What does Fillon’s austerity plan means for your business?

By Valérie Aston on 13 November 2011 · Viewed 9542 times · Questions

On Monday 7th November, Francois Fillon revealed his "Plan d'austérité" with several measure designed to reduce France's deficit. Here is an overview of the key measures and their impact on your French business.

VAT increased from 5.5% to 7%

This is the main impact for small businesses... and French residents . The reduced VAT rate applied to some activities such as restaurants and renovation work, will be increased from 5.5% to 7%. Artisans within the buidling sector will suffer most from this increase, hence their request for auto-entrepreneurs to become liable to VAT. Taxes on food will stay at 5.5%. The VAT increase should bring an extra 1.8 billion euros.

Retirement age raised to 62 from 2017

The legal age for retirement in France was due to be increased to 62 by 2018. This measure has been brought forward and will be inforced by 2017, hence saving 200 millions euros in 2012.

Incorporation tax increased for large companies

The incorporation tax for companies with a turnover over 250 million euros, will be increased by 5% in 2012 and 2013. This represents an extra 1.1 billion for the French state.

Prélèvement forfaitaire libératoire increased from 19% to 24%

The ''prélèvement forfaitaire libératoire', paid by individuals on dividends will be increased from 19% to 24%. 

For more information on the French austerity plan.

Valerie Lemiere: Start Business in France

About the author: Valérie Aston

I've been helping people who want to start or already have a small business set up in France since 2009. After graduating from a Master of Business Administration (MBA) degree, I worked as a senior marketing consultant in the UK and France for various International companies. I worked as a conseillère en création d'entreprises (senior business advisor) for BGE here in France and run this independent business on a daily basis.