"We are in a very insecure tax environment in France," said Anne Quénedey, a Dentons partner in Paris, who described the past year as highly critical given the elections and appointment of a new socialist government.
The end of 2011 saw an increase ...
[more]
"We are in a very insecure tax environment in France," said Anne Quénedey, a Dentons partner in Paris, who described the past year as highly critical given the elections and appointment of a new socialist government.
The end of 2011 saw an increase in transfer taxes applicable on the transfers of shares and limitation to the tax deduction of interest paid by companies to acquire shares in subsidiaries that are not managed from France. In February 2012 the VAT rate increased from 19.6% to 21.2%. The following month, parliament approved the financial transaction tax (FTT) which became effective on August 1 2012. The new government of President Francois Hollande increased the FTT from 0.1% to 0.2%, applicable to the acquisition of French listed shares where the issuer has a market capitalisation of more than €1 billion ($1.3 billion), as soon as he came to power in May.
Penalties have also gone up for taxpayers who act through so-called non-cooperative jurisdictions.
A bank levy was introduced in 2010, on French and non-French banks operating in France, at 0.25% of the minimum capital required under French legislation. Another bank levy is to be implemented in late 2012, which is expected to be equal to the amount of the bank levy liability.
These taxes and other features of the system have made companies think about migration. "French major businesses are contemplating the possibility of moving their business outside France because the corporate rate tax in France is high compared with other other countries, it is 36.1% at the moment," said Philippe Derouin of Skadden in Paris.
Tax is getting more and more controversial in France, explains another practitioner: "Tax controversy hits a lot of people and business which were not used to litigation with tax authorities before. Authorities are more controversial and aggressive than in the past and companies which were never used to litigation are now learning how to litigate".
[hide]