increase of EUR20bn, however you decorate it. French economic ministers have been on a charm offensive in the last few days, ahead of the unveiling of the 2014 finance bill, trying to convince people of the patently untrue proposition that taxes aren't going up. The truth is there for all to see in figures published this week showing a tax take up 8.7 percent in the first seven months of the year. And those "savings"? Well, state spending reached EUR235.5bn as at the end of July, 2013, compared to EUR226bn the year before; that's up 4 percent. Inflation this year is running at 0.94 percent so far, so that's a real spending increase of 3 percent. Actually they haven't saved a dime. The only piece of good news out of France this week has been a warning from the French Digital Council (CNN) against the imposition of a specific national digital tax, something the Government is known to be considering, although in this case the motivation is not so much to raise money as it is to drive Google and Apple out of the country.
    Source: www.lowtax.net/asp/story/front/French_Tax_Revenue_Growth_Narrows_Budget_Gap____61999.html

  • Sep 12, 2013   France: lashes out

    Ah well, time to lighten up, not that there's anything much to laugh about in this week's batch of tax news. But there's a sort of wry amusement to be gained from seeing the outraged squeals emanating from Bermuda, the British Virgin Islands and Jersey in response to their inclusion on France's new blacklist of non-cooperative territories. It's a serious matter for any French investors with companies in those places, since tax rates reach a crucifying 73 percent on remittances from France to these "paradis fiscaux" as the French call them. "Paradis infernelles" would be more like it, as seen from the banks of the Seine. Monaco must be trembling in its boots.
    Source: www.lowtax.net/asp/story/front/Bermuda_Responds_To_Tax_Blacklisting_By_France____61908.html

  • Sep 05, 2013   France: hooked on tax

    European Commissioner for economic and monetary affairs Olli Rehn warned France during the week that further tax hikes would damage prospects for economic growth and put jobs at risk, telling the cloth-eared Communists in Paris (well they were probably in St Tropez last week) that "budgetary discipline must come from a reduction in public spending and not from new taxes." Of course they didn't pay any attention, and said they would increase payroll taxes to shore up the country's creaking social security system, as well as increasing the number of required contribution years from 41.5 to 43. This courageous action is to take effect, wait for it, by 2035!! They don't dare increase the retirement age, which would bring rioters onto the streets of the capital; the first thing Communist-in-Chief Francois Hollande did when he came into office was to cancel the (rather minimal) increase in retirement age decreed by outgoing President Nicolas Sarkozy. Pierre Gattaz, head of France's employers' confederation, got it right, calling the reform "dangerous" and unacceptable, saying that "all the Government does is tax and then tax some more."
    Source: www.lowtax.net/asp/story/front/France_To_Pay_For_Pension_Deficit_With_Higher_Payroll_Taxes____61882.html

  • Aug 01, 2013   France: makes an effort

    Even when it tries to reduce taxes, it seems that the French Government can't get things right. It's trying to rearrange the capital gains tax regime allowing increased tax reductions depending on the holding period, with total exemption from real estate capital gains tax granted after a 22-year holding period, instead of 30 years as is currently the case. In addition, there are progressive reductions in matching social levies (the CSG general social contribution and CRDS contribution for the repayment of social debt), and a total exemption from social contributions will be accorded after a 30-year holding period. But the French national real estate federation FNAIM insists that the Government has failed to tackle the root of the problem and to simplify the regime. The federation emphasizes that the Government should have introduced a simpler regime, akin to the system in place in France up until 2004. Under this regime, regular tax reduction increments of 5 percent a year were accorded, starting from the third year of the holding period until total exemption was granted for a 22-year holding term. Air France's unions are up in arms, too, over plans to increase the country's tax imposed on airline tickets next year. Dubbed the "Chirac tax," the charge was introduced in France in 2006 by former French President Jacques Chirac. Levied at a rate of EUR1 on single intra-European flights in economy class, and up to a rate of EUR40 on international business flights, the product of the levy flows to finance the fight against AIDS, tuberculosis, and malaria in developing countries. French President François Hollande's has pledged to increase the tax in 2014, perhaps by as much as 10 percent.
    Source: www.lowtax.net/asp/story/front/French_Federation_Denounces_Complex_CGT_Reform____61523.html

