Part II

Developments in the Member States

France

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Overall trends in taxation

Structure and development of tax revenues
In 2010 the tax-to-GDP ratio in France stood at 42.5 %, the fourth highest in EU-27 and almost seven percentage
points above the EU-27 average (35.6 %).
The share of indirect taxes as a percentage of GDP was at 15.1 %, above the EU-27 average (13.5 %), while the
share of direct taxes (51) was just below average at 11.0 %. Social contributions represented the highest share
relative to GDP in the EU at 16.7 %. Employers contributions make up more than two thirds of social
contributions; as a percentage of GDP employers' contributions were more than 70 % higher than the EU-27
average. The central government raised 35.0 % of total taxes, the lowest share of any not fiscally federal Member
State. 54.9 % of total taxes collected in France (representing 23.4 % of GDP) go to the Social Security Funds, the
highest level in Europe. The local governments' share of tax revenue (10.1 %) is close to the EU average (10.6 %)
It consists mainly of the local business tax, patent levies, real estate and housing taxes.
Between 2003 and 2006 the overall tax burden ratio adjusted for the cycle has remained substantially stable in the
range of 43 %. It declined for 2007-2008 due to the crisis but started to recover in 2009. A particular development
is noticeable for CIT revenues, which suffered in 2009 from the economic slowdown and the recovery packages
dedicated to improve the cash flow of companies. This decline was moderated by a rise in revenue from social
security contributions. CIT collection partially recovered in 2010.
Taxation of consumption, labour and capital; environmental taxation
In 2010, the ITR on consumption was 2 percentage points below the EU average (21.3 %). The ITR remained
remarkably stable from 2001 to 2006. Since 2007, the ITR has decreased by 0.6 percentage points.
The ITR on labour income, 41.0 % in 2010, is among the highest in the Union (EU-27 33.4 %). Under the
definition of labour taxation used in this report, the increases in the CSG, the CRDS as well as the social levy of
2.2 %, booked in national accounts as taxes on personal income, have offset the effects of reductions in social
contributions at the aggregate level.
The ITR on capital of 37.2 % is well above the EU-25 average (23.3 %). After declining in 2002 and 2003, the ITR
picked up again rising 4.2 percentage points between 2003 and 2006. The decline between 2006 and 2009 reflects
mainly the dynamics in revenue from taxation on corporations. The French system relies on a number of other
taxes on capital, such as the real estate tax, the housing tax, the wealth tax and the local business tax. Most of them
are classified as taxes on stocks of capital/wealth, which altogether represented 4.3 % of GDP, the second highest
value in the EU (EU-27 1.8 %).
France has the second lowest share of environmental taxes on GDP. Their level declined from 2.2 to 1.8 % over
the period concerned compared to the EU-27 average of 2.6 %.
Current topics and prospects; policy orientation
The Finance Law 2011 increased the top PIT rate from 40 % to 41 %. The 3 % allowance which reduces the
employment income subject to the generalized social contribution (contribution sociale gnralise, CSG) and the
social security deficit contribution (contribution pour le remboursement de la dette sociale, CRDS) is capped. This
allowance has been reduced to 1.75 % since January 2012. The optional final levy on dividends, interests and
capital gains was increased from 18 % to 19 % (i.e. 31.3 % with the social taxes). Since January 2012, the overall
(51) These shares are based on the Eurostat definition, which is based on the ESA95 codes (see Annex B for details). The French national definition differs in some
important respects.

Taxation trends in the European Union

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