France: 75% tax rate approved by top court

French actor Gerard Depardieu left the country over the new tax rate. Picture: Getty

The Constitutional Council threw out a proposal earlier this year that individual earners must pay the tax aimed at tackling France’s crippling national debt.

But judges have now approved the socialist government’s revised proposal that companies must pay the supertax on all pay above £850,000.

President François Hollande has said the idea is “not to punish” but instead to encourage companies to lower executive pay at a time when the economy is suffering, unemployment is soaring and workers are being asked to accept wage cuts.

A second supertax on companies posting a turnover of more than £210 million will also be doubled in a measure that is expected to bring in £2.1 billion a year to government coffers.

When the tax was first proposed as part of Mr Hollande’s May 2012 election manifesto, a catalogue of French multi-millionaire’s announced they were leaving the country.

Optician chain tycoon Alain Afflelou, who has an estimated £190m fortune, said he was moving to London, while film star Gerard Depardieu bought a house just 800 yards from the French border in Belgium.

Depardieu was also awarded Russian citizenship by the Kremlin in January following a row with the French government over the taxes.

France’s richest man, Bernard Arnault, also announced he was moving to Belgium, but denied he was fleeing taxes.

Football clubs in France went on strike earlier this year over the issue, saying many of the country’s clubs are financially fragile and say the plans could spark an exodus of top players who are paid huge salaries.

The Union of Professional Football Clubs, which represents France’s first and second division teams, claimed that the tax would make it impossible to compete with other European clubs, driving the country’s most talented players abroad. Paris St Germain has ten players over the supertax threshold.

Polls suggest a large majority in France back the tax. Unlike many other countries in Europe, France aims to bring down its huge public deficit by raising taxes as well as through some spending cuts.

The new levy is expected to affect only a few thousand earners, and is being seen as a symbolic move to make the rich pay their share in tough economic times, rather than as a major revenue raiser.

It has met with fierce opposition from business chiefs, with the leader of employer’s union MEDEF Pierre Gattaz calling for the tax to be scrapped.

The tax also comes after Paris estate agents warned that France’s luxury property market had hit a “selling panic” as the super-rich rushed to move away.

Luxury property agent Daniel Feau said: “It’s nearly a general panic out there with some 400 to 500 residences worth more than one million euros coming onto the Paris market since May.

“And the profile of those who are leaving has changed, from the idle rich to managers of major international corporations who are scared of a marginal tax rate of 62.21 per cent on sales of stock.”