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Government ready to u-turn on start-up tax

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Government ready to u-turn on start-up tax
Photo: Flickr user jyc1
10:22 CEST+02:00
France's Socialist government signaled on Thursday it was prepared to review its plans to hike the tax on the sale of companies that investors warned threatens to cripple the high-tech start-up sector.

Finance Minister Pierre Moscovici said he was ready to consider making changes to the government's tax plans.

"If there are measures that will have a shock or dissuade investment in new, innovative companies, then we'll have to look at it again," he said on France Inter radio.

"When measures are poorly calibrated, there has to be a possibility for dialogue and a correction," he added.

Moscovici and the government's junior minister for small and medium-sized business, Fleur Pellerin, were to meet later Thursday representatives of start-up companies that feel threatened by the new measures.

Last week France unveiled its biggest package of tax hikes and spending cuts as it seeks to bridge a €37 billion gap in public finances to meet its EU commitments to reduce its public deficit.

"Today, the highest rate (of tax on the capital gain for the sale of shares or company ownership) is 58%, and in the discussions we will hold, we will make adjustments to ensure there isn't something very penalizing against creating new businesses and innovation," Pellerin said on RMC radio.

She said the government was looking at possible adjustments to tax breaks.

The Socialists plan to bridge the fiscal gap relies heavily on raising taxes on businesses and the rich, but they have also targeted improving the competitiveness of French business in order to stem rising joblessness.

Start-up entrepreneurs, who often invest personal funds and take little salary from their new companies in the hope of later selling them for a big return, warned the changes would mean they had little prospect of financial reward from innovation in France and likely encourage people to move abroad.

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