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As the year comes to a close, we await final decisions from parliament on tax changes for the following year. President Macron’s government has announced €9 billion worth of tax cuts for families in France. The draft budget for 2020 was revealed in late September and is currently under parliamentary review, with a final vote expected in late December. Below is a summary of French taxation for 2020, based on the current budget. However, amendments may still occur before the year ends.
The main change in the 2020 budget is a reduction in income tax rates. Under the previous system, tax rates announced in the 2020 budget would have applied to 2019 income (tax paid in 2020). With the introduction of PAYE (Pay As You Earn), the 2020 budget now includes income tax bands and rates for both 2019 and 2020.
The tax rates remain the same as last year, but bands have been indexed for inflation:
IncomeTax RateUp to €9,964Nil€9,964 to €27,79414%€27,794 to €74,51730%€74,517 to €157,80641%Over €157,80645%
The starting tax rate is reduced from 14% to 11%, saving taxpayers in this bracket around €350 per year. However, the 30% rate now starts at €25,405 instead of €27,794.
IncomeTax RateUp to €9,964Nil€9,964 to €25,40511%€25,405 to €72,64330%€72,643 to €156,24441%Over €156,24445%
The tax rate for investment income remains unchanged at 30% (including social charges) for 2020 income.
No changes were announced for social charges, so they are expected to remain as follows:
The initial budget draft did not include any reforms for the taxation of Assurance Vie. Several early amendments that proposed significant changes were rejected. The most recent amendment was debated but also appears to have been rejected. Therefore, it is expected that there will be no changes to Assurance Vies in 2020.
The €1,300,000 threshold for the IFI (Real Estate Wealth Tax) will remain in place for 2020, with no changes to the scale rates of tax. The 75% limitation also remains unchanged.
The budget did not propose any reforms for Succession Tax rates and allowances.
The changes to Taxe d’Habitation (local residence tax), announced in 2017, continue to remove households from this tax. While some households already no longer pay it, the number will increase in 2020, so that only 20% of households will still be liable. By 2023, the tax will be completely abolished.
The main rate of corporation tax remains at 31%, but it is reduced to 28% for companies with turnovers under €250 million.
The information provided on this page is intended as an introduction only and is not designed to offer solutions or advice. Beacon Global Wealth Management accepts no responsibility for any losses incurred by acting on this information.
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