France is contemplating a temporary increase in corporate tax for its largest companies, as well as a potential tax on share buybacks, as part of Prime Minister Michel Barnier's efforts to manage a mounting budget shortfall. According to Le Monde, the plan aims to raise crucial funds for the country’s strained public finances, as weaker-than-expected tax revenues and increased spending pressure the government's financial standing.
The proposed tax hike would apply to companies with an annual turnover of at least €1 billion, potentially increasing corporate tax by 8.5 percentage points. If implemented, the measure could generate approximately €8 billion in 2025. Additionally, a tax on share buybacks is under consideration, as Barnier's government looks for ways to improve its fiscal outlook.
Barnier, who recently took office, faces the challenge of balancing public finances while maintaining France's credibility with financial markets and European Union partners. Borrowing costs for the country have surged, putting additional pressure on the government to present a viable budget solution.
However, the new government faces internal opposition, as it lacks a parliamentary majority. Even within the ruling coalition, there is no consensus on whether tax increases should be part of the solution. The previous administration had set a goal of reducing the fiscal deficit to 3% of GDP by 2027, but current financial pressures make that target increasingly unlikely.
The prime minister must finalize the 2025 draft budget within the coming weeks, aiming to submit it to lawmakers by mid-October. As the situation develops, there has yet to be an official response from Barnier’s office or the finance ministry.
