As part of a range of austerity cuts following the latest Euro currency rescue agreement, the government of France announced plans to impose a ‘temporary’ corporate tax surcharge of 5 percent for 2012 and 2013 for large companies.

1. A Look at the Change in VAT Rates and Corporate Tax in France
As part of a range of austerity cuts following the latest Euro currency rescue agreement, the government of France
announced plans to impose a ‘temporary’ corporate tax surcharge of 5 percent for 2012 and 2013 for large
companies. The French government also plans to increase the 'reduced' value-added tax (VAT) rate of 5.5 percent
to 7 percent, with certain limited exceptions. The move is part of France’s second austerity package designed to
increase corporate tax revenue and reduce government expenditure and debts. It is said that the extra cuts make
the 2012 budget one of the toughest since 1945.
What are the New Corporate Tax Proposals?
The corporate tax proposal mainly focuses on two measures that would affect business taxpayers. A temporary
5percent surcharge on corporate income tax would be implemented in 2012 and 2013 for companies having an
annual turnover of €250 million or more. The “reduced VAT rate” which is currently at 5.5 percent will be
increased to 7percent for all goods and services (with an exception to food and certain goods/services provided to
disabled persons).
Tax proposals for Individual Taxpayers
The French government also introduced an exceptional 4 percent individual income tax on taxpayers with income
of €250,000 or more if single and €500,000 or more for qualifying couples which is currently being considered by
the French Parliament. Some of the proposed measures concerning taxation of individuals, if enacted, would
increase the individual income tax 'flat rate' that applies for dividends and savings income from 19 percent to 24
percent.
Take the help of an expert
When doing business overseas, the last thing any organization wants to do is to pay your hard-earned profits as
unnecessary taxes, especially in the current economic climate. It is best to partner with an expert to help simplify
the process and overcome any challenges in taxation. A business consultant will have a complete up-to date
information on how to keep up with the ever changing laws pertaining to expat tax, global transfer pricing,
regulatory filing, to name a few. A dependable professional partner in an international expansion can help get rid
of any concern regarding your overseas expansion project, thereby allowing you to focus on building your
business.
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