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President of the rich? Macron to scrap ‘exit tax’ on France’s high-earners

French President Emmanuel Macron intends to scrap a 30 percent "exit tax" on top-earners who transfer their assets outside of France, in a bid to boost the attractiveness of the country for foreign investors.

President of the rich? Macron to scrap 'exit tax' on France's high-earners
Photo: AFP
The levy was introduced in 2012 under former rightwing president Nicolas Sarkozy to try to dissuade wealthy French entrepreneurs or investors from moving their money or assets out of the country.
 
At the time, many millionaires were fleeing France for neighbouring jurisdictions with lower income tax rates such as Belgium.
 
Macron told Forbes magazine in an interview published Tuesday that he would scrap the tax next year.
   
“People are free to invest where they want. If you want to get married, you should not explain to your partner, 'If you marry me, you will not be free to divorce,'” Macron told the magazine.
   
“I'm not so sure it is the best way to have a lady or a man who loves. So I'm for being free to get married and free to divorce.”
   
The move could prove controversial for Macron, who has been labelled the “president of the rich” by his opponents after introducing a series of measures designed to encourage entrepreneurs.
   
These included scrapping a special wealth tax on high-earners in this year's budget and creating a “flat tax” of 30 percent on all financial income including dividends.
   
Macron insists that he needs to lower the country's tax take, one of the highest in Europe, to make the country more attractive for investors as he seeks to lower unemployment from its current rate of around 9.0 percent.
   
He also told Forbes that he would stick with reforms to the public sector, particularly the state rail operator SNCF, despite ongoing strikes.
 
“Perhaps some of them will want to organise strikes for weeks or months. We have to organise ourselves,” he said. “But I will not abandon or diminish the ambition of the reform because there is no other choice.”

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SECOND HOMES

Tax hikes of up to 60% for French second home owners

Towns and villages through France are raising property tax rates for second-home owners, with many areas voting for the maximum 60 percent increase.

Tax hikes of up to 60% for French second home owners

Even though France’s taxe d’habitation (householders’ tax) is in the process of being phased out for most French residents, second-home owners are still required to pay it.

This year more towns have voted to increase it, and others have recently gained the ability to add a surcharge for second-home owners, with French daily Le Parisien reporting that the residence tax “continues to soar.” 

Municipalities in zones tendues (areas with a housing shortage) have the ability to choose to increase taxe d’habitation by up to 60 percent for second home owners.

From 2023, several new areas – including Nantes – will join the list of zones tendues, meaning they will be able to vote to increase taxes for second-home owners.

This year, large cities such as Bordeaux, Lyon, Biarritz, Arles and Saint-Jean-de-Luz saw their city councils vote to increase the tax at the maximum 60 percent.

READ MORE: Why some French cities are increasing taxes for second-home owners

Some areas have still not chosen to apply the increase, but those looking to buy a second home in France should beware that these municipalities could vote to increase the taxe d’habitation in the future.

In 2020, cities on average voted to increase the residence tax on second homes by 248.50, in comparison to €217 in 2017. This year, that amount is expected to be even higher.

On top of the taxe d’habitation, second-home owners also have to pay the separate taxe foncière property tax, which is itself rising sharply in many areas.

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