  • Jul 18, 2013   France: rapidly sinking

    Good old France, going from one madness to the next even crazier madness, keeping scribes like me in business, week on week. This time it's a proposed tax on luxury hotels, to finance holiday camps and trips away for young people. Sounds just like the USSR in the 1970s, right? Well, that's what you get if you elect a Communist president. Even more amazing, the levy would be set at up to 6 percent. A task force attached to the National Assembly Cultural Affairs and Education Committee was asked to examine accessibility for the young to camps and other such organized trips. In its report, the task force noted that such schemes have become less popular for middle-class families due to rising costs. So, obviously, take another bite out of the rich. Except that these rich are foreign rich, who come to France to invest (and rapidly decide not to). It might work at the Cannes Film Festival, I suppose. And this is in the context of the inexorably rising level of general taxation, set to increase next year by 0.3 percent of GNP, taking it to more than 45 percent of GDP, which itself will decline this year and is expected to decline again next year. And that's before any further tax increases, which Finance Minister Pierre Moscovici studiously refused to rule out this week. The deficit will break Maastricht rules this year and next, while debt has been ballooning to reach more than 90 percent of GDP this year. The EU in its wisdom has given France an extra two years to bring the figures back under Maastricht levels (3 percent deficit and 60 percent debt) - whatever for? This is the 1990s all over again, when the original Maastricht rules were immediately flouted by Germany and France, with today's horrendous consequences.
    Source: www.lowtax.net/asp/story/front/Moscovici_NonCommittal_On_Further_Tax_Hikes____61353.html

  • Jul 11, 2013   France: taxes everything

    I am bewildered by the stance of the French Government, and possibly they are bewildered themselves. Amidst all the grand rhetoric there is no distinguishable, coherent fiscal policy. What there is however is a series of tax rises here, there and everywhere, responding it seems to shortfalls in revenue which appears unable to keep pace with runaway spending. This week we had an increase in the tax on advertising signage (it reminds me of the old Marxist belief that advertising was in some obscure sense capitalist profit and it was taxed accordingly), and a rise from 7 percent to 19.6 percent in VAT on a raft of services, including gardening work, land clearance, home study courses (excluding tutoring), technical support and maintenance services and business agency services. A sudden shaft of light from the Court of Auditors demanding that public spending should be curtailed turned out on closer inspection to be a request for tax breaks to be cut back, i.e. an increase in taxation. Real public spending (bureaucrats spending their time inventing new difficulties for business) is of course sacrosanct, and any attempt to cut it would be met with a hail of paving stones; but there won't be one. A report on improvement of the business taxation environment which is supposed to deliver a "simplification shock" was presented by a socialist politician, and will now go through an extensive consultation exercise; that's to say it will be shelved, along with all the others.
    Source: www.lowtax.net/asp/story/front/French_Local_Advertising_Tax_Tariffs_Rise_In_2014____61295.html

  • Jul 04, 2013   France: sets sail for oblivion

    I don't know what I would do for this column without France, which continues to roll out a stream of anti-business measures as it hurtles towards an approaching collision with reality. This week it's the turn of the yachting sector: while virtually every other jurisdiction in the world has noticed that building, selling and operating yachts is a major growth industry which ought to be encouraged in every way possible, especially if you have a coast-line, France regards yachts much as Robespierre must have regarded upholstered carriages and is determined to eradicate them along with tax havens and second homes. The Isle of Man, which is all coast-line and hardly any land, has got it right, as has Gibraltar, with its new 700-yacht marina. Pretty soon now you'll be able to walk from Europe to Africa on a yacht-bridge. France at least has a friend in Italy, which is also carrying out an anti-yacht pogrom, with tax inspectors masquerading as whelk-sellers in fashionable yachting resorts like Sardinia (the same as policemen, you can always tell them by the shoes; the Agenzia d'Entrata can't afford Gucci pumps).
    Source: http://www.lowtax.net/asp/story/front/France_To_Apply_VAT_To_Yacht_Charter_Services____61219.html

  • Jun 27, 2013   France: ices the cake

    I was going to give France two cheers for improving the access process for SMEs for its CICE tax credit, until I realized that they were only doing it because their flagship project is actually not working, with a mere 5,000 firms having applied for the advance credit, to a magnificent total of EUR700m. The scheme is supposed to generate EUR25bn in total savings for businesses. Probably the process is too bureaucratic. The Government claims that a surprisingly large number of small firms are applying, but if that's the case, why change the terms? So I was going to leave France alone, until the Government announced that it was expanding its black-list of AFTICs, meaning that the EU's parent/subsidiary Directive would be suspended for firms with subsidiaries in AFTICs if they didn't immediately consent to automatic information-sharing (not yet the law, by the way), and they would pay a 55 percent withholding tax. Ouch! Clearly the French Government thinks that AFTICs are a blot on the landscape, and indeed it has said it wants to exterminate them. At least Mr Cameron doesn't believe his own propaganda; but the French do!
    Source: http://www.lowtax.net/asp/story/front/France_Waives_CICE_Tax_Credit_Fee_For_SMEs____61130.html

