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Government Affairs

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France Proposes Tax Cuts for French Workers, Other Changes

Widespread worker unrest, including “yellow vest” protests across the country, have prompted France to propose a number of changes, including income tax cuts for middle-income workers estimated to cost some 5 billion euros.  This follows a December program allowing employers to pay tax-free bonuses to workers earning less than 3,600 euros per month.  For prior coverage of that program, see French Program Offers Tax Free Bonuses.

The latest concessions, announced in a 25 April speech by French president Macron, would be funded by closing “tax loopholes” for business as well as cutting government spending.  However, no details were released.  In a 2 May interview the Finance Minister said a framework for the cuts, that would begin 1 January, 2020, will be provided in June.  Those plans will, however, include making the tax-free bonus program available every year.  They will also include requirements that French citizens work longer before retiring.

However, Macron made clear that financing the cuts will not include reinstatement of a “solidarity” tax on wealth.  The government will undertake a new analysis of such a tax in 2020.  The tax was replaced by a real estate tax that went into effect in 2018.

The French business community expressed concern, especially that corporate credits such as the research credit would be removed as part of the financing for the individual cuts.  The Finance Minister has been reported to have assured businesses that neither the research credit nor the employment tax credit would be affected.

How This Impacts Mobility

Worldwide ERC® members with employees or business in France could benefit from tax cuts and tax-free bonuses for employees but could also be affected by still-unspecified changes to business tax provisions.

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