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TAXES

France to introduce tax on big US tech firms in January

France will introduce its own tax on large internet and technology companies like Google and Apple from January 1, Finance Minister Bruno Le Maire said on Monday amid difficulties in finalising a new EU-wide levy.

France to introduce tax on big US tech firms in January
Photo: AFP

France has been pushing hard for a new so-called “GAFA tax” — named after Google, Apple, Facebook and Amazon — to ensure the global giants pay a fair share of taxes on their massive business operations in Europe.

“The tax will be introduced whatever happens on January 1 and it will be for the whole of 2019 for an amount that we estimate at 500 million euros 
($570 million),” Le Maire told a press conference in Paris. 

The low tax rates paid by US tech giants in Europe has repeatedly caused anger among voters in many European countries but the 28-member bloc is divided on how to tackle the issue.

Ireland, which hosts the European headquarters of several US tech giants, leads a small group of otherwise mostly Nordic countries that argue a new tax could lead to reprisals against European companies and stoke anger in the US.

Any tax changes must be approved unanimously by member states.

France and Germany agreed earlier this month to introduce a new joint measure in 2021, which would give the Paris-based OECD time to work on a new global solution.

The Organisation for Economic Cooperation and Development, which groups major world economies, is working on a proposal for a new international scheme that would regulate taxation on tech firms.

Policymakers across the world have had difficulty in taxing the US-based giants who dominate their sectors internationally, but who often route their 
revenues and profits via low-tax jurisdictions to reduce their liabilities.

France's move to introduce the tax on January 1 could be driven by domestic budget concerns, with the finance ministry looking for new sources of revenues and savings.

Under pressure from “yellow vest” protesters, President Emmanuel Macron announced a series of measures last week for low-income families which has left a multi-billion-euro hole in the 2019 budget. 

Some other EU member states such as Britain, Spain and Italy are also working on national versions of a digital tax, with Singapore and India also 
planning their own schemes.

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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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