  • May 30, 2013   France: unspeakable

    Only in France: when the French budget minister revels in the fact that many wealthy French people are paying more than 100 percent of their income in taxes we may fairly call the French Government uncomprehending, along with a number of other negative epithets. As even the President of the National Assembly's Finance Committee says (admittedly a right-wing politician), it is scarcely surprising that better-off citizens choose to leave, walking David Cameron's red carpet across the Channel to do business in the United Kingdom. There are no believable statistics for how many French actually decamp for greener pastures, not least because they open themselves to even more penal taxation by admitting to an "exit." The Government says that 120 people made exit declarations in 2012, incurring tax on EUR1.4bn of capital gains – better I suppose to cough up now if you are leaving, so that at least future gains can take place under a more appealing regime. Actually most of the 120 went to Switzerland (this was the year in which the 50 percent top tax rate applied in the UK) and only 17 to the UK. But this doesn't square with anecdotal evidence from London, and I don't entertain such a low figure for one moment.
    Source: www.lowtax.net/asp/story/front/Frances_Cazeneuve_Justifies_Confiscatory_Tax_Levels____60858.html

  • May 09, 2013   France: defends its digital territory

    I find it really shocking that after five years of pressure and complaints, the Netherlands' Government is still refusing to level the playing field for its state-owned businesses when they compete against private sector equivalents. Of course this was the norm in pre-Thatcher days, when the finances of state-owned corporations were utterly obscure, and notions such as profit and loss were alien to the bureaucrats who had carte blanche to favour themselves over private competitors. Silly me, I thought that had all gone, but evidently not. I was writing about Fannie Mae and Fannie Mac last week, and that's unfair competition as well, although not quite so blatant. Then this week we also had the spectacle of the French government grandly announcing a rapprochement with business, while out of the other side of its mouth it was denying Yahoo's attempt to take over website Dailymotion – something the company itself and its other shareholders wanted – because it didn't suit part-owner France Telecom. France is altogether in a defensive posture as regards the Internet, as President Hollande made very clear back in January when he threatened Google with legislation if it didn't pay through the nose for linking to French content. The truth unfortunately is that the wave of privatization, or to give it a more accurate name, marketization, which bubbled up in the UK in the 1980s, and which had a major impact in many countries around the world, has largely passed by countries such as France and Italy. Even in a place like Cyprus, where you might have thought that the "Anglo-Saxon" influence would have been stronger, the state clings on to the telephone, electricity and water utilities: last month when the Troika tried to insist on privatization of the electricity company, the feather-bedded bureaucrats who run it as a kind of family retirement home offered to find the EUR1.5bn themselves if they could be spared! That would be funny if it weren't sick. We have a long way to go.
    Source: www.lowtax.net/asp/story/front/Hollande_Pledges_Intervention_In_Google_Tax_Dispute____59269.html

  • Apr 18, 2013   France: mistreat China

    One country which is conspicuous by its absence from the TPP talks is of course China. Although there are ongoing negotiations between the Middle Kingdom and various other countries, and China has FTAs with a scattering of other countries, notably including ASEAN and New Zealand, on the whole it is lagging. And it considers itself as an injured party in trade affairs, complaining this week about the level of "dumping" and "counter-vailing" measures it is subject to, particular emanating from the USA. A lot of the problem revolves around the designation of China as a "non-market economy" (NME). For anyone who, like me, finds it extraordinary that China should still be regarded as an NME, a word of explanation is in order: an NME is a country in which the State subsidizes enterprises or indulges in other non-market behaviour, despite WTO rules against it. So, an NME is allowed to cheat, if you will; but the other side of the coin is that for an aggrieved counter-party, the burden of proof is lower in anti-dumping proceedings. China's accession agreement to the WTO allows it to retain NME status only until 2015; but the change is not in China's gift, and both the USA and the EU persist in regarding China as an NME, despite frequent requests from China for them to treat it as a market economy.
    Source: www.lowtax.net/asp/story/front/China_Sees_Itself_Subject_To_Increasing_Trade_Friction____60398.html

  • Apr 04, 2013   France: no comment

    It's almost a relief to turn from countries which are making eyes at each other (admittedly better than scrapping over barren islets in the China Sea) to countries which are behaving badly and making no bones about it. We'll start with France, where Francois Hollande is giving his famous impersonation of an ostrich, sticking to his doctrinal insistence on taxing the living daylights out of anyone who has been subversive and anti-Republican enough (meaning something quite different in France) to make a capitalist profit. The Constitutional Court, about whose inconvenient existence he can do nothing, has blocked his path, so he is now pretending to impose his superlative 75% tax on companies which employ profit-makers. He knows, the Court knows, every journalist in France knows, and we all know that it won't work. So why didn't he just admit defeat, instead of making an ass of himself in addition to being wrong?
    Source: www.lowtax.net/asp/story/front/Frances_Hollande_Unveils_Revamped_Super_Tax____60279.html

