If you thought the top income tax rate in the UK was high, spare a thought for the high earners in France who could shortly be facing a whopping 75% tax bill.
New president Francois Hollande is believed to want to introduce the marginal tax on annual incomes of more than £806,000 and if he does so, those high earners could flee to the UK.
Hollande plans to increase the nation’s tax take by billions and as well as the 75% tax rate, he intends to implement a 45% income tax rate for people earning more than €150,000, increase inheritance tax and put a limit of €10,000 on tax relief.
Only between 10,000 and 15,000 people would be affected by the new 75% tax rate, which is far higher than the current European high of 56.5% in Sweden. Under Sarkozy, the French enjoyed a top tax rate of 41%, although there was a 3% premium on income over €250,000 and 4% if income exceeded €500,000.
Brits with second homes in France could be affected by Hollande’s plans to reduce the inheritance tax free allowance for children to just €100,000. It currently stands at €159,000.
Hollande recently said that the financial world was his adversary and there are real concerns that his moves will cause the wealthy to look for countries with a less aggressive tax stance. He also intends to increase corporation tax based on the size of a business and while the figure has still to be determined, it could be as high as 35%.
In fact the only move that could curry favour with all members of the French public is his proposal not to raise VAT by the planned 1.6% at the beginning of October.