France Exempts Local Entrepreneurs From Capital Gains Tax Boost

France will exempt local business-owners who qualify as entrepreneurs from a tax increase on capital gains planned in the 2013 budget, a Finance Ministry official said.

Rules are still being defined on how long a business-owner must own his company, how much of it he must own and what he’s allowed to do with the proceeds of a sale to fit the “entrepreneur” category and continue paying the current 19 percent tax rate in addition to 15.5 percent in social charges.

Owners of French startups have been voicing concerns over the increase in the budget in the tax on capital gains from selling a business, which in some cases could be double the current rate. The tax increase spawned a protest group called “Les Pigeons,” which drew thousands of supporters on social network websites such as Facebook Inc. and Twitter.

After meeting with entrepreneurs yesterday, French Finance Minister Pierre Moscovici said he will suggest changes to the 2013 budget to address their concerns, while maintaining the principle of aligning the tax on revenue from capital and from labor for other categories of investors.

Moscovici also said the shortfall in revenue for the government from the change will be compensated elsewhere, without providing details. French President Francois Hollande’s government has said the 2013 budget will ensure that France meets its commitment to cut its deficit to 3 percent of gross domestic product next year from 5.2 percent last year.

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