  • Mar 21, 2013   France: losing talent

    Francois Hollande's chickens are coming home to roost, with the news that senior managers are apparently leaving France in droves because of the penal tax regime for share options and high salaries. It's not clear whether these executives are leaving their jobs as such, or merely going to live somewhere else and continue their work in a friendlier tax climate. Perhaps it's the latter. Governments, whether socialist as in beknighted France, or centrist as in the UK, haven't woken up yet to the new electronic reality that senior managers can do their work just about anywhere with their tablets, Blackberries, Skype and conference calls. If you're a factory floor supervisor, then for a while you will still have to walk around and talk to people; but fairly soon even that supervisor (if he still has a job at all) will be managing a work-shop full of robots, and will be able to do it sitting in a bar in Cyprus with wi-fi. Perhaps Finance ministers do know this, and are counting on seeing out their term and getting their gongs before the sands start running out from under their feet; but if that's the case then they are being most improvident, because a large percentage of their top-earning and top-tax-paying senior people are probably actively planning to leave. Ministers should be trying to create attractive tax regimes for their best managers; instead, they seem to be doing the opposite.
    Source: www.lowtax.net/asp/story/front/French_Taxes_On_Capital_Drive_Out_Top_Executives____60107.html

  • Mar 07, 2013   France: helps business, really

    Another nifty scheme which sails beneath the Commission's state aid radar is the French CICE tax credit. It's complicated, but in a nutshell it means that if a small firm is profitable it can get back about a third of its payroll taxes in the form of an advance from a state-sponsored bank, and the amount will act as a credit against corporation tax in the following year. It's all very circular, because this scheme was offered by the Government in return for swingeing tax increases which hit larger firms particularly hard. So it's re-distributive. And it's not peanuts, adding up supposedly to EUR20bn, which you would think is going to add that much to public debt on a permanent basis? It's not yet clear what interest rate will be charged on the advances, but various analyses have suggested that the long-term effect of the CICE will be to create 150,000 jobs. Let's hope that not too many of them are in local tax authority offices.
    Source: www.lowtax.net/asp/story/front/France_Presses_Forward_With_Competitiveness_Tax_Credit____59965.html

  • Feb 28, 2013   France: repeats history

    I've been trying not to attack France for the last few weeks, because as a target it is too tempting and too easy, and it doesn't seem fair to kick a country when it's down. Of course it's not the country I'm kicking, it's the blind and incapable government it has been landed with. The Government's own auditors are telling it to stop raising taxes and spending money, but they might as well go swimming in the Seine for all the attention they are going to get. Anyway, that's not my beef this week; I am worrying about the anti-banking frenzy that has taken hold of French politicians. The law to separate retail and investment banking is Glass-Steagall all over again, but you don't need any lessons from history to know that this separation is a mistake. The French are not alone, of course: there is Dodds-Frank, there is Liikanen, there is Vickers. They're all at it, and they're all wrong. It's just that the French are doing it so enthusiastically. One question, and I'll shut up: where would you start a new bank in 2014 - Paris, London, Jersey, Denver or Singapore? There isn't exactly a right answer, it depends on the circumstances; but I'd like to meet the person who opts for Paris.
    Source: http://www.lowtax.net/asp/story/front/French_National_Assembly_Waves_Through_Banking_Bill____59891.html

  • Feb 07, 2013   France: and diminishing returns

    Across the Channel in France there is more evidence that the level of taxation in Europe has reached its natural limit of effectiveness, with the news that the Financial Transactions Tax imposed since last August has reaped less than one third of the amount expected by the government. And that's before the victims of the tax have fully learnt how to avoid it. The failure of this tax won't stop Commissioner emeta from powering ahead with his European version of the FTT, but it ought to give him pause. As many critics have pointed out, an FTT, even an extra-territorial one as is planned by Brussels, is fairly easy to evade for larger companies with world-wide networks of subsidiaries and competent tax departments, leaving the tax to be paid by the small fry who are not so nimble. Thus, the "speculators", the mythical enemy of President Hollande and just about every other eurozone chief, will escape, and the small investor, who should be treasured, will be hurt. The tax will act as a disincentive to desirable economic activity, without cramping the "speculators" (aka corporate treasury managers), thus achieving precisely the opposite of what was intended.
    Source: http://www.lowtax.net/asp/story/front/French_FTT_Fails_To_Reap_Results_In_2012____59482.html

  • Jan 31, 2013   France: in fraternity with Germany

    If David Cameron and his euro-sceptic legions want a semi-detached UK, the terrible twins Angela Merkel and Francois Hollande want to complete the roofing of their half-finished euro-house. Again, we'll have to shut our ears to the twaddle about transaction taxes and corporate tax unification and focus just on the fiscal charter, which will submit EU members to some sort of budgetary harmonization under the control of Brussels and Dragon Draghi. You may be surprised to hear this coming from me: how can I support Cameron's dash for freedom at the same time as euro-unification? Because Europe has to go one way or the other: a Brexit accompanied by a Grexit and a few other exits would lead to an outcome of a sort - a Europe of competing nation states, but it is against the grain of history. A better outcome would be a united Europe with one currency and a single economic budgetary policy, on the model (OK, not quite) of the USA, which could then live or more likely die in competition with other major blocs. But that's not going to be the result: instead, we will have something like a re-creation of EFTA led by the UK, with a unitary euro-zone, which may have been forced to become more competitive by the UK's antics. That's how I can have my cake and eat it!
    Source: http://www.lowtax.net/asp/story/front/Hollande_Merkel_Resume_Push_For_Fiscal_Integration____59367.html

