On 4 December 2012 it has been published that the French National Assembly Finance Committee has recently adopted the country’s 2012 supplementary finance bill, which constitutes a key stage in the government’s overall plan to strengthen the fight against tax fraud and tax optimization.
The measures include tougher penalties on taxpayers that refuse to disclose undeclared sources of income. For example, taxpayers refusing to disclose details as to the origins of undeclared sums invested abroad will be taxed at 60%, as it will be presumed that the assets originate from a gift.
The bill also provides that taxpayers are required to “justify” bank deposits exceeding declared income by more than EUR200, 000 a year.
Additionally, the bill introduces initiatives aimed at limiting the capacity of taxpayers to put in place tax optimization strategies against the spirit of the law.
Principal amendments to the bill made in committee include the institution of a tax credit for competitiveness and employment (CICE) for companies employing salaried staff, equal to 4% in 2013 of gross payroll for remuneration equal to or below 2.5 times the minimum wage (SMIC), rising to 6% in 2014.
Another adopted amendment provides for the reform of VAT rates in France from January 1, 2014. Under the plans, the reduced VAT rate will be lowered from 5.5% currently to 5%, the intermediate VAT rate will rise from 7% to 10%, and the standard VAT rate will be increased from 19.6% to 20%.
