Paying French tax made simpler

FRANCE has become more fiscally attractive, according to leading international accountants PricewaterhouseCooper (PwC).

While it is still not among the countries with the most attractive tax systems, its taxation is comparatively less of a hassle than it was, the experts say.

France comes 55th, up from 59th, for fiscal attractiveness in Paying Taxes 2011, an annual study of taxes on business in 183 countries carried out in partnership with the World Bank.

The ranking is based on a combination of the tax rates that firms pay, the complexity of a country’s tax system and how simple it is to pay taxes.

One of the aims is to encourage developing countries to reform tax systems so as to make them more welcoming to foreign investors.

According to French-based lawyers Landwell & Associates, part of the PwC network, the report shows an improvement in the amount of time firms in France spend making tax declarations, coming 36th, compared to 40th last year.

The majority of time is spent making declarations related to social charges, the study showed. Out of an average 132 hours per year spent making declarations (222 is the EU average), 80 hours were spent on social charges, compared to 26 on corporation tax.

France is very positively placed, at number nine, in terms of the number of tax payments that have to be made.

However Philippe Durand, a lawyer for Landwell & Associates, said the standardised way the study is done might have skewed this figure.

“The figure is doubtless more favourable than it should be because it is based on the fact there are, in theory, just two social charges payments to be made, but, bearing in mind the number of different social charges bodies that collect payments in France, the reality is different for many firms.”

As for the actual rate of tax paid, France comes in a poor 163rd, up from 165th last year, with a rate of 65.8 per cent. In Europe, only Italy was found to be worse, at 68.6 per cent. The EU average is about 44.2 per cent.

Mr Durand said: “This position is mainly owing to the weight of social charges that firms in France have to pay, as the actual taxation on profits is quite low, not least because the social charges and various other heavy taxes can be deducted from the profit taxable to income tax.”

According to Mr Durand, France’s position for this factor may even be higher than it should be because the study looks at standard taxes, but does not take into account various ones that apply only to certain sectors, which he said France “specialised” in.

Worst in the world in this factor were certain African countries, which have rates of more than 100 per cent.