France Tries To Bury High-Tax Image With Executive Tax Breaks

by Ulrika Lomas, Tax-News.com, Brussels

21 November 2003

The French government is to woo foreign executives to France with a package of tax incentives announced by Prime Minister Jean Pierre Raffarin on Wednesday.

The measures, which have received backing from the cabinet, will mean foreign executives working in France will no longer pay income tax on bonuses derived from working abroad, which some estimate can represent between 20% and 50% of a top executive's income.

Other measures will include the deductibility of pension and healthcare contributions paid in their country of origin from taxable income.

“We know that although the image of France is good as far as its infrastructure, quality of life and workforce is concerned, it has a poor reputation for taxes and employment legislation,” a spokesman representing the Finance Ministry commented.

According to The London Times, this was a view reinforced by Jean Cantono of American-based investment agency Invest in France, who said that US investors shied away from the country due to “the 35 hour week and all it symbolizes.”

The proposals are scheduled to be in place by January 1 next year and are expected to benefit around 3,000 executives, French MP Sébastien Huyghe was quoted by The Times as announcing. The measures also include French managers who have been paying taxes abroad for at least ten years, and are expected to cost the French government some 80 million euros.

Recommended