The Finance Act 2006 has made an important change to the taxation of taxpayers: the abolition of the amount by 20% (but keeping the standard deduction of 10% for professional fees) offset by a revision of the tax schedule and a set of patches for some income.
It was, indeed, previously possible for some income to deduct an allowance of 20%. This reduction involved including salaries, pensions, annuities and benefits for professional members of an authorized management center.
The origin of this benefit was a pragmatic approach. Indeed, revenues benefited from this relief can be made the subject of a declaration by a third party (employer for wages) is subject to review before the declaration (profession adheres to a management center approved). It was therefore particularly difficult for recipients of these revenues to underestimate, in other words to defraud. But the beneficiaries of other income such as property income, the incomes of professionals subject to the regime of BIC or BNC did not adhere to a management center could more easily acceptable to underestimate their statements such as "blowing" their charges or lower bound on their income.
is to take into account this difference and, somehow, the "rupture of equality before the fraud that the reduction of 20% was established. Now this reduction is deleted, but the reasoning we just described remains valid insofar as the deletion is accompanied by improvements.
1) Fixes for deletion:
If the reduction of 20% disappears as such, the benefit will not be lost so far since the effects of the reduction will be incorporated in the Schedule of the Income Tax Act. Now that schedule is applicable to all taxpayers and not just for former recipients of relief, Patches are provided which should hit the income does not qualify for this relief before.
Their will and applied a flat rate increase of 25% of taxable income. For the same reason, the abatements for costs applicable in the regime of micro-enterprises are subject to reduction. The number of patch is important and their actual fiscal impact would be gradual!
Below is the main fixes:
| type of income | Remedial Measures |
| pension paid under a court | 25% increase |
| Deduction Alimony paid to adult children | Pass € 4489 to € 5398 |
| abatement "children married or PACS attached" | 4489 € per dependent 5398 increased to € |
| abatement granted to taxpayers aged over 65 | € 2 132 if the total income does not exceed € 13 125 and 1 066 € when overall income is between € 13 125 € 21 188 and |
| TNS non-adherent to a CGA | 25% increase |
| Proprietary Income | Reducing the reduction in the micro land from 40% to 30% Remove the standard deduction of 14% (6% in Robien) News deductible expenses for their actual |
| self-employed who are not members of a recognized organization (BIC / BNC) | 25% increase |
| Micro BIC | The abatement rate from 72% and 52% to 68% and 45% |
| Micro BNC | The abatement rate from 37% to 25% |
| Alimony | 25% increase |
| income from movable capital | Percentage tax income distributed from 50% to 60% The abatements of 1 220 € 2 440 € are brought to € 1 525 to 3 050 € surcharge fee of 25% for income deemed distributed income interests in foreign entities subject to a preferential tax regime, income distribution mentioned in c to e of section 111 of the CGI |
| Premium Jobs | Increase of 25% of income tax reference |
| Salaries of individuals not domiciled in France | rates of 15 and 25% of deductions source passes 12 and 20% |
Failure spontaneous reporting of income it was previously impossible, as a sanction, to carry the deduction of 20%. The abolition of this relief without the establishment of a new sanction would have led to confer a benefit to people not declaring their income voluntarily. It was therefore established a new penalty of 10%. This new penalty is applicable in case of default or late returns and underwriting for inaccuracies or omissions in the declarations. This increase may also apply in some cases increases with the attitude of law, a 10% surcharge for late payment and interest for late payment.
2) Changing the tax schedule:
This reform will apply from 2007 for the taxation of 2006 and provoked by five tax rates instead of seven this reform takes into account the integration of the reduction of 20 %. One goal of reform is to make the French tax system competitive with our major economic partners, the maximum marginal tax rate found in the average of those in Germany, Italy and United Kingdom. A decrease in tax of about 8% on average should be generated reform. If one believes the government that change should be beneficial to taxpayers http://www.minefi.gouv.fr/presse/dossiers_de_presse/ministre/plf2006/plf/recettes/2_dispositions.pdf
Without getting into a political debate which has no reason to be here, we stress that if the new scale should actually benefit the middle income, the abolition of two tax rates resulted in limiting the progressive income tax and differences can therefore appear between the middle classes "low" and "high".
| Taxable income brackets | Marginal tax rate | overall tax rate |
| 0 to € 5 515 | 0.00% | 0.00% |
| From 5516 to 11 000 € | 5.50% | 3.33% |
| From 11 001 € 24 432 à | 14 , 00% | 8.82% |
| From 24 433 € 65 500 à | 30.00% | 22.10% |
| Beyond € 65 501 | 40.00% | 34.14% for 200 000 € |
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