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French Left To Tighten Fiscal Screws On Inheritance Tax

by Ulrika Lomas, Tax-News.com, Brussels

27 July 2012


During its examination of France’s second 2012 supplementary finance bill, the Senate finance committee, with its Socialist majority, has put forward a series of amendments aimed at increasing the tax burden on the country’s most wealthy, notably as regards inheritance tax.

The Senate finance committee united on plans to submit a number of government amendments to the bill, presented by committee general rapporteur François Marc. The opposition voted against the initiatives.

In accordance with government plans, the key amendment provides for a measure reducing by a third the tax break accorded for donations to direct descendants. The government plans to lower the tax reduction per child from EUR159,000 (USD192,691) currently to EUR100,000.

The amendment also provides for a similar reduction for the tax break applicable to donations to indirect descendants. The government plans to lower from EUR15,932 currently to EUR10,000 the tax reduction accorded for donations or inheritances benefiting brothers and sisters, and from EUR7,967 to EUR5,000 the tax reduction for nieces and nephews.

The measure is expected to generate additional revenues for the state of an estimated EUR230m annually.

Defending the government’s plans, Marc insisted that it was necessary “to correct today” that which had been done five years ago, when the country’s most wealthy had benefited under the five-year mandate of former French President Nicolas Sarkozy.

Other amendments adopted by the committee included plans to postpone the revision of cadastral rental value, an indicator determining the amount of local taxes to be paid to the country’s local authorities. As a precaution, Marc put forward the idea of delaying the revision until 2015 to avoid any sudden losses or increases in taxation linked to the changes.

For its part, the opposition has submitted over 150 amendments to the bill, designed to abolish the majority of French Socialist President François Hollande's controversial proposals, certain to delay the vote in the Senate.

TAGS: inheritance tax | tax | investment | France

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