France Eyes New Taxes on Rich Taxpayers

July 5, 2012 Taxation in France

François Hollande announced new taxes on the richPARIS – The newly elected French government is gunning after the country’s wealthiest taxpayers, proposing a slew of new tax measures to raise more than EUR 7 billion in revenues.

On June 4th the French government released a supplementary budget which contained new tax measures and several tax changes aimed at rousing fresh streams of revenue in order to ensure that the country’s budget deficit does not exceed 4.5 percent of GDP in the midst of an economic slowdown in France.

If the proposed changes are approved by parliament, the government expects to see tax revenues rise by approximately EUR 7.2 billion this year.

One of the most significant changes announced is a one-off levy on wealthy households with annual incomes exceeding EUR 1.3 million per annum, which is expected to raise approximately EUR 2.3 billion in 2012.

Another EUR 1.1 billion will also be raised by the government by imposing a new tax on large banks and oil companies.

The government also plans to impose a “social charge” on incomes derived by taxpayers from rental properties, with the effective tax rate on earnings rising from 20 percent to 35.5 percent. The new tax will be applied retrospectively, and be charged to all incomes realized from January 1st 2012 onwards.

The tax on the capital gains made from the sale of property will also be increased, with the effective rate rising from 19 percent to 34.5 percent.

Photo by manuel | MC