French Tax On Bankers' Bonuses To Support SMEs

by Ulrika Lomas, Tax-News.com, Brussels

05 February 2010

Estimated at around EUR360m, the product of the windfall tax levied on bonuses, issued by France to market operators, is to be transferred in its entirety to Oséo, the public bank working to support small- and medium-sized enterprises (SME).

Put forward by French Finance Minister Christine Lagarde, the amendment proposing the provision was adopted during examination of the country’s 2010 supplementary finance bill.

Finance Minister Lagarde emphasized the fact that the targeted allocation of the additional revenue generated by the levy, to a sector desperately in need of finance, was entirely appropriate, and serves to underline the exceptional nature of the tax.

The one-off 50% tax is to be levied on 2009 bonuses in excess of EUR27,500. The initial text provided that EUR270m of this additional revenue would be accorded to the deposit guarantee fund, in a bid to enhance the security of depositors.

The National Assembly Finance Committee then adopted an amendment put forward by its president Didier Migaud, which sought to allocate all of the product to the state budget.

The SME industry body the Confédération générale des Petites et Moyennes Entreprises (CGPME) welcomed the final amendment to the text, stating that it is legitimate and desirable that the tax levied on bonuses arising from trading activities is used to support the financing of SMEs, those companies who have seen their access to credit severely restricted by the crisis.

The French employers’ association Medef also welcomed the decision, which it believes provides a “practical and concrete” solution.

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