By Tendai Musakwa
The French government has proposed an across-the-board increase of the taxes levied on capital gains deriving from the sale of real estate in the country. The proposals are currently being debated by the French parliament and, if passed, would become effective in 2014.
Christian Eckert, the parliamentary budget spokesman of the ruling French Socialist Party, proposed the following increases in taxes levied on capital gains from sale of second homes:
• An increase in taxes from 19 percent to 22 percent for capital gains of between 110,000 Euros and 150,000 Euros.
• An increase in taxes from 24 percent to 25 percent for capital gains of between 150,000 Euros and 200,000 Euros.
• An increase in taxes from 24 percent to 28 percent for capital gains of more than 200,000 Euros.
The proposed tax increases outlined above would be additional to the 15.5 percent social security tax that the French government currently levies on capital gains, meaning that the effective rates for the capital gains brackets outlined above would be 37.5 percent, 40.5 percent and 43.5 percent, respectively.
The French government submitted the tax increases to the French Assembly in a supplementary finance bill recently.
The proposed tax increases are expected to yield 300 million Euros for the French state and are part of 24.4 billion Euros in new taxes that the French government is proposing. The government is seeking to reduce France's public deficit to 3 percent of GDP, in line with its commitments to the EU. The deficit is around 4.5 percent of GDP for this year.
Some of the controversial tax increases the government has introduced include a 75 percent top marginal tax rate on incomes more than 1 million Euros and a 45 percent rate on incomes greater than 150,000 Euros.
