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France May Increase Tax On Stock Options

by Ulrika Lomas, Tax-News.com, Brussels

03 October 2007


The French government is reported to be considering raising tax on stock options to help plug a shortfall in the country's social security system.

In an interview with French business daily, Les Echos, Finance Minister, Christine Lagarde revealed that an amendment may be included in the 2008 social security budget legislation to introduce national insurance contributions on options, which are already taxed.

The French government has already proposed raising revenues from dividend tax in order to find an additional EUR1.3 billion (US$1.8 billion) for the social security budget in 2008.

Lagarde also told Les Echos that President Nicolas Sarkozy's plan to remove taxes on overtime pay will release some EUR5.6 billion into the French economy, although she conceded that the French economy would fall short of Sarkozy's 3% growth target this year.

Sarkozy has come to the French presidency determined to reduce the size of the French state, but has initially given tax cuts rather than spending cuts a higher priority, despite dire warnings from his own Prime Minister that the country is "bankrupt". Early tax relief measures include mortgage interest relief to encourage property investment, and the elimination of inheritance taxes for the majority of French property owners, as well as relieving the tax burden on overtime.

The French government forecasts the 2008 budget will shave 0.3% off of the country's tax burden, which will fall to 43.7% of GDP next year, from a planned 44% this year.


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