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France to tax cosmetic companies

Senator Alain Milon

Senator Alain Milon

The third attempt was successful for French senator Alain Milon (who belongs to Nicolas Sarkozy’s centre right party) who, after two failures in 2009 and 2010, passed an amendment to tax the sales of cosmetic companies, as part of discussions on the 2012 law for the funding of Social Security.

Despite (soft) opposition by the French government, the senator’s proposal was adopted by the Senate and included in the final version passed by the National Assembly on November 29. This annual tax of 0.1%, will be perceived by the French national health insurance fund for employees (Caisse nationale de l’assurance maladie des travailleurs salariés - CNAM). According to the new law, it will be paid by the “persons subject to tax on added value“performing”the first sale in France” of cosmetics, as defined at the article L. 5131-1 of the French Code of Public Health. Clearly, these are the manufacturers and importers of cosmetic products who market them in France.

Senator Alain Milon justifies this tax by the need for equitable funding of the French Agency for the Safety of Health Products (AFSSAPS). “The agency monitors the market to detect adverse effects resulting from the use of cosmetics. Yet it receives no income for this mission, while drugs and medical devices are taxed for this purpose,” he explained in support of its proposal.

Jean-Marc Giroux, president of COSMED, the association representing small and medium enterprises of the cosmetics industry, told Premium Beauty News the senator’s equity argument does not withstand analysis. “Indeed, he said, the French National Agency for Food, Environmental and Occupational Safety (ANSES) gets 93% of its funding from European institutions and from the French government, while only 7% comes from taxes. Should we follow the same reasoning of senator Milon, we would be entitled to request a similar funding structure.

Moreover, according to the president of COSMED, this tax could not have been passed at the worst moment. Indeed SMEs are currently facing a general restriction of bank credit and have also started the implementation of the new European Cosmetic Regulation, “which is of high interest to consumers but is also a real cost for companies.” In a context of increased competition, it is not possible to pass this tax on the sale price, he added, “hence companies’ margins will be mechanically damaged.

COSMED considers that companies with sales less than 900,000 euros should be exempted from the tax.

For its part the French Federation of Beauty Enterprises (FEBEA) notes that as this tax will fund the CNAM, it will not affect the AFSSAPS budget. “Based on sales totalling about 10 billion euros in France, the tax should amount to some 10 million euros," said Anne Dux, Director of Scientific and Regulatory Affairs.

Vincent Gallon

© 2011 - Premium Beauty News -
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