4 ms·

> France, Germany etc. are charging huge payroll, income and sales taxes to fund their huge welfare states and bureaucracies, but in the process ruining their c

by adev_ 6y ago

> France, Germany etc. are charging huge payroll, income and sales taxes to fund their huge welfare states and bureaucracies, but in the process ruining their competitiveness That's a common bashing legend that France/Germany are taxe hell and it is mainly bullshit. I am currently live in France with salary over 100k and my effective taxe rate is under 20%. Both France and Germany (and almost every European country) have a gazillion way of reducing legally your taxe bill if you do it right. Currently, some of my colleagues in Switzerland, a well known taxe heaven, pay more taxe than I do.

pingec 6y ago
And what are those ways?
- smartervo 6y ago
  Off the top of my head... in France, you pay tax as a household rather than an individual. So if you are married with children you get a tax cut for each child up to 3. Private pension contributions are also tax deductible and don't actually have to be used for retirement (you can use it to fund a first house for example) Other things that you can take off your tax bill include alimony payments, charitable donations and investments made in certain French initiatives. So yes, there are many ways to legally reduce your tax bill quite significantly here.
  - adev_ 6y ago
    And to add, Randomly out of my mind : - Owning a flat and rent it to a thrid party. Many fees on it are deductible. - Investing in medium/small-sized companies. - Making property/housing more energy efficient. - Invest in accommodations for disabled/elderly/etc. - Fees for the studies of your kids. - Support/Invest in art / creative related enterprise. - And many other that need to be checked. That is not exceptional. Many European countries have similar taxes credit schemes.
mytailorisrich 6y ago
France is a tax and red tape hell. As an individual you may be OK re. tax if you are married with children because they give strong tax advantages to those households [basically they count how many people live on your income when calculating income tax], which must be your case. But overall tax levels are high, taxes are many and complicated, red tape works against you.
- adev_ 6y ago
  > France is a tax and red tape hell. - Red tape I agree. Administrations are slow and processes cumbersome. - Taxes I do not agree, France is in the European's average.
  - mytailorisrich 6y ago
    France is #1 in the EU for public spending [1]. Deficit is within average and constrained by Eurozone rules (excluding the current mess). Money does not magically appear. As I said, taxes are many, complicated, and often useless. This of course overlaps with the issue of red tape but is an issue in itself. There is a reason why so many rich French people live in Belgium or London. There is a reason why when Peugeot merges with Fiat-Chrysler the new company is headquartered in Amsterdam. Just another example I've recently found (this is supposed to be abrogated this year): If you're a company and your turnover is greater than EUR760k annually then there is a special, additional tax on your advertising spending. There are plenty of things like that. This is bonkers. [1] https://www.statista.com/statistics/263220/public-spending-ratio-in-eu-countries/ https://www.statista.com/statistics/263220/public-spending-r...
    - adev_ 6y ago
      > France is #1 in the EU for public spending [1]. That's a well known overstatement that comes mainly from the fact Pension system, education system AND health care system are almost entirely state-owned in France. You can find the same pattern in some Scandinavian country btw, France is not an exception. > There is a reason why so many rich French people live in Belgium or London. You can say the same with British and American near the Leman-lake /Zug in Switzerland. Fiscal optimization is everywhere. > There is a reason why when Peugeot merges with Fiat-Chrysler the new company is headquartered in Amsterdam. That's not surprising, Holding companies always love specific countries for legislation/taxes reasons. That include Netherlands, Luxembourg, Switzerland and Ireland. Almost every European major multi-national has an holding in one of these. > If you're a company and your turnover is greater than EUR760k annually then there is a special, additional tax on your advertising spending. That I totally agree with you. This is a good example of terrible case by case politic bullshit.
hydraxis 6y ago
Are you including social contributions of employer and employee in your 20% tax rate? Because these are definitively taxes that should be included. If yes, I am really curious to know how this is possible
- mytailorisrich 6y ago
  Really the only way as an employee is to have a family because income tax depends on household size. And let's remember that there is a de facto second income tax (CSG/RDS) on top of the income tax. But this is a small part of the issue with tax. Regarding employment there are the taxes paid by employers, as you rightly point out, which make the cost of labour quite high in France, but there are also all those other taxes on about everything.
- adev_ 6y ago
  > Are you including social contributions of employer and employee in your 20% tax rate? Only income taxes. The employer taxes are mainly pension / health insurance.
  - hydraxis 6y ago
    Compare for example with Denmark where the social contributions are close to 0 and the income tax up to 50%. The total of the employment taxes paid in Denmark is still lower than the total in France.
    - adev_ 6y ago
      Denmark seems to be a particular case compared to other OECD countries. https://en.wikipedia.org/wiki/Tax_rates_in_Europe#/media/File:Payroll_and_income_tax_by_country.png https://en.wikipedia.org/wiki/Tax_rates_in_Europe#/media/Fil...
      - hydraxis 6y ago
        Yes, I chose this extreme example on purpose to show that evaluating only the income tax is not meaningful.

