Equitax (Équitaxe or Équi-taxe) is the term used to describe the attempt to move equestrian activities in France from a reduced VAT rate to the standard rate, i.e. from 7% to 20%. The European Union and France are at loggerheads, as France has been applying reduced VAT rates to several equestrian activities since 2004. In January 2013, VAT on the sale of horses was raised to the standard rate. At the end of 2013, Jean-Marc Ayrault's second government proposed that the entire equestrian sector be brought under the standard VAT rate. The amendment was passed by the National Assembly on the night of October 22, then published in the Journal Officiel de la République française on November 13, with implementation scheduled for January 2014 under the authority of the Minister of Agriculture, Food and Forestry, Stéphane Le Foll, and the Minister Delegate for the Budget, Bernard Cazeneuve.
The government says it has been forced to implement this measure by the E.U. and does not support it, as do many elected representatives from all sides of the political spectrum. A hundred MEPs believe horse-riding is a French cultural exception and the use of sports facilities, and can continue to benefit from a reduced rate. The announcement of this future VAT increase has provoked strong reactions from the equestrian community and horse professionals in France. They demonstrated in most major cities, including Paris on November 24, with ponies. They are demanding the repeal of the decree, supported by their official institutions. The Fédération nationale du cheval (FNC) and the Fédération française d'équitation (FFE) are actively lobbying. A French delegation travels to Brussels on December 13, but the European Commission states that an overall reduced rate for equestrian activities is not possible. On January 1, 2014, VAT in the equestrian sector was switched to the standard rate. After various European negotiations, on January 31, 2014, reduced-rate VAT exceptions were created for the sports sector, including the use of equestrian center buildings.
Critics point to the corporatist aspect of the anti-equitax protests, in particular the desire of horse professionals to preserve their “privileges” in a difficult economic context. A year after the introduction of the modified equitax, in January 2015, the French equestrian sector is in recession. A decline in the number of licensees and breeders, and an increase in horse abandonment, have been noted. While VAT is cited as the reason, other factors are also at play, in particular the reform of school rhythms.
On October 26, 2023, Bruno Le Maire, French Minister of the Economy, announced that the VAT rate on equestrian center activities would be reduced to 5.5% from January 1, 2024.
Name and symbols
The name “equitax” is not official. It was adopted spontaneously by the equestrian community and journalists. The name was chosen by analogy with the heavy goods vehicle tax, nicknamed the “ecotax,” which raised controversy at the same time (and also affected horse professionals when transporting their Equidae). The “La Horde française” collective adopted a horse wearing a red bonnet as its logo, about the Bonnets Rouges movement in Brittany, which was opposed to the ecotax. Some equestrian center managers, notably in Loire-Atlantique, have chosen this symbol to cap their ponies. Other demonstrators, in Périgueux and elsewhere, wear red helmets.
Context Several foreign journalists, including Kim Willsher for The Guardian, see the anti-equitax demonstrations as part of a wave of French protests against fiscal pressure, which started in Brittany with the Bonnets Rouges movement.
The anti-equitax protests were not the only ones in France at the end of 2013; in addition to the Bonnets rouges movement, teachers of preparatory classes for the grandes écoles, school principals, and some craftsmen and tradesmen (the “Sacrificed” campaign) were protesting against taxes, their workload, or the number of their salaries, deemed too low. The movement against the VAT increase for equestrian centers takes place in a context where demands are breaking away from political parties and trade unions, notably through the use of social networks. With the VAT rate in France rising from 19.6% to 20%, with increases in certain sectors of activity, the political majority feared a tax slingshot for January 1, 2014.
Interviewed on France 3 about the equitax, David Boéri mentions the very particular situation of horse riding in France, which unlike other sports is not taught mainly by associations, but by small private companies. Changing the status of riding schools to that of associations would prevent them from making any commercial profit. These private riding schools are self-financing and are not subsidized. According to legal expert Nicolas Masson, they made around 5% in 2013. The spokesman for the “Equitation in Peril” collective estimates this margin at 7%.
History
The introduction of the “equitax” is the result of a long-running dispute between the French government and the European Union over the equestrian industry. According to the President of the French Riding Federation, the teaching of horseback riding in France represents a European exception: this sporting pastime has become highly democratized, taking its place among the mass sports leisures, unlike in other European countries where horseback riding is more traditional or elitist. In the 1980s, riding was still a military activity reserved for a minority. Private initiatives led to the creation of riding schools whose activities were part agriculture, part sport, and part business. In 2005, they were granted farmer status. Between 2005 and 2011, according to the Groupement Hippique National, a thousand jobs were created annually in the equestrian sector thanks to the introduction of a reduced VAT rate. The breeding of racehorses and sport horses then benefited from a tax allowance costing €2 million in revenue to the State, making it look like a tax exemption. This advantage was abolished in 2011.
