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France, a Tax Haven? Yes, for Microsoft and Huawei

Tuesday, 18 November 2014   (0 Comments)
Posted by: Authors: Marie Mawad and Helene Fouquet
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Authors: Marie Mawad and Helene Fouquet (Irish Independent)

Move over, Ireland. Companies from Microsoft to China's Huawei Technologies scouring Europe for fiscally attractive shores are turning to an unlikely country: France.

As a base for research and development teams, that is.

Tax breaks for R&D, €5.6bn this year alone, combined with world-class scientists are making France a honey pot for technology companies.

As the French parliament debates how to shrink the country's budget deficit this month some lawmakers are demanding reining in the R&D credits, saying some companies are abusing them. President Francois Hollande has pledged it's a budget line he won't touch.

"Research tax breaks are decisive; they make France economically much more attractive," said Olivier Piou, who heads Gemalto, an Amsterdam-based developer of security products for bank cards, mobile phones and passports.

The fiscal breaks offset a significant part of Gemalto's R&D budget, making it more compelling to keep 30pc of its 2,000 researchers worldwide in France, Mr Piou said.

Ireland's corporate tax rate of 12.5pc, less than half France's 33.3pc, ensures companies from Google to Apple keep their European headquarters here.

Still, for R&D, global companies are increasingly beefing up their teams in France, transforming the country into a European technology hub, mirroring the UK.s dominance in the financial industry and Germany's manufacturing prowess.

Mr Hollande boasted about the "edge" the measure gives France during his nationally televised interview earlier this month.

"Often we have our handicaps, but here we have an advantage," he said.

The jobs being created and the technological ecosystem the tax breaks are spawning is just what Mr Hollande needs as he struggles to rekindle growth and reverse record-high joblessness.

The measure, introduced in the 1980s, was expanded by former President Nicolas Sarkozy. It is among the few of his predecessor's policies retained by Mr Hollande.

"The drivers of our economy aren't the same as they were in the 1950s," Economy Minister Emmanuel Macron said yesterday during a technology conference in Paris. "I can tell you tech is key for our future growth."

More than 17,000 companies, ranging from biotechnology and energy to software and gaming, are cashing in on the tax advantages and subsidies for innovation this year in France, with an average break of about €323,500.

The R&D tax break is France's second-biggest behind a payroll credit, a measure to spur competitiveness, according to the Budget Ministry.

The move, meant to keep the brightest minds and high-value jobs at home, is also prompting foreign companies to set up laboratories or hire French algorithm whizzes.

This article first appeared on

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