Press Release:
Press Release
News Article February 2005
- Simplified Layoff Procedures Another Key Change as Prime Minister Unveils 35 New Reforms to Further Increase France's Business Appeal -
PARIS, Feb. 7 /PRNewswire/ -- The French government today announced the relaxation of the 35-hour work week as part of 35 new legal reforms designed to increase France's appeal as a destination for foreign investment. The new measures also include the simplification of the legal procedures for laying off personnel, rules that have often been identified by U.S. senior managers as impediments to investment in France.
The new reforms, announced today by French Prime Minister Jean-Pierre Raffarin, are the second set of legal measures to come out of the French government's recent campaign to improve the country's business environment for international companies. The first set of reforms, 50 new measures announced at the beginning of 2004, included the creation of Europe's most aggressive R&D tax incentive program.
"The relaxation of France's 35-hour work week regulations and the easing of the layoff procedures are great news for current and future international investors," said Clara Gaymard, French Ambassador, Special Representative for International Investment and President, Invest in France Agency, the investment arm of the French government in charge of attracting foreign investment and coordinating the legal reform process. "I spend half my time traveling the world and meeting with CEOs from companies interested in expanding in Europe and these two issues are always the first that they raise. We're extremely excited to now be able to announce to investors around the world that change is indeed in the air here in France."
The 35 new measures are designed to attract skills (students, researchers and managers) and business operations that contribute directly to economic growth (e.g. headquarters, R&D centers, etc.).
The most significant new measures include:
-- New flexibility in the application of legal working hours (35 hours) in
2005: The legal standard for annual working hours has been increased
from 1,780 to 1,820 with allowable overtime raised to 220 hours per
year (which translates into an average of 40 hours per week).
Collective labor agreements may increase this flexibility even further.
-- Major changes to the law on collective dismissals: The duration of
negotiations between employees and employers for the preservation of
employment in the event of economically-induced layoffs has been
substantially simplified and reduced.
-- Changes to rules governing the personal tax liability of impatriate
employees: Personal tax liability is to be aligned with the best
international practice, with charges proportional to the time spent in
France. For example, taxation is now proportionate to the time actually
spent working in France, applying a principle similar to remittance-
basis taxation in the UK.
-- The widening of conditions for exemption of expatriation premiums from
taxation: Since January 2004, the tax law provides the exemption from
personal income tax of expatriation premiums paid to employees and
directors on temporary assignment in France. This exemption has
hitherto been reserved to individuals who have not been residents of
France for tax purposes in the course of the ten previous years. This
requirement is being considerably relaxed with the period reduced to
five years for directors and employees beginning assignments from
January 1, 2005.
-- Taxation of capital gains on the sale of equity securities granted to
employees is to be phased out: Taxation of capital gains on equity
securities is set at 15% for financial years beginning in 2005, and 8%
for those beginning in 2006. Capital gains will be exempt for financial
years beginning in 2007 and after.
-- R&D coordination centers are to benefit from a tax regime similar to
that previously reserved for headquarters: Businesses engaged in
research and development can benefit from an improved, secured tax
system. The measures adopted will benefit both R&D coordination and
operational R&D.
One of the major factors in the French government's long-term commitment to reform has been the Strategic Council of Attractiveness, a group of 21 CEOs from global corporations including GE, Eli Lilly and Rohatyn Associates LLC. The group meets privately with French Prime Minister Raffarin for a series of frank discussions about France's strengths and weaknesses as a destination for foreign corporate investment. The first meeting was held April 2004 and a second meeting is scheduled for April 2005.
Invest in France Agency (IFA) is the French national governmental body responsible for promoting, prospecting and facilitating international investment in France. The IFA network operates worldwide, with offices in France at both the national and local level. It draws on the expertise of specialists in a range of disciplines based at its head office in Paris, as well as in its 22 offices in North America, Europe and Asia. In France, IFA works in partnership with regional development agencies to offer international investors the best possible business opportunities and customized services.
Source: Invest in France Agency
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