The 2025 French Budget is now voted

Tax Bands, Allowances and Thresholds applicable to 2024 Income ​

Mieux vaut tard, que jamais… ​

We now finally have the voted 2025 budget, adopted by the Sénat on 6 February. ​

The planned 2% inflationary increase to the tax scale bands, tax ceilings and limits to follow inflation was adjusted to 1.8%. The final new “barème” and set allowance limits applicable to 2024 income are therefore as follows:​
 

Income Bands (€)  % 
Up to 11,497 0
Between 11,497 and 29,315​ 11
Between 29,315 and 83,823​ 30
Between 83,823 and 180,294​ 41
Above 180,294​ 45
 

  • The tax benefit for each extra half family share is capped at €1,790 (“plafonnement”), with specific rules for disabled dependants, single parents, war widows, and army veterans.​

  • The 10% annual pension allowance is capped to €4,399 per household, with a minimum of €450.​

  • Capping of the 10% allowance on salaries: €14,426 per person, with a minimum of €504.  ​

  • The annual means-tested allowance for housing a person aged over 75 is €4,039.​

  • The minimum income tax rate applicable to French source income received by non-residents of France is set at 20% up to €29,315 and 30% thereafter.​

VAT Franchise Reduction and Alignment Postponed​

The measure designed to introduce a €25,000 single VAT franchise across all types of activities has been suspended amid concerns of some 250,000 Micro-Nevertheless, businesses. ​

The Minister of the Economy, Eric Lombard recently announced that further consultations are planned whilst numerous pressure groups recommend scrapping the measure. ​

As a reminder, the current franchises are as follows: ​

€85,000 for buying and selling and including hotel-like furnished lets​

€37,500 for non commercial activities and some furnished lets. ​

2024 and 2025 Furnished Lettings Income ​

Contrary to what was looming, the 2025 budget did not revisit the Micro BIC turnover thresholds or the set allowances for expenses. ​

It is the Loi le Meur voted in November 2024 that is, therefore, expected to dictate how the Micro BIC will apply to 2025 rentals onwards, unless of course this is revisited through a rectified 2025 budget or the one for 2026. ​

Owners of short-term rentals which are not registered as Chambres d’Hôtes or Meublés de Tourisme Classés can remain under the Micro Bic tax regime for their 2025 rentals, if their turnover in either 2023 or 2024 was below €15,000. The set allowance for expenses is reduced from 50% to 30%. ​

For Chambres d’Hôtes, Meublés de Tourisme Classés and long-term furnished lets, the Micro BIC may apply to 2025 income if either of the 2023 or 2024 turnovers were below €77,700. The set expense allowance is reduced to 50% instead of 71% previously applicable for Chambres d’Hôtes and Meublés de Tourisme Classés . ​

Last year, many remained under the Micro BIC regime for their 2023 income since the 2024 budget changes were “frozen” through a last-minute tolerance measure. Despite a motion to have it cancelled, the tolerance was upheld as supported by the ensuing tax assessments ​

The feared drop of the Micro BIC application threshold from €77,700 to €15,000 was, therefore, neutralised for 2023 income as was the drop in the set allowance from 50% to 30%. ​

Nevertheless, it is not clear whether this tolerance will apply in respect of 2024 rentals. Should this not be the case, many would have to apply the itemised regime at the last minute, seeking to appoint French accountants who are already stretched at this time of year. ​

Those currently renting non-classified short-term rentals will need to register as Chambres d’Hôtes or Meublé de Tourisme classé as soon as possible if they wish to remain under the Micro BIC regime without limiting their turnover to €15,000 and see their expense deduction dwindle to 30%. ​

Capital Gains Tax on Disposals of Properties Rented Furnished​

When computing the taxable gain upon selling a property which has been rented out furnished, non-professional landlords, like professional landlords, must now reintegrate the property depreciation claimed against their taxable rental income. This rule formally applied to professional landlords only.​

Additional Tax for the Higher Earners​

The Contribution Différentielle sur les Hauts Revenus (CDHR) is now a reality for households with a taxable income in excess of €500,000 (couples) and €250,000 (single) already within the scope of the existing Contribution Exceptionnelle Sur les Hauts Revenus « CEHR ». ​

Nevertheless, this only affects those whose income tax and CEHR liabilities amount to less than 20% of their available income or Revenu Fiscal de Référence. In simple terms, their liability will be recalculated to bring the liability up to 20%. This extra tax will be payable between 1 and 15 December 2025 with a penalty of 20% if late. ​

The CDHR computation method is particularly complex, but it is expected that it will only concern around a third of the 65,000 households liable to the CEHR. ​

Temporary Gifts Tax Exemption ​

​Cash gifts of up to €100,000 per donor to children or grandchildren may be exempt provided these are used by the recipient within six months to purchase a new-build property or one under construction. ​

Cash gifts invested in renovation projects that meet certain environmental criteria may also benefit from the exemption if the donee owns the property and uses it as a main home for at least five years. ​

Uncles or aunts who do not have children of their own may award this tax-free gift to their nephews or nieces. Each donee can receive up to a total of €300,000 in tax free gifts from qualifying donors.​

This standalone tax-free cash gift allowance may be used up 31 December 2026. ​

​Should you have any queries in relation to your French tax affairs please email  French.tax@bdo.gg