  • Jan 24, 2013   France: good at spin

    Faced with a barrage of criticism from businesses and foreign investors, the French government went on a charm offensive this week, announcing a range of business-friendly tax measures, including for the sacred SMEs. But in truth, there was nothing new other than some fresh good intentions, and we must remember that the EUR20bn of apparent tax incentives through the CICE is merely compensation for new taxes that were loaded onto the economy last year, and only part compensation at that. The remainder of the government's deficit reduction program is supposed to come from cuts in public expenditure; well, this is France we are talking about and I'll believe in the cuts when I see paving stones being thrown around in the streets of Paris. In fact the government was busy planning yet more taxes during the week: unemployment insurance contributions for short-term contracts are go up; and the dwellings tax is to be linked to household income, which will be a typically socialist redistributive measure, although not until 2014. So, another black mark!
    Source: http://www.lowtax.net/asp/story/front/France_Commits_To_Tax_Incentives_To_Boost_Foreign_Investment____59194.html

  • Jan 03, 2013   France: the bankers' enemy

    Since I'm writing this on New Year's Eve, I suppose it's right to end the year where we began, with the banks, and it's surely one that they will want to forget. My main question, and perhaps I am just being stupid, old-fashioned or both, is to wonder why, if Glass-Steagall was such an unmitigated disaster when it was tried in the 1930s, the separation of retail and investment banking would be any more successful today? During the year we've been over and over the unedifying reasons for politicians' dislike and persecution of high-flying, over-paid bankers, there have been many reports which absolved hedge funds and derivatives traders from any direct responsibility for the debt crisis (on the contrary, all evidence is that they restrain volatility), we have noted exhaustively that the debt crisis is caused by governments borrowing too much from willing banks; yet here we are at the end of the year as if none of this had ever happened, with the US far ahead with implementing Dodd-Frank (never trust a hyphenated law!), the UK going beyond the Vickers' Commission's trenchant proposals, and now the French in the vanguard in Europe with a Banking Bill that will surgically separate the suspect Siamese twins. Indeed President Hollande is the enemy of finance, but no problem, Francois, relax: you soon won't have any left to worry about.
    Source: http://www.lowtax.net/asp/story/front/France_Unveils_New_Banking_Law____58903.html

  • Dec 20, 2012   France: shoots the messenger

    After slamming France last week I was minded to leave the poor dears alone in their Slough of Despond for a few weeks, but Prime Minister Jean-Marc Ayrault's attack on famous actor Gérard Depardieu is so egregious that it can't pass unmentioned. After Ayrault called him "pathetic" and "unpatriotic" for moving to Belgium in order to pay less tax, Depardieu mailed his passport to Ayrault, mentioning that he had paid 85% of his income in tax last year, and that he had paid EUR145m in tax in his career. He also sent in his social security card, which he said he had never used. Ayrault should take a lesson from Colbert, who famously said that the art of taxing was to extract the maximum number of feathers from the goose with the minimum amount of hissing. Well, now he will have no feathers and a lot of hissing. This latest black mark sends France to the bottom of my table of business-friendly countries. It's not a question of the government's politics (with which, needless to say, I completely disagree), it's a simple matter of practicality. They seem to be doing everything they can to drive away wealth-creation. If Colbert understood how to tax, Cameron's almost-equally-famous red carpet across la Manche shows that he has a better understanding of wealth creation than Francois Hollande and his legions. The British government published figures recently showing that hundreds of French citizens have recently taken advantage of the UK's HINWI immigration scheme, under which someone with assets of GBP2m and intending to invest GBP750,000 in a UK business can gain residence quickly and easily, as well as using the non-dom scheme to pay a set amount of tax. Work it out: one Depardieu pays 80% of his income to France; let's say that's 80% of EUR500,000 = EUR400,000. Losing 100 such individuals will cost France EUR40m a year. Perhaps to glorious politicians juggling with billions and the next election, that's chicken-feed. Chicken-feed it may be; golden goose feed it ain't!
    Source: http://www.tax-news.com/news/Frances_Ayrault_Denounces_Tax_Exiles____58764.html

  • Dec 13, 2012   France: oh dear

    I have been leaving France alone for the last few weeks as it continues its stately progress towards fiscal dissolution, but the time has come to remind everyone just what a mess is being created. After a short-lived piece of political theatre in which the Senate pretended to disagree with one of the government's plethora of tax bills, they are being passed, one by dreary one, in the National Assembly. It's all a bit like the last scene in the Dialogue des Carmélites (opera by Poulenc) in which the nuns have their heads chopped off, one by one, quite cheerfully, everyone expecting it. But at the end of it, they are all dead. What will become of La Belle France, which we all loved so?
    Source: http://www.lowtax.net/asp/story/front/French_Lawmakers_Pass_Social_Security_Budget____58627.html

