Bloomberg reports that Hollande, who released his first annual budget on Sept. 28, plans to tax fund managers’ share of the profit from their investments, known as carried interest, at a rate of as much as 75 percent, part of a wider effort to increase taxes on the wealthy and narrow the country’s deficit. France also plans to as much as double taxes on capital gains and restrict the amount of debt interest payments a company can deduct from its taxable income, a measure that will reduce returns on leveraged buyouts.
Lower levies in the U.K. will lure professionals across the English Channel from where they can still try to buy French companies, Parisian dealmakers say. More than 280 private-equity firms call Paris home, including Astorg Partners Wendel, LBO France and PAI Partners, which plans to start raising a 3 billion-euro ($3.9 billion) fund this year. It's also Europe's second-largest market for leveraged buyouts after Britain.
'We understand we need to contribute to the nation’s efforts, but if all these proposals are actually implemented, it means the death of private equity in France', Gonzague de Blignieres, a Paris-based partner at Equistone Partners Europe Ltd., said in an interview. 'There won’t be a buyout fund management company left in Paris'.
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image: © Jean-Marc Ayrault