The tax rebates the Government has implemented last year have had a positive impact on the overall tax burden in 2015. Both individuals and companies have benefited from tax cuts which led to a slight fall of the tax burden last year. This is the result of the Responsibility and Solidarity Pact combined with the tax credit for competitiveness and employment. Our lawyers in France can provide you with information about the two legislative measures.
The Finance Ministry announced that the tax burden fell from 44.8% of the Gross Domestic Product to 44.5% last year, which is the first rebate since 2009. This drop was partially attributed to the Responsibility and Solidarity Pact, under which French companies will benefit from a lower corporate social solidarity tax between 2015 and 2017. The cuts should amount to 14 billion euros by the end of the project. The corporate tax has also been clamped down from 33.3% to 28% and in the near future a few other taxes applied to companies will be phased out.
Employees are also granted several benefits, among which a lower family benefits contribution for those earning a maximum of 4,000 euros monthly (from 5.25% to 3.45%), while those earning the minimum monthly salary will be granted an exemption from the social security contribution.
This year has brought additional changes to the French taxation system which now favors companies. The income tax on gains and financial assets in 2016 was modified. Holding companies can take advantage of the capital gains tax relief if they have owned shares in another company. The relief applies as it follows:
The same relief applies to those selling shares held in collective investment funds, if 75% of these shares are distributed by holding companies. The Government also encourages investments in small and medium-sized companies by providing allowances which can reach up to 85%.
For complete information about the latest tax adjustments and governmental allowances, do not hesitate to contact our law firm in France.
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