Court backs France’s 75% tax on salaries over €1m

French president François Hollande received approval from the country’s constitutional court to proceed with his plan to tax salaries above €1m at 75% for this year and next.

Under Hollande’s proposal, companies will have to pay a 50% duty on wages above €1m. In combination with other taxes and social charges, the rate will amount to 75% of salaries above the threshold, the court wrote in a decision published yesterday.

“The companies that pay out remuneration above €1m will, as expected, be called upon for an effort of solidarity on remuneration paid in 2013 and 2014,” the Economy Ministry said in an e-mailed statement.

Hollande, who once said he “didn’t like” the rich, announced the 75 % tax in Feb 2012 as part of his presidential campaign to appeal to his Socialist base. It has become a symbol of his government’s record-high taxation rate.

A first proposal to put the change into law was turned down by the constitutional court in December last year because the tax applied to individuals and not households. The country’s top administrative court said any rate above 66% would be rejected as confiscatory.

Hollande revived the plan this year, making it apply to salaries and be paid by employers rather than individuals. The total amount is limited to 5% of a company’s revenue.