  • Oct 25, 2012   France: eyes wide shut

    Francois Hollande talks about a 'banking union' in the eurozone in 2013, while Angela Merkel rows back, demanding 'quality' before 'speed'. Whatever was agreed, or will be agreed, as far as I can see it is all a plot to spend your and my money on propping up banks which ought to be allowed to go bankrupt. Here is how it goes: 1. banks lend money to governments by buying their bonds; 2. the governments get into debt up to their eyeballs and the banks won't lend them any more money; 3. the banks start to dissolve because their holdings of government bonds are worthless; 4. governments buy the banks for a fraction of what the banks had lent them. But that game has come to a juddering halt at step 4., because of Greece, which hasn't got the money to do it, and can't borrow the money from the ECB or the IMF. So now they have a nice new game, which is to pretend that the banks are stateless (like refugees), and they will recapitalise them direct from the European Stability Mechanism (ESM) which has somewhere between EUR500bn and EUR1 trillion to spend, and it won't count as government debt. But it will count as eurozone debt, so what's the difference? Well, the crucial difference is that Italian taxpayers have to pay off Italian debt, whereas eurozone debt has to be paid off by eurozone taxpayers in proportion to their contributions to the ESM. Germans therefore pay most, and that's why Angela Merkel doesn't like the deal. And has anyone asked the taxpayers? Of course not, and not one in a thousand of them has any clue as to the trick that is going to be played on them. Maybe it's all a necessary part of forming the United States of Europe; but it would be nice to be asked! So, black marks all round, but especially for France and Germany, which are leading the charge, willy-nilly.
    Source: http://www.lowtax.net/asp/story/front/EU_Agrees_To_Full_Banking_Union_In_2013____57891.html

  • Oct 18, 2012   France: France being communautaire!

    To some people's surprise, the French Senate has adopted the EU's Fiscal Pact, although it took an unholy alliance of left and right to get it through. Surprise, because France is one of the least likely countries to give up such a large slice of its treasured sovereignty. This is the agreement between 26 EU member states to adopt a strict budgetary regime which David Cameron famously repudiated last December. Since then the Czech Republic has also excluded itself from the treaty, but the remaining 25 countries are forging ahead. Why do I improbably support an EU initiative, when I am usually against anything that emanates from Brussels? Because Europe has to go forward or backward, not hang around bleeding to death. I don't actually mind which way it goes, but agreement to the fiscal pact is a clear indication that it is going forward, putting national finance ministries under orders from Brussels, to stop their mindless, politically-inspired spending. Whether it will work, when Maastricht, which was supposed to do the same thing, was blown apart by the very countries (France and Germany) which now lead the pack, is another question. But this time the safeguards and the punishments for transgression are far stronger than with Maastricht. So it may work, and I hope it does.
    Source: http://www.lowtax.net/asp/story/front/French_Lawmakers_Give_Green_Light_To_Fiscal_Compact____57762.html

  • Oct 11, 2012   France: France double double, toil and trouble

    France published a social security budget a week after the main budget - there are so many tax increases they can't get them all into one bill, so there are two, and then usually a few supplementary ones as they keep remembering some they left out the first two times around, or as their over-optimistic revenue projections turn out to be wrong, which we all already know is the case. Presumably they know as well, so you have to ask who they are actually deluding? I've been looking through the fine print of the social security bill hoping to find some savings identified, an increase in the retirement age, for instance, but of course, silly me, I was forgetting that arithmetically-challenged Francois Hollande had already promised to reverse Nicolas Sarkozy's increase in the pension age from - wait for it - 60 to 62. The main budget did contain a promise of EUR10bn to be saved from a freeze in public spending, but that isn't exactly 'saving' is it? And politicians' promises to cut spending are easy to make, very hard to fulfil. This government meanwhile shows every possible sign of being profligate rather than penurious. The volte-face on pensions is reckoned to cost an extra EUR3bn. So make that 13bn instead of 10. It's just funny money to them. There is real trouble ahead.
    Source: http://www.lowtax.net/asp/story/front/France_Unveils_TaxLaden_Social_Security_Bill____57589.html

  • Sep 13, 2012   France: has its own fiscal cliff coming

    Slapping down an attempt by some of his unfortunate and less-crazy-than-most ministers to limit the inevitable and catastrophic effect of the proposed 75% upper rate of income tax, raving Marxist Francois Hollande has now really gone for the jugular of France's reeling economy, promising even more dramatic tax increases next year. France's richest man, industrialist Bernard Arnault, is said to have applied for Belgian nationality, leading to a vicious war of words in the French press and accusations of unpatriotic behaviour from the President himself. If anyone is being unpatriotic, naturally in the most well-meaning way, it is of course the French government, which seems determined to commit national suicide in the most expeditious way possible. Let me predict what will happen - it's not difficult: the government will copy the US in subjecting French citizens to worldwide taxation regardless of their residence, and like the US Senate will attempt to penalize anyone renouncing French citizenship, except with more success, because the left has a strangle-hold on both houses of parliament, the constitutional court is a feeble relic, and there's no need to ask where the President will come down. So wave goodbye to France, Mr Arnault, you won't be welcome there for a long time to come!
    Source: http://www.lowtax.net/asp/story/front/Hollande_To_Unleash_EUR20bn_Tax_Tidal_Wave_In_2013____57237.html

