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Investing.com - Lawmakers in France’s lower house late on Tuesday approved two tax hikes on large multinational companies, putting pressure on Prime Minister Sebastien Lecornu’s fragile government and raising uncertainty around the 2026 budget in Europe’s second-largest economy.
The plans, which were passed during the bill’s first reading, include a new levy based on global revenues and a doubling of an existing digital tax.
While ministers from parties on both the left and right backed the amendments, France’s Finance Minister Roland Lescure argued that the changes could break international tax treaties and dissuade big-name companies from doing business in the country.
Under the proposed measures, which are likely to be struck down by the conservative-dominated Senate, France’s corporate tax surcharge introduced in 2025 would be amended to generate around 6 billion euros in fiscal revenues next year, analysts at Barclays said in a note. This would be down from 8 billion euros this year, but about 2 billion euros above the government’s initial draft budget.
The exceptional levy will set tax rates at 26.25% for firms earning between 1 billion euros and 3 billion euros. Companies making above that amount will face a tax rate of 33.825%, while those below the threshold will remain at 25%.
Although marginally lower than a peak notched in 2025, France’s tax burden would still be "significant" and leave the country with the highest corporate tax rate among the 38 members of the Organization for Economic Cooperation and Development, the Barclays analysts including Emmanuel Makonga and Emmanuel Cau said in a note.
They estimated that the proposed tax increase would also reduce net income in the SBF 120 -- an index tracking France’s most actively traded stocks -- by 5.6 percentage points. This would translate to the consensus forecast for these companies’ combined full-year 2026 net income growth falling to 6.1% from 11.7%.
Sectors with the largest earnings per share growth gap between this year and 2026, as well as high exposure to domestically-generated revenues, are most at risk, the analysts said.
These industries include telecommunications and staples retailing, they noted, highlighting names like French operator Orange and grocery chain Carrefour. Other potentially-exposed groups were carmaker Renault, banks BNP Paribas and Societe Generale, and aerospace player Thales.
Persistent political and fiscal turmoil is also tipped to keep the risk premia elevated around French stocks in general and weigh on investor sentiment towards France, the analysts said.