Vive la black market! One in three French people say they have earned undeclared income this year

Anne Penketh reports on resourceful ways to dodge VAT

Paris

When Katell, a French estate agent, had a false ceiling constructed in her house in the Breton town of Quimper, she paid cash for the week's work. And when Catherine, a teacher, had to spend €400 on her La Rochelle apartment, she paid cash.

They were not alone. A potent combination of rising unemployment and VAT rates has given a huge boost to France's black economy. One in three French people say they have earned undeclared income this year, compared with only 13 per cent five years ago, according to a survey published last week by Le Figaro.

Half of France's babysitters and teaching assistants, a third of domestic cleaners and 42 per cent of carers for the elderly are working for money paid "under the table", said the report commissioned by O2, France's biggest home services agency.

Of the 1,028 people surveyed, 20 per cent had recourse to the "grey" economy, in which they would pay partly in cash for services.

That figure could go still higher when VAT goes from 7 per cent to 10 per cent on New Year's Day, according to Charles Dauman, the general manager of Shiva Corporation, which specialises in remote access. Other VAT hikes will see a similar jump in restaurant food at the beginning of next year, and a rise from 7 per cent to 20 per cent in VAT to be charged by riding stables. That prospect brought horses and ponies with their owners out on to the streets across France last week in protest.

"Who wants to pay 19 per cent in VAT?" said Katell, referring to the top rate of 19.6 per cent levied on construction work until the end of this year. She said that the two young Frenchmen who repaired her ceiling were moonlighting to supplement their low-paid jobs.

But the increase in clandestine work has led to a comparable drop in tax revenue and in social contributions, affecting state resources as well as individuals' medical and retirement cover. The agency responsible for collecting social security payments, URSSAF, has seen contributions declared by individual employers dip by 8 percent this year. The Association of Individual Employers says the number of such people on its books has declined by only 1 to 2 per cent. This suggests that French households are declaring fewer hours by the cleaners or babysitters whom they employ, and paying the rest in cash.

French authorities have taken measures to prevent earnings going underground, particularly in the construction industry, whose foreign workers are regularly monitored. Banks require customers to fill out forms identifying contractors if a sum of more than €3,000 is involved. According to an investigation by the French economics programme Capital, the restaurant sector is where undeclared income is highest.

The survey for O2 said that a reduction in tax perks for home services has added 12 per cent in costs to the customer over the past two years. However, French households can still claim tax credits for employing home help.

Guillaume Richard, the CEO of O2, said that the black economy had become his company's "worst enemy" with workers preferring to accept cash for part or all of the services provided. He told Le Figaro he is launching a campaign highlighting the "disastrous social and economic impact" of such practices. "Declaring home services is also an act of citizenry," he added.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Office / Sales Manager

£22000 - £32000 per annum: Recruitment Genius: Established and expanding South...

Recruitment Genius: Administrative Assistant / Order Fulfilment

£14000 per annum: Recruitment Genius: An exciting opportunity to join a thrivi...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + Uncapped OTE: SThree: Trainee Recruitment Consulta...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + Uncapped OTE: SThree: Trainee Recruitment Consulta...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones