France - World Champions of Tax?

Last updated: 13 June 2023 Views: 3533

The French are well known for their love of taxes. A list of 266 taxes levied by the French taxman has recently been doing the rounds on social media, causing quite a few raised eyebrows at the pernickety nature of some of the taxes. (Our personal favourite is number 62 – a tax on cross-country skiing!)

If you delve deeply into most countries tax systems you can find hidden charges and fees on many industries and trades. However this latest list has made international entrepreneurs who have their businesses based in the UK breathe a sigh of relief that the British tax system is much more streamlined.

As well as the tax system being much simpler to understand, the steady corporation tax rate of 20% makes the UK extremely tax-friendly and inviting for business owners and foreign entrepreneurs.

Some other advantages in the UK include the high limit for Capital Gains Tax which is only collected on amounts over £10,000; and a reduced tax for IT and tech startups or companies in the business of innovation or ideas. This tax is called the patent box and instead of paying 20% corporation tax, they only pay 10%.

What are the French tax changes for 2015?

But despite their reputation, France is beginning to take a leaf out of the UK’s book and has finally started implementing online payment systems instead of insisting on rafts of paperwork that needed filling in and sending off.

A new law has also been announced that will see employees being taxed entirely at their payroll instead of everyone - whether self-employed or not! - having to fill in a time-consuming income tax declaration. President François Hollande packaged this system swap-over with a supposed “gift” to the workers of France - an “année blanche” (a lost tax year) where no income tax would be levied for 2017.

This could potentially come as a nice money-earning advantage to the heads of big business who could hold off paying their bonuses or “variable income” in 2016 and instead pay it in 2017 when they won’t be taxed. However, the majority of French workers will not be benefitting at all. This is because the French always pay their income tax on the previous year, so they will still have to pay tax in 2017 on their 2016 earnings.

On the positive side, this change to payroll tax means a simplified system for employees. And also as President Hollande pledged this income tax change in his 2012 election manifesto, the French can at least rejoice in the fact that their President has finally stuck to a promise. So despite their reputation for dragging their heels in the face of change, it hopefully won’t be too long before the French tax system resembles that of its European neighbours.

For more information on UK company formation in tax-friendly Britain, or details on how to make the most of your tax situation in France – including expert advice with French tax planning and accounting, please download our free guide below or contact us with your questions via our contact page and we’ll be happy to find a solution.

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