French Senate Approves Amended Social Security Bill

by Ulrika Lomas, Tax-News.com, Brussels

16 November 2011

The French Senate has recently adopted on a first reading the country’s 2012 social security finance bill (le projet de loi de financement de la sécurité sociale pour 2012 – PLFSS), providing notably for the abolition of the tax exemption accorded for overtime hours.

Key amendments to the government’s bill adopted by the Senate include plans to abrogate article 1 of the Tepa law in favour of work, employment and purchasing power, granting exemption from tax and social contributions for overtime hours.

Other major changes agreed by the upper house include plans to increase the tax and contributions pertaining to golden handshakes, to the allocation of stock options and free shares, as well as to enhanced pensions.

During its examination of the text, the Senate also re-established the 3.5% tax on complementary health insurance contracts, including mutual and insurance contracts, doubled to 7% in September within the framework of the 2011 supplementary finance law.

Denouncing the tax at the time as both unjust and intolerable, the French mutual insurance company Mutualité Française warned that the proposed increase would merely serve to exacerbate social inequalities, as it would lead companies to increase complementary contributions.

The Senate also adopted fiscal measures aimed at benefiting the environment, notably by revising the taxation of hybrid vehicles (maintaining the current exemption) and the taxation of vehicles using flex-fuel.

In its release, the Senate also underscores that a supplementary social security finance bill is to be presented to the Council of Ministers on November 23, taking into account the new growth forecast for next year, revised downwards from 1.75% to 1% of gross domestic product (GDP) in light of the deterioration of the economic climate.

Intended to integrate the latest wave of austerity measures announced by Prime Minister François Fillon on November 7, which includes a series of tax and expenditure decisions, the planned supplementary bill is due to be submitted to the French National Assembly on December 5 and subsequently to the French Senate.

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