France More Attractive As A Business Location, Study Shows

by Ulrika Lomas, Tax-News.com, Brussels

26 November 2009

Frequently criticised for its tax and administrative burden, France now offers businesses a more favourable fiscal environment, according to a recent survey conducted by PricewaterhouseCoopers on behalf of the World Bank.

Despite the significant burden of compulsory levies in France, the introduction of a number of administrative reforms has served to improve the attractiveness of the country as a business location.

According to the latest study, in terms of global attractiveness, France improved its position slightly between 2008 and 2009, rising from 66th to 59th position out of a 183 countries.

Based on a typical company, with 60 employees and located in the capital, the study assesses both the burden of levies (taxes and contributions) and the administrative burden (including the frequency of payments and the time taken to complete tax declarations).

The survey highlights the fact that, as a result of recent administrative reforms, procedures in France are now much simpler, particularly when compared to other western countries.

The development of declarations and payments made via the Internet, as well as the creation of a dedicated office for large companies, has served to simplify the annual declaration process for businesses, which is now thought to amount to around 130 hours.

Despite recent tax initiatives, such as the abolition of the fixed annual tax, the abolition of local business tax levied on new investments, and the development of research tax credit, France remains in bottom position, ranking 165th in the world in terms of tax burden (down five places compared to 2008), just ahead of Italy (166th).

Although corporate taxation and other taxes are relatively low in France, it is the level of employers' social contributions that has significantly reduced the attractiveness of France as a business location, the report concludes.

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