'Don't drop the ball': U.S. tech investors warn Macron over taxes

By Mathieu Rosemain

PARIS (Reuters) - President Emmanuel Macron must pursue tax-friendly policies towards foreign investors if he wants French startups to flourish, visiting Silicon Valley investors told Reuters on Thursday.

The visit and associated demands comes at a tough time for the French leader, who faces the fierce opposition of the "Yellow Vest" movement over economic reforms, which are seen as favouring the wealthy.

The discreet one-day tour of France's startup scene is the result of two months of intense work by the country's export promotion agency Business France, at the invitation of Macron, who has organised a dinner at the Elysee Palace later on Thursday.

Joe Schoendorf of venture capital group Accel Partners said France had a chance to become the lead player in technology in Europe.

"France will become the innovation centre for the new EU, and they will, and they can blow it," he told Reuters on a visit to Paris tech campus station F.

"Right now, the game is totally France....Nobody is in your way but don't drop the ball," he added. Accel's investments in France include carsharing business BlaBlaCar.

The French tech scene has seen a boom in recent years, helped by Macron's efforts to develop a "startup nation", as a new generation of tech-savvy entrepreneurs taps into the large pool of engineers that France's top universities produce.

WEALTH TAX

France is being pulled in two different directions on tax -- trying to balance wooing business with anger from ordinary citizens over the cost of living.

A source close to the president's office said France had thought about postponing the session in light of the protests but decided to press ahead.

The visit coincided with a threat by France to tax digital giants at a national level from next year if European Union states cannot reach an agreement on a tax on digital revenues.

One of the main measures implemented by the French government to boost business and investment after Macron's election last year was to set a flat tax of 30 percent on all capital income and remove the top marginal band of payroll tax.

Macron was this week forced to bring his ministers back into line after his government spokesman and a junior minister said reinstating a scrapped wealth tax was being considered.

Despite pressure from the street protests, Macron's team is acutely aware that such a tax would deter foreign investors.

"If you want the new jobs, with the high salaries, you gotta compete with the rest of the world for them and wealth tax is one way to be sure you don't get them," said Schoendorf.

Tony Fadell, a former member of the iPhone development team who moved to Paris more than three years ago, said the tech sector needed to be nurtured despite Macron's current problems.

"I understand people are suffering and those problems need to be addressed but you can't throw away the future," he said.

(Additional reporting by Michel Rose; Editing by Keith Weir)