  • Sep 06, 2012   France: . . . . is paved with good intentions

    French Finance Minister Moscovici, who keeps singing an encouraging song to business despite his almost certain knowledge that his 2013 budget, now imminent, is going to be disastrous for enterprise and wealth-creation. Anyone who can lie that well is destined for greater things, so he is my tip for the next President, once the life is choked out of Francois Hollande by a deep, deep wave of disappointment and scandal.
    Source: http://www.lowtax.net/asp/story/front/Frances_Moscovici_Allays_Business_Fears_Over_Budget____57107.html

  • Aug 30, 2012   France: holds up two fingers to the single market

    President Hollande's anti-business campaign continues with a significant tightening-up of CFC (controlled foreign company) rules. The changes are complex, and much may depend on how the tax authority and the courts interpret them, but there doesn't seem much doubt that in future, any business with a subsidiary in a low-tax jurisdiction, even one within the EU, will have to prove that the subsidiary exists for genuine business reasons rather than in order to lower the tax bill. Since the barrier is a corporate tax rate which is less than 50% of the French one, this certainly captures Cyprus, Ireland, Malta and several ex-Soviet eastern european member states. How can this be consistent with EU single market rules? If I want to establish a holding company in Cyprus to service the MENA region, at first blush it would seem that all of its turnover could be deemed to be taxable in France, at 33%. Surely this is directly discriminatory against the interests of Cyprus? Because it's obvious that I won't do any such thing. And I can't go to Dubai (even worse!). It will be interesting to see whether either Brussels or the ECJ has the balls to stand up to France. Definitely Cyprus and the other threatened countries should march in on the French immediately, writs flying in all possible directions.
    Source: http://www.lowtax.net/asp/story/front/France_Reforms_CFC_Legislation____57003.html

  • Aug 16, 2012   France: will sign up to the fiscal compact

    It was a vain hope on the part of French right-wingers that the country's constitutional court would strike down any of the tax increases included in President Hollande's monster supplementary finance bill, and I have previously marked down France on account of those noxious taxes; but the constitutional court also waved through the notion of a fiscal debt brake and other aspects of Europe's fiscal compact - that's the deal on budgetary restraint that Britain notoriously refused to sign up to. But most member states are going ahead with it, subject to national legislative approval such as will now be given in France. I am not much of a friend of the EU, but since member countries have shown that they are politically incapable of budgetary restraint on their own, there is now a choice between centrally-enforced rules and dissolution. Mind you, Maastricht was supposed to do the same job and was simply ignored; it remains to be seen what will happen when a country is forced to its fiscal knees by the Brussels bureaucrats. But nowadays the markets have a say, something that wasn't nearly so true twenty years ago, and as long as the ECB sticks to its guns, countries will need the markets to finance their debt. If the ECB doesn't, you can wave goodbye to the euro as a serious currency.
    Source: http://www.lowtax.net/asp/story/front/French_Court_Gives_GoAhead_To_Fiscal_Compact____56783.html

  • Aug 02, 2012   France: just make sure you don't die there

    The French left is continuing to rifle the shelves of the country's fiscal toyshop, attacking one after the other all of the moderately sensible reforms brought in by Nicolas Sarkozy, and even previous governments. They won't be content until everyone in the country is equally poor. One of the amendments added to the supplementary finance bill, now finally enacted, is a toughening up of the inheritance tax law. There are certain elementary rules of taxation that apply to any country that seeks to be business-friendly, and they are normally observed by right-wing governments as much as they are honoured in the breach by left-wingers. They include encouraging free trade, avoiding confiscatory rates of tax (anything over 40%) and allowing the transmission of business assets between generations. The French socialists are now systematically breaking all of these rules, and they are doing so while failing to get government spending under control. The party can't last, so let them enjoy smashing the place up while they can.
    Source: http://www.lowtax.net/asp/story/front/French_Left_To_Tighten_Fiscal_Screws_On_Inheritance_Tax____56522.html

  • Jul 19, 2012   France: has gone totally barmy

    I didn't think that France could do anything more awful than it already has, but I was wrong. The honourable deputies duly waved through the new finance bill (just another EUR7bn of taxes this year), but we expected that. Now that the government is on a roll, it has put forward yet more suggestions for new taxes: a retroactive tax on overtime pay? ooh, goody, that's another EUR1.4bn we can spend on grands projets - how about a bridge over the Manche so that all the rich French who are now living in London can drive back to pay their dividend taxes? And what about increasing the portentously titled 'contribution generale sociale' (sorry, we don't do accents)? It's just a tax, after all, so it ought to be increased, non? And the lovely thing is that it will hit higher earners harder than the voters (oops, sorry again, I meant to say, the poor).
    Source: http://www.lowtax.net/asp/story/front/France_Eyes_Retroactive_Tax_On_Overtime_Hours____56394.html

