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French Committee Adopts Supplementary Finance Bill

by Ulrika Lomas,, Brussels

04 December 2012

The French National Assembly Finance Committee has recently adopted the country’s 2012 supplementary finance bill, which constitutes a key stage in the government’s overall plan to strengthen the fight against tax fraud and tax optimization.

The measures include tougher penalties on taxpayers that refuse to disclose undeclared sources of income. For example, taxpayers refusing to disclose details as to the origins of undeclared sums invested abroad will be taxed at 60%, as it will be presumed that the assets originate from a gift.

The bill also provides that taxpayers are required to “justify” bank deposits exceeding declared income by more than EUR200,000 (USD260,000) a year.

In accordance with the bill, fraud affecting tobacco trade will also be specifically targeted, notably by ensuring the traceability of tobacco products to enable the authorities to better combat contraband and counterfeit networks, and by giving additional powers to customs officers.

The government plans to clamp down on value-added tax (VAT) fraud for used cars, by providing that any member of the intermediary chain will be severally liable for the VAT due for knowingly participating in fraudulent activity, for example carousel fraud.

Additionally, the bill introduces initiatives aimed at limiting the capacity of taxpayers to put in place tax optimization strategies against the spirit of the law.

Principal amendments to the bill made in committee include the institution of a tax credit for competitiveness and employment (CICE) for companies employing salaried staff, equal to 4% in 2013 of gross payroll for remuneration equal to or below 2.5 times the minimum wage (SMIC), rising to 6% in 2014.

An additional amendment stipulates that the CICE tax credit must not serve to finance a rise in executive pay.

Another adopted amendment provides for the reform of VAT rates in France from January 1, 2014. Under the plans, the reduced VAT rate will be lowered from 5.5% currently to 5%, the intermediate VAT rate will rise from 7% to 10%, and the standard VAT rate will be increased from 19.6% to 20%.

TAGS: compliance | tax | value added tax (VAT) | tax compliance | tax avoidance | payroll | offshore | legislation | tax rates | France

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