Institute for Research in Economic and Fiscal issues

IREF Europe - Institute for Research in Economic and Fiscal issues

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Social contributions increase in France

Starting July 1, French taxpayers will have to pay an extra 2% on top of the "Generalized Social Contribution" that was so far set at 13.5%. This brings the new rate of the General Social Contribution on labor and capital incomes to 15.5%.

This “social flat tax” is to be added to the personal income tax or capital gains tax and to "specific" social contributions (unemployment insurance, health insurance, etc.) The move is easy to understand since these Generalized Social Contributions, together with the VAT, are the only way to quickly increase tax revenues for the government. In view of the state of public finances, we can bet that an increase in VAT will be next, probably in 2014.

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