France holds on to crown of Europe’s most-taxed country

The results of the a study on the most taxed countries in Europe will only give France's anti-government yellow vest protesters more ammunition.

France holds on to crown of Europe's most-taxed country
Photo: AFP

It's official France is the most taxed country in the EU.

According to the latest Eurostat report that looks at the percentage of a country's GDP that comes from tax receipts France is top of the European league.

Some 47.7% of the country's GDP is from tax revenues in 2017.

That's enough to put it ahead of Belgium where the tax-to-GDP ratio is 47.3 percent, Denmark (46.5 percent) and Sweden on 44.9 percent.

At the bottom of the table came Ireland where tax receipts only make up 23.5 percent of GDP. The tax-to-GDP ratio stood at 35.4 percent for the UK.

Part of the reason France topped the table was because it had the highest ratio of social security contributions (cotisations sociales) to GDP.

Some 18.8 percent of France's GDP comes from social security contributions which unlike income tax are automatically deducted from incomes for salaried workers in France.

The next in line was Germany where the ratio of social contributions was 16.7 percent.

When it came to basic income tax, which from next January will be deducted at source in France, the percentage of the GDP was 8.7 percent, which put the country behind the UK where the ratio just for income tax was 9.2 percent.

The report from Eurostat – the EU's statistics machine – sees France top the table for the third year running and comes at a time when the country is in the middle of a long running anti-government protests inspired by the French public's anger over the taxes they pay.

Yet the French have historically tolerated and defended paying high taxes as the price to pay for the public services as well as the welfare state that provides protection for the worse off.

But the ongoing yellow vest protests suggest the French,  or at least the lower middle classes, have had enough of paying such high taxes.

As part of his budget over the last two years President Emmanuel Macron has tried boost spending power of workers by cutting the social contributions.

But with fuel taxes rising along with the price of petrol, those workers who rely on their car for a living, might not have noticed any extra money in their pockets.

Macron has the yellow vest protesters for sticking to his plan to raise taxes on petrol and diesel in January.


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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.