The tax credit would be paid for with increased rates of value added tax (VAT) and new environmental taxes.
The proposed tax credit would be based on the payroll amount corresponding to that paid to employees earning less than two and a half times the minimum wage amount in France (i.e., approximately €3,500 per month).
The amount of the tax credit would be 6% of this basis.
Proposed effective date
The tax credit would be available with respect to the corporate income tax corresponding to fiscal year 2013.
Taxpayers also would be able “to book” in 2013 a claim equal to the tax credit that they would be able to claim for the following year. Moreover, small and medium-sized enterprises (SMEs) would be able to benefit from an advanced payment of the credit as from 2013.
Paying for the payroll tax credit
The tax credit would be partially financed by an increase in the VAT rates and with the introduction of environmental taxes.
- The standard rate of VAT would be increased from 19.6% to 20%.
- The reduced rate of VAT would be increased from 7% to 10%.
- The super-reduced rate of VAT, however, would be decreased from 5.5% to 5%.
The increase in the VAT rates would not affect consumers before 2014. The new environmental taxes would be effective beginning 2016.
Tax professionals with FIDAL* have observed that with these measures, the French government has indicated its intention to increase the competitiveness of French companies.
For more information, contact a tax professional with FIDAL*
Olivier Ferrari, Tax Partner
+33 (0)1 55 68 14 76
Patrick Seroin, Tax Partner
+33 (0)1 55 68 15 93
Gilles Galinier- Warrain, , French Tax Center, KPMG LLP, New York
* FIDAL is an independent legal entity that is separate from KPMG International and its member firms.