France’s 2018 Budget – Tax cuts announced
In the 2018 Budget the French Government confirmed that taxes and compulsory levies will be reduced by around EUR10 billion (USD11.8 billion) next year.
The Budget, released in draft format on 27th September, 2017, contains reductions in corporate tax, alterations to social security contributions, and a tax cut for certain finance sector workers, as well as increases in environmental taxes and the removal of the housing tax.
This 2018 Budget carries on the previous Government’s plan to decrease corporate tax to 28% on income up to EUR500,000.00. The headline rate, currently 33.33%, will then be lowered to 31% in 2019 on profits in excess of EUR500,000.00 (and the 28% lower rate maintained).
Corporate profits will then be taxed at a single rate of 28% from 2020, before corporate tax is cut to 26.5% in 2021 and to 25% in 2022.
Employee unemployment and health contributions will be terminated in two stages next year, beginning in January. These contribution rates are currently set at 0.75% and 2.4%, respectively. But, this measure will be offset by a 1.7% increase in the general social contribution (CSG). Presently, the CSG is 7.5% of an employee’s wages.
These new measures are anticipated to result in social contribution savings for around 21 million employees totalling EUR7billion.
In a proposal to encourage high-income workers in the finance industry to relocate from London to Paris amid Brexit uncertainty, the Budget also includes measures to reduce tax on salaries exceeding EUR152,279.00.
Other alterations contain a gradual phasing out of the housing tax, an increase to both the tax on diesel and the carbon tax on fuel, and the introduction of a 30% flat tax in capital income.
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