French taxes in 2024:Â Several adjustments in French taxation are poised to impact households, ranging from indexation of the income tax scale to inflation to changes in property taxes. Expats living in France or considering a move should be aware of these alterations, as they could influence financial planning and decisions. In this guide, we delve into the key modifications set to take effect, exploring the implications for taxpayers, property owners and those with specific investments.Â
Table of contents
Indexation of the income tax scale
One noteworthy change in taxes in 2024 is the indexation of the income tax scale to inflation. The government’s decision to increase tax brackets by 4.8% aims to align with the evolution of the consumer price index. This adjustment offers relief to individuals whose incomes haven’t kept pace with inflation, with the tax entry threshold raised to €11,294. While this benefits many, the wealthier individuals remain unaffected by adjustments to the exceptional contribution on high incomes (CEHR).
Impact on 'Macron Bonus' beneficiaries
For employees, the revaluation of the income tax scale brings mixed news. While many will benefit, recipients of the “Macron bonus” will see changes. Although this bonus remains exempt from social contributions, it will now be subject to income tax for employees in larger companies or those earning above three times the minimum wage. However, the exemption persists for employees in smaller firms until December 31, 2026.
Rise in taxes on electricity
Anticipate an increase in your electricity bill in 2024 due to a rise in the domestic tax on final electricity consumption (TIFCE). This adjustment follows a Senate amendment, allowing the government to raise the TIFCE by a maximum of €15. The move aims to fulfil a commitment to limit the overall increase in energy bills to 10%, providing both challenges and opportunities for consumers.
Property tax hike for owners
Property owners are set to face challenges in taxes in 2024 as the property tax is slated to increase by at least 3.9%. Calculated based on cadastral values, the property tax hike correlates with the harmonised consumer price index. This upward trend has stirred dissatisfaction among property owners, who feel burdened by escalating taxes, particularly following the elimination of the housing tax.
> You might be interested in this article: Navigating French income tax for expats
No change for Airbnb accommodation owners
Good news for owners renting accommodations on Airbnb – the 71% tax reduction on rentals of furnished tourist accommodations in challenging housing access areas is set to be maintained. Despite a Senate article proposing a reduction to 30% and a lowered revenue ceiling of 15,000 € in the 2024 finance bill, the government, acknowledging a “material error,” did not delete the provision. Parliamentary procedures prevent an immediate correction, leading to the likelihood of the measure being frozen. Modifications to the rules are anticipated, potentially coinciding with the 2025 budget or a subsequent legislative initiative. Advocates for reducing this tax loophole might reintroduce the topic as early as January, contributing to ongoing discussions on fiscal policies. This preservation of the 71% tax reduction offers a reprieve for Airbnb hosts, providing stability in their tax considerations as they navigate the evolving fiscal landscape.
Tightening rules for IFI
In 2024, rules for the real estate wealth tax (IFI) will be harmonised, addressing a flaw that previously favoured those owning real estate assets through companies. The harmonisation ensures equal treatment, disallowing the deduction of debts not linked to real estate assets from the IFI base. This adjustment closes a loophole that provided favourable conditions for certain taxpayers.
> You might be interested in this article: Retiring in France: Tax implications for British retirees
Future climate savings plan
A significant change in 2024 is the introduction of the Future Climate Savings Plan (PEAC), reserved for individuals under 21. Set to be effective from July 1, 2024, this plan exempts products and capital gains from income tax and social security contributions, encouraging young individuals to invest in climate-friendly initiatives.
Final notes
In summary, 2024 brings a series of changes to the French tax landscape, impacting various aspects of individuals’ financial lives. Expatriates should stay informed about these modifications to make informed decisions and optimise their financial strategies accordingly. Whether you’re a taxpayer, property owner, or investor, understanding these changes is crucial for navigating the evolving fiscal environment.
Useful resources
French Government Tax Portal: The official portal for French tax information, providing updates, forms, and guidelines for taxpayers. Visit the website here.
Les Echos – French Financial News: Stay informed about financial news and analyses, including updates on tax policies affecting individuals and businesses in France. Visit the website here.
Airbnb Tax Guide: Airbnb’s official tax guide provides hosts with information on tax obligations, including any changes in tax regulations. Visit the website here.
