The finance draft laws are published, what are the tax novelties for private individuals in France?

The innovations introduced by the end-of-year finance draft laws have been validated almost entirely by the Constitutional Council. Let’s take stock of the main measures affecting private individuals.

Income tax

The brackets of the 2017 tax scale and all the thresholds associated to this scale are revalued by 1%. The allowance on the taxable income granted to the parents attaching to their tax home children who are married, are in a civil union or have family responsibilities is increased to € 5,795.

The Pinel act

The Pinel real estate system is extended till 2021 and refocused on certain areas (A, A bis, B1 and former defense sites). Learn more here:

CSG

The generalized social contribution (CSG) is deductible, for a share, from the category income or the global income subject to the income tax. The Social Security Financing Act for 2018 increased the CSG rates applicable to all income categories by 1.7 percent points from 2018. This increase in 1.7 percentage points of the CSG is deductible from the income tax base. The increase in the deductible portion of the CSG will apply from the taxation of either 2018 revenues or 2019 revenues, depending on the income categories and the recovery terms of the social charges.

Tax reduction for non-professional furnished rental companies

The tax reduction for individuals who acquire property to be leased furnished in residences for the elderly, dependent or disabled, as well as in residences for students is extended for one year. The “Censi-Bouvard” or “LMNP” plan, which was to apply to acquisitions completed until December 31, 2017, is thus extended until December 31, 2018

CITE

The income tax credit relating to energy transition expenditures (CITE) made in the principal residence will be extended for one year. However, it will be refocused on the expenditures deemed most efficient.

Tax reduction “Madelin”

The rate of the tax reduction is increased from 18 to 25% for payments made until December 31, 2018. This increase applies to payments made under the general plan. The subsidized rate of 38% for investments made in Corsica and overseas remains unchanged.

Single lump sum

From the taxation of 2018 revenues, the movable income and capital gains from the sale of securities of individuals are subject to a single flat-rate tax (PFU). The PFU, also called “flat tax”, consists of a tax on income at a flat rate of only 12.8% to which are added social security contributions of 17.2%, which translates into a global taxation of 30%. Taxpayers with an interest may, however, waive this taxation and opt for the progressive scale.

Real estate Tax

In 2018, the ISF, traditional French wealth tax will be abolished and replaced by the Tax on real estate wealth (IFI), the base of which is limited to real estate assets held by the taxable person on 1 January of the year. All property and real estate rights held directly by the taxable person are included, but also the securities of companies (real estate or non-real estate) and specialized investment vehicles for the value of such real estate, including when they are held through a property.