Inheritance law decision?
A decision from the European Commission is awaited on the legality of France’s 2021 inheritance law, which seeks to impose French forced heirship rules on the estates of people who opted in their wills for the law of their nationality to be applied.
The French law means many people who have made UK/US-law wills favouring their spouse (as an EU regulation allows them to) face having their wishes ignored in favour of large portions being given to their children after they die.
There have been multiple complaints to the commission and hundreds of Connexion readers have joined a campaign against the law.
Read more: French inheritance law: couples anxiously await EU decision as discussions continue
Interest-free loan extended
The interest-free loan for home purchase, currently restricted to those buying new flats in areas subject to housing pressure, will be extended to all first-time buyers from February 1.
With interest rates still above 3%, this return to wider availability of the scheme should help many more people buy a property.
Tax bands
Income tax bands set to be applied in 2025 on 2024 income have risen by 2% in line with inflation. A freeze had been envisaged as the government sought to reduce its deficit.
The new bands are: Up to €11,520 = 0%, then to €29,373 = 11%, then to €83,988 = 30%, then to €180,648 = 41%, and above this, €45%.
More tax on holiday rentals
New tougher tax rules on furnished holiday rentals and chambres d’hôtes will start for income earned in 2025.
The old familiar rules will remain in place for income from 2024 declared in 2025.
A previous set of new holiday rental rules set out in the 2024 finance law has been scrapped.
The new rules for micro-Bic rentals are: 50% allowance for classified holiday rentals and for chambres d’hôtes within a micro-Bic ceiling of €77,700 turnover (down from 71% and €188,700 in the old, familiar rules); otherwise, a 30% allowance within a limit of €15,000 (down from 50% and €77,700).
It is also being proposed, but subject to confirmation, that holiday rental properties rented out on the régime réel (as opposed to the micro-Bic) tax set-up will now incur more capital gains tax.
This is due to an intended change to rules on amortissements (depreciation).
People who rent out furnished property as non-professional landlords under the réel can deduct depreciation (wear and tear) amounts from their taxable earnings so that they pay less tax. It is intended that amounts claimed in this way should be “re-integrated” when the property is sold, effectively being taken off the purchase price used in the tax calculation, thus increasing capital gains tax.
Read more: Holiday rental laws to be toughened in France in 2025
Wealth tax
France’s property wealth tax could be replaced, as of 2025, by a new version on “unproductive” wealth, extending it to, for example, yachts, jets and cryptocurrency.
This idea remains to be confirmed, along with a proposal to exempt from gifts tax family gifts of money that are for the purchase or renovation of a main home.
The latter is intended to last only two years, and be for amounts up to €100,000.
New local taxation?
A return of taxe d’habitation has been ruled out by the government, but consultation will continue with local councillors over demands by the latter for more power over their local financing, such as via a new contribution citoyenne towards funding of local services.
This could, it is suggested, be payable by residents in a given commune, whether they own property or not, on a sliding scale based on means.
Further studies and consultations into the implementation of such a contribution will take place at the start of 2025.
Read more: ‘Contribution citoyenne’: What is this new residents' charge proposed by French mayors?
A rise in notaire’s fees?
Departmental councils were expected to be permitted to increase the rate of their part of the notaire’s fees (stamp duty) on property sales, from June.
An amendment to the 2025 budget allowed them to increase their rate from 4.5% to 5% of the property’s price. It means that for a property of €300,000, total notaire’s fees on a purchase will increase from around €22,500 to €24,000.
This proposal was thrown out alongside the entirety of the 2025 budget, but is popular with local authorities (as it increases local funding available to communes) and may return in an updated budget presented at the start of next year by the new prime minister François Bayrou.
Read more: Notaire fees expected to rise for home purchases in France
Topping up UK state pensions
People wanting to top up missing years of National Insurance contributions for the period between April 2006 and April 2017 have until April 5, 2025 to do so.
After this, it will only be possible to top up the previous six tax years, moving forward.
Help for single-parent families
From this year the benefit complément de libre-choix du mode de garde (CMG), which goes towards childcare, will allow single-parent families to benefit from this up to the child’s age 12, as opposed to six.
Pensions set to rise
The government had planned to limit the usual rise in state pensions, set for January 1, to just 0.8%, with a further 0.8% from July 1 for those on the lowest pensions.
This is as opposed to the 2.2% rise which would usually have applied from January, under the usual cost-of-living increases.
The latter is now expected to apply, after the vote of no confidence toppled former prime minister Michel Barnier and his 2025 budget.
Read more: Ministers to debate emergency law so France can continue to collect tax and pay expenses
More tax on the wealthiest?
A new tax, called contribution différentielle sur les plus hauts revenus, aimed at making sure the wealthiest households pay a minimum of 20% income tax on average on their income (ie. as opposed to paying less than this overall via various tax breaks) was included in the original 2025 budget.
It would have affected those with incomes of more than €250,000 for a single person or €500,000 for a couple.
The largest companies were also being asked to contribute more – a contribution exceptionnelle sur les bénéfices des grandes entreprises, consisting of an extra amount on top of corporation tax, was to be levied on France’s 450 largest firms (with turnover of a billion euros or more), in 2025 and 2026.
Both measures were thrown out alongside the 2025 budget.
However, as these measures were approved during debates on the now-scrapped 2025 budget and received widespread consensus, they may return in the upcoming budget of Mr Bayrou.
