corporate tax<\/a> rate in France for companies with annual revenues of more than \u20ac3bn to 35 per cent, and 30 per cent for those above \u20ac1.5bn, by adding a surcharge to standard corporate tax paid on profits made in France.<\/p>\nIt is a reversal of Macron\u2019s supply-side approach at the beginning of his time in office in 2017, when he gradually reduced the corporate tax from 33 per cent to 25 per cent. <\/p>\n
Despite small changes to the 2025 measure, to raise the threshold at which it takes effect from \u20ac1bn to \u20ac1.5bn, the signal sent to investors and businesses was part of the reason for a muted stock market response to Lecornu\u2019s budget last month, said Thomas Zlowodzki, head of equity strategy at ODDO BHF.<\/p>\n
\u201cThis has prevented Cac 40 shares from taking off after the passing of the budget. The impact would have been less negative if they had lowered the rate a little bit, which would have suggested the additional taxes were going to disappear. Now that seems less likely,\u201d he added. <\/p>\n
LVMH chief executive Bernard Arnault said last week that France\u2019s policy to \u201ctax companies to the hilt and create unemployment\u201d added to existing uncertainty for businesses and meant he was \u201csomewhat reserved\u201d on the company\u2019s prospects in 2026. <\/p>\n
The measure meant LVMH\u2019s total income tax payments rose to about \u20ac5.5bn last year, more than \u20ac300mn higher than 2024, finance chief C\u00e9cile Cabanis told analysts this week. <\/p>\n
That came despite the luxury conglomerate benefiting from lower US tax rates under US President Donald Trump\u2019s \u201cOne Big Beautiful Bill\u201d. She said she expected an \u201cidentical\u201d tax rate in France in 2026. <\/p>\n
French banks face a hit of more than \u20ac1bn, according to the French banking federation. Those with large domestic operations will bear the brunt, with co-operative banks Cr\u00e9dit Mutuel, Cr\u00e9dit Agricole and BPCE paying a combined \u20ac800mn, the federation said.<\/p>\n
This reflects the disproportionate impact of the measure on companies with high sales and profits in France, compared with French-headquartered businesses with significant foreign revenues. <\/p>\n
Vinci, the motorway operator, booked a \u20ac425mn hit to free cash flow last week, although France\u2019s biggest bank BNP Paribas said the impact had been negligible.<\/p>\n
The additional surcharge means that, at 36 per cent for large companies, France has the OECD\u2019s highest statutory corporate income tax rate \u2014 a measure the organisation uses to compare headline tax rates faced by businesses across countries. <\/p>\n
Fran\u00e7ois Ecalle, a former top finance ministry official now leading non-profit public finances institute Fipeco, wrote in a recent note that the \u201cexceptional, limited tax\u201d has little effect on economic activity but that uncertainty over how long it would be applied was \u201cdamaging because it puts brakes on investment\u201d.<\/p>\n
The additional tax comes as larger companies continue to perform relatively strongly despite the French political turmoil. The prospect of extending the tax further is set to spark more debate later this year.<\/p>\n
\u201cWe\u2019re talking about a surcharge on 300 businesses which are the biggest in France,\u201d socialist party leader Olivier Faure told broadcaster France Inter last month. \u201cThese are people who have distributed more than \u20ac100bn in dividends and share buybacks last year. Do you think we can\u2019t take \u20ac8bn?\u201d<\/p>\n
However, Philippe Juvin, a rightwing lawmaker and leading parliamentary negotiator on the 2026 budget who opposed the tax, warned: \u201cFrance already has among the highest tax rates in the world. Companies are not cows to be milked.\u201d<\/p>\n
Additional reporting by Sarah White, Leila Abboud and Adrienne Klasa<\/p>\n","protected":false},"excerpt":{"rendered":"Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this…\n","protected":false},"author":2,"featured_media":283893,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":{"0":"post-283892","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-new-zealand","11":"tag-newzealand","12":"tag-nz"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/283892","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=283892"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/283892\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/283893"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=283892"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=283892"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=283892"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}