The European Union relies on the legal basis provided by articles 96 to 99 of the VAT directive. It is calling for all equestrian activities to be subject to the standard VAT rate, except for those involving the human consumption of horsemeat. France is not the only country concerned, as Germany, the Netherlands, and Ireland have also been called to order by the EU regarding their equestrian sectors. Austria, Italy, Luxembourg, and the Czech Republic have, like the previous countries, changed their horse tax rules to comply with European legislation.
On March 8, 2012, a few months after the Netherlands, France was fined by the Court of Justice of the European Union (CJEU) for the reduced taxation it applied to sales of Equidae intended for sport or leisure. The government announced that a return to the normal VAT rate on equine transactions is to be applied at the request of the European Commission in Brussels, leading to an initial protest movement, the “Insurgents Campaign,” as well as concern in the equestrian world from December 2012. In the equestrian sports sector, Jérôme Cahuzac is studying the issue of small owners. A drop of 1,500 racehorses in training is expected.
In January 2013, the VAT rate was raised to the standard rate on equine transactions and winnings in equestrian sports, but equestrian activities (notably those of riding schools) remain at the reduced rate, which rises from 5.5% to 7%. In August 2013, the French government announced that this rate would be raised by three points to the intermediate level (i.e. 10%) in January 2014. DateEvent1 January 2005France recognizes all equestrian and horse-related activities (except for entertainment) as part of the agricultural sector, allowing them to benefit from a reduced VAT rate of 5.5%.27 October 2007The European Commission informs France that applying a reduced VAT rate to transactions involving horses not intended for consumption or agricultural services is not permissible.22 January 2008France responds that the horse is an agricultural animal that can be used in food production.19 February 2008France maintains the reduced VAT rate on equine transactions. The European Commission takes the case to the Court of Justice. Ireland supports France in this legal process.1 December 2008France receives a notice of infringement from the European Commission and has two months to comply with EU tax regulations.16 December 2010The European Commission initiates infringement proceedings.8 March 2012France is condemned by the Court of Justice of the European Union.22 June 2012The European Commission requests that France apply the full VAT rate to horse sales and riding lessons.1 January 2013The VAT rate on horse transactions in France increases to the full rate, while riding lessons and boarding fees rise from 5.5% to 7%.
Implementation and adjustments
While riding schools should theoretically have had another year to join the standard VAT rate, on October 22, 2013, an amendment was proposed to the National Assembly by Bernard Cazeneuve to raise the VAT applicable to the equestrian sector by 13 points from January 2014, i.e. from 7% to 20%. The vote passed with just a few MPs present, at 5 a.m., despite the opposing opinions of two MPs, Hervé Mariton (UMP) and Charles de Courson (UDI). This amendment nicknamed the “equitax,” provoked reactions from the equestrian community and official representatives of the industry, who feared job losses, the closure of riding schools, and the scrapping of horses.
Publication of the decree and announcement of the “horse fund" On November 13, 2013, despite the initial protests, the government published the official decree repealing the reduced VAT on equestrian activities. On the same day, Pierre Moscovici announced several adjustments, including the possibility that contracts concluded before December 31, 2013, could continue at the same VAT rate until they expire. He proposed the creation of a “horse fund” to help professionals, particularly riding schools, absorb the VAT increase. He also believes that the tax credit for competitiveness and employment (CICE), from which they already benefit, will offset the effect. The following day, despite a blockade operation at Vincennes by angry riders, he declared on RTL that the government would not go back on the VAT hike in the sectors concerned for January 2014.
Questioning the European injunction Although Jean-Marc Ayrault's government has announced that the VAT increase to 20% is necessary to avoid further European condemnation, this view is not shared by all politicians. Around a hundred MEPs (including former sports minister Chantal Jouanno and ecologist senator Jean-Vincent Placé) sent a letter to Prime Minister Jean-Marc Ayrault on November 15, arguing that measures could be taken at the European level to avoid the increase. MP Sophie Auconie received a response from the European Commission concerning the right to use sports facilities, including equestrian facilities, which are eligible for the reduced VAT rate. This concerns points 13 and 14 of Annex III of the current European Directive (2006). This European law was reiterated by Mr. Šemeta on October 25, 2011.
Several equestrian collectives and specialists in equine law, in particular “Équitation en péril,” believe that the government is not under threat of imminent European condemnation for breach upon breach and that the dispute only concerned horse transactions and the equestrian sports sector, not teaching in riding schools. One of its spokesmen, Loïc Caudal, claims to have received confirmation of this from Brussels. What's more, maintaining a reduced rate would theoretically be possible if Europe recognized French horse riding as a cultural exception.
November 22 press release