France’s 2025 Tax Reform

Key Changes for Individuals and Businesses

The 2025 Finance Bill, submitted to the National Assembly on September 27, 2024, introduces significant changes to the taxation of both individuals and businesses. These measures, expected to be adopted in the coming months, aim to strengthen fiscal fairness while adapting the rules to current economic realities. Here’s an overview of the main provisions.

Taxation for Individuals

Income Tax Brackets for 2025 The income tax brackets for 2025, applicable to 2024 income, will be adjusted in line with the expected inflation rate for 2024, estimated at 2% (PLF 2025 – Art. 2). This adjustment will raise the income limits of the tax brackets, helping households maintain purchasing power in the face of inflation.

The income limits for the withholding tax brackets will also be adjusted by 2%, starting from January 1, 2025.

 

The proposed tax brackets for 2025 are as follows:

Income Brackets (1 share) Tax Rate
Up to €11,520 0%
€11,521 to €29,373 11%
€29,374 to €83,988 30%
€83,989 to €180,648 41%
More than €180,648 45%
 

Introduction of a Minimum Contribution for High Earners The bill also introduces a minimum contribution of 20% for high-income earners whose reference taxable income exceeds €250,000 for a single taxpayer or €500,000 for a couple. This “differential” contribution will apply to 2024–2026 incomes, with a higher rate for incomes exceeding €330,000 for singles and €660,000 for couples.

Taxation for Businesses

Exceptional Contribution for Large Corporations An exceptional contribution on corporate income tax (CIT) is planned for companies with revenues exceeding €1 billion. The contribution rate will be 20.6% for companies with revenues between €1 billion and €3 billion, and 41.2% for those exceeding €3 billion. This contribution will not be deductible and will apply from the fiscal year ending December 31, 2024, with lower rates planned for the following fiscal year.

 

Tax on Share Buybacks A new 8% tax will apply to companies with revenues exceeding €1 billion in cases of capital reductions following share buybacks. This tax, effective since October 10, 2024, will not be deductible from corporate profits.

 

Adjustments for SMEs and Microbusinesses SMEs and microbusinesses will also face budgetary adjustments, particularly regarding apprenticeship aid. The aid provided for each apprentice will decrease from €6,000 to €4,500. Additionally, reductions in social contributions will be scaled back, which could increase the cost of sick leave for these businesses.

 

Postponement of CVAE Elimination The elimination of the Contribution on the Added Value of Enterprises (CVAE), initially scheduled for 2024, has been postponed to 2028. The progressive reduction of the CVAE will now extend until 2030, allowing businesses to better plan their tax liabilities over the medium term.

If you have further questions, our accountants will be happy to provide you with personal advisory. Additionally, we are available to advise you throughout France and Germany by phone and video conference. Your Franco-German tax consultancy FRADECO.

Disclaimer

Although the greatest possible care has been taken in the preparation of this newsletter, we reserve the right to make changes, errors, and omissions. The abstract legal presentation in this newsletter is no substitute for individual civil and tax law advice on a case-by-case basis. Subsequent changes to the legal framework, the views of the German or French tax authorities or case law, including with retrospective effect, are possible.