France's millionaire tax approved

30-12-2013

President Francois Hollande. Reuters file photo
France's Constitutional Council has given the green light to a "millionaire's tax", to be levied on companies that pay salaries of more than one million euros a year.

The measure, introduced in line with a pledge by President Francois Hollande to make the rich do more to pull France out of crisis, has infuriated business leaders and soccer clubs, which at one point threatened to go on strike.

It was originally designed as a 75 percent tax to be paid by high earners on the part of their incomes exceeding one million euros, but the council rejected this, saying 66 percent was the legal maximum for individuals.

The Socialist government has since reworked the tax to levy it on companies instead, raising the ire of entrepreneurs. Under its new design, which the Council found constitutional, the tax will be an exceptional 50 percent levy on the portion of wages exceeding one million euros paid in 2013 and 2014.

Including social contributions, its rate will effectively remain roughly 75 percent. The tax will, however, be capped at five percent of the company's turnover.


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