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Economy

France to pay big firms 10 billion euros after court blocks dividends tax

media French government spokesman Christophe Castaner Reuters/Philippe Wojazer

The French exchequer has been ordered to pay 10 billion euros to big companies after the country's highest judicial authority struck down a tax imposed by the previous government on dividend payouts.

Earlier this month the Constitutional Council declared the three-percent tax on dividends, introduced by President François Hollande's government in 2012, illegal on the grounds that it violated the "principle of equality before the law and public levies".

On Wednesday government spokesman Christophe Castaner announced that the government will have to pay back 10 billion euros, half of it to just 13 firms.

He blamed "legal amateurism" on the part of the previous government for "the biggest tax gift ever handed to companies in this country".

The finance ministry may include the payments in an updated budget plan, or mini-budget, later in the year, he said.

Finance Minister Bruno Le Maire meanwhile slammed "bad decisions taken by my predecessors".

Blow to deficit reduction plan

President Emmanuel Macron's government had already decided not to renew the tax and set aside 5.7 billion euros for repayments but the bill has turned out to be nearly twice as big.

It represents two thirds of the 15 billion euros the government aims to find in new savings next year and is higher than the seven billion it has promised in tax cuts.

The announcement is a blow to the aim of reducing the deficit to the EU target of 3.0 percent of GDP.

Before the court ruling France had budgeted for a deficit of around 76.5 billion euros for this year, and around 83 billion for 2018.

In 2013 the Constitutional Council struck down the Hollande government's 75 percent supertax on earningss over one million euros on the same grounds as it ruled against the dividends tax.

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