by adev_ 6y ago

pingec 6y ago

And what are those ways?

smartervo 6y ago
Off the top of my head... in France, you pay tax as a household rather than an individual. So if you are married with children you get a tax cut for each child up to 3. Private pension contributions are also tax deductible and don't actually have to be used for retirement (you can use it to fund a first house for example) Other things that you can take off your tax bill include alimony payments, charitable donations and investments made in certain French initiatives. So yes, there are many ways to legally reduce your tax bill quite significantly here.
- adev_ 6y ago
  And to add, Randomly out of my mind : - Owning a flat and rent it to a thrid party. Many fees on it are deductible. - Investing in medium/small-sized companies. - Making property/housing more energy efficient. - Invest in accommodations for disabled/elderly/etc. - Fees for the studies of your kids. - Support/Invest in art / creative related enterprise. - And many other that need to be checked. That is not exceptional. Many European countries have similar taxes credit schemes.

mytailorisrich 6y ago

France is a tax and red tape hell. As an individual you may be OK re. tax if you are married with children because they give strong tax advantages to those households [basically they count how many people live on your income when calculating income tax], which must be your case. But overall tax levels are high, taxes are many and complicated, red tape works against you.

adev_ 6y ago
> France is a tax and red tape hell. - Red tape I agree. Administrations are slow and processes cumbersome. - Taxes I do not agree, France is in the European's average.
- mytailorisrich 6y ago
  France is #1 in the EU for public spending [1]. Deficit is within average and constrained by Eurozone rules (excluding the current mess). Money does not magically appear. As I said, taxes are many, complicated, and often useless. This of course overlaps with the issue of red tape but is an issue in itself. There is a reason why so many rich French people live in Belgium or London. There is a reason why when Peugeot merges with Fiat-Chrysler the new company is headquartered in Amsterdam. Just another example I've recently found (this is supposed to be abrogated this year): If you're a company and your turnover is greater than EUR760k annually then there is a special, additional tax on your advertising spending. There are plenty of things like that. This is bonkers. [1] https://www.statista.com/statistics/263220/public-spending-ratio-in-eu-countries/ https://www.statista.com/statistics/263220/public-spending-r...
  - adev_ 6y ago
    > France is #1 in the EU for public spending [1]. That's a well known overstatement that comes mainly from the fact Pension system, education system AND health care system are almost entirely state-owned in France. You can find the same pattern in some Scandinavian country btw, France is not an exception. > There is a reason why so many rich French people live in Belgium or London. You can say the same with British and American near the Leman-lake /Zug in Switzerland. Fiscal optimization is everywhere. > There is a reason why when Peugeot merges with Fiat-Chrysler the new company is headquartered in Amsterdam. That's not surprising, Holding companies always love specific countries for legislation/taxes reasons. That include Netherlands, Luxembourg, Switzerland and Ireland. Almost every European major multi-national has an holding in one of these. > If you're a company and your turnover is greater than EUR760k annually then there is a special, additional tax on your advertising spending. That I totally agree with you. This is a good example of terrible case by case politic bullshit.

hydraxis 6y ago

Are you including social contributions of employer and employee in your 20% tax rate? Because these are definitively taxes that should be included. If yes, I am really curious to know how this is possible

mytailorisrich 6y ago
Really the only way as an employee is to have a family because income tax depends on household size. And let's remember that there is a de facto second income tax (CSG/RDS) on top of the income tax. But this is a small part of the issue with tax. Regarding employment there are the taxes paid by employers, as you rightly point out, which make the cost of labour quite high in France, but there are also all those other taxes on about everything.
adev_ 6y ago
> Are you including social contributions of employer and employee in your 20% tax rate? Only income taxes. The employer taxes are mainly pension / health insurance.
- hydraxis 6y ago
  Compare for example with Denmark where the social contributions are close to 0 and the income tax up to 50%. The total of the employment taxes paid in Denmark is still lower than the total in France.
  - adev_ 6y ago
    Denmark seems to be a particular case compared to other OECD countries. https://en.wikipedia.org/wiki/Tax_rates_in_Europe#/media/File:Payroll_and_income_tax_by_country.png https://en.wikipedia.org/wiki/Tax_rates_in_Europe#/media/Fil...
    - hydraxis 6y ago
      Yes, I chose this extreme example on purpose to show that evaluating only the income tax is not meaningful.