  • Jul 12, 2012   France: succumbs to its history

    President Hollande and his henchmen and henchwomen (henchpeople? henchman is a word that is evidently doomed to be dropped from the lexicon, irretrievably sexist) are positively revelling in an orgy of new taxes. Every one is greeted with a cry of triumph, just like the heads that rolled from Madame during the Terror. Of course the people doing the celebrating aren't the ones who are going to be paying the new taxes: that privilege is reserved for the wealthy, that's to say the ones who make all the money in the first place. You can blame Nicolas Sarkozy, if you like: his conspicuous consumption and cocky grandstanding were an act of hubris whose nemesis has now arrived, tapping into the vein of republicanism that sits so deeply in the French psyche. Anyway, I have already given two execrations to France for its new taxes; this one on the other hand is for not cutting public spending. Even Mario Monti, who also started off by raising taxes, has come to realize that in the end that there is no answer to national poverty other than reducing the size of the State, and has started to lop off the heads of public servants rather than those of businesspeople. No such thoughts in France, which has an even bigger bureacracy than Italy.
    Source: http://www.lowtax.net/asp/story/front/France_Eyes_75_Tax_In_2013____56288.html

  • Jun 28, 2012   France: Vive La Revolution!

    France has got a EUR10bn shortfall this year (or was it last year? or will it be next year?) and I will give you one guess, just one guess, as to what they are going to do about it, and if you can't get it right first time, off to the guillotine with you! Yes, you are a good student, that's right: they are going to soak the rich for it. That's to say, the few rich people who haven't already gone to London to buy a penthouse flat on Park Lane (that's Allee du Parc, or perhaps it's Pereulok Sad, and I don't know any Arabic so I'll spare you that one). There'll be more taxes on wealth, on dividends, on overtime (lots of that in France after the government before last cut the working week to 35 minutes). Amazingly, in a gesture of ultimate generosity to Madame Lilliane Bettencourt, who will be the only rich person not leaving, because she has been imprisoned by her lawyers in her Paris apartment, the President has said that individual taxation will be capped at a mere 85% of income! How can he afford it?
    Source: http://www.lowtax.net/asp/story/front/France_Confirms_EUR10bn_Fiscal_Shortfall____56065.html

  • Jun 21, 2012   France: on the primrose path to ruin. Won't it be nice when all those horrid bankers have gone? (to Hong Kong)

    They don't believe in competition in large swathes of the EU, including obviously France; but more surprisingly, nor do they in Germany. At least, the politicians don't. Evidently the Mittelstand does, and international companies like VW or Siemens can hardly do other than live or die by it. But try telling that to the idiots who govern the country. Of course, they're just doing what will get them re-elected next time, we know that. But then that makes them liars as well as stupid. We knew that, too. So what to do about the lemmings who are about to jump over the FTT cliff? Are they just striking poses? Will they slam on the brakes at the last moment? Don't count on it. Nicolas Sarkozy encouraged banker-hatred for his usual pragmatic, populist purposes, and had no choice but to follow through the destructive logic, not that it helped him. Ironically, it has helped Francois Hollande, who can now double the tax (he said he would, this week) without being blamed for it. Oh, you didn't know what FTT stood for? Lucky you. Financial Transactions Tax, or 'How to destroy your banks in one easy lesson'. You don't even need a Bac or an O-level; just a big mouth and an empty treasury. So that's black marks for both France and Germany. An FTT is a BAD THING. In capitals.
    Source: http://www.lowtax.net/asp/story/front/Germany_To_Take_First_Steps_Towards_EU_FTT____55905.html

  • Jun 15, 2012   France: in an orgy of national self-destruction

    Hollande's plethora of tax rises is just one of a plethora of bad country behaviours this week, and as a national suicide bid it has to rank alongside the Portuguese invasion of North Africa in the 16th century (sorry, BT300), or Japan's Pearl Harbour in slightly more modern times (AT42). The French can be forgiven most of their strange behaviours after 500 years of strangulation by a rapacious and arrogant monarchy; but how to explain constant bouts of fascination with far-left fantasies when they've had two hundred years of universal education and ample opportunity to realize that high taxes are destructive? My personal theory is that they gave up on government after Napoleon, if not before, and nowadays they simply concentrate on escaping from it in one way or another. Hence their extreme individualism. Politics and its economic consequences are thus simply a kind of game, a dream-world, without real-world consequences. That would explain why the French are unable (actually, just unwilling) to take on board economic reality as she is nowadays understood. There are other countries in Europe which could inhabit this paradigm, as we are about to discover.
    Source: http://www.lowtax.net/asp/story/front/Hollande_Prepares_Plethora_Of_Tax_Rises____55847.html


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