Living in France For Members

The French tax breaks you could benefit from next year

The Local France
The Local France - [email protected]
The French tax breaks you could benefit from next year
Households in France are set to get more disposable income next year. Photo: AFP

French president Emmanuel Macron has unveiled his proposed budget for 2020 - which contains a total of €12 billion of tax cuts for people and businesses in France - so who benefits?


The bulk of the tax cuts - around €9 billion - are aimed at households and include the €5 billion already announced by Macron in his response to the demands of the 'yellow vest' protesters.

Income tax - there are some fairly significant savings for anyone whose income is taxed in France, particularly the lower earners.

In tax bracket 1 - for people who earn between €9,964 and €27,519 a year - the rate will be cut from 14 percent to 11 percent. It's estimated this will save people in this bracket an average of €350 a year.

In tax bracket 2 - for people earning €25,519 to €73,779 - the rate will fall to 30 percent, which represents an average saving of €180.

READ ALSO What you need to know about the annual French tax declaration

Public accounts minister Gérald Darmanin, left, and finance minister Bruno Le Maire unveiling the 2020 budget proposals. Photo: AFP

Household tax - the biggest single saving is the widespread abolition of the taxe d'habitation or household tax. There were already plans underway to gradually abolish this and by January 2020 only 20 percent of households in France - generally the high earners - will still be paying this. It will be phased out altogether (apart from for second home owners) by 2023. The rate of taxe d'habitation varies hugely according to where you live, but it is estimated the average savings from scrapping the tax will be €723 a year. Taxe foncière - the tax for building owners - remains, however.

Benefits - for people in receipt of state benefits or allowances there is mixed news. The family allowance and housing assistance payments will rise by just 0.3 percent - well below the rate of inflation which is forecast to be around one percent.

But the allowances for disabled adults and elderly people will be increased to an average of €900 per person per year.

In total is is estimated that 17 million households in France will see their disposable income rise from next year.

Public accounts minister Gérald Darmanin told French media when unveiling the budget: "What counts in this matter - as in love - is proof. When they see their pay slips next January, the French will understand that we have not lied."

Businesses - Although most of the savings are aimed at households, there is also a package of €1 billion tax cuts for businesses in France.

The majority of this will come from from a cut in corporation tax, which will fall from 33 percent to 25 percent.

However if you run a small business in a rural or deprived area you could benefit from further cuts.

READ ALSO The family benefits you can claim in France, but probably didn't know about

If you've got more money in your pocket next year it might be thanks to these guys. Photo: AFP

Local authorities in areas classified as either rural or deprived are being given the option to cut three types of tax for small businesses - business property tax the cotisation foncière des entreprises (CFE), building tax the taxe foncière sur les propriétés bâties (TFPB) and the value added tax cotisation sur la valeur ajoutée des entreprises (CVAE). 

Further savings to the French public purse are expected to come from previously announced cuts to unemployment benefits and a reduction in the number of civil servants.

Macron's government had made balancing the books of the French state one of their main priorities, but after facing months of protests from 'yellow vests' who said they simply could not afford a decent standard of living the government brought out a package of measures aimed at easing the financial pressure on low earners.

The measures are expected to push this year's deficit to 3.1 percent of gross domestic product, making France the only eurozone member to exceed the bloc's three percent limit - even as countries like Germany, the Netherlands and Portugal are likely to post surpluses.

The government forecast next year's deficit ratio falling to 2.2 percent, still short of the previous goal of two percent.

And France's debt mountain will barely budge next year from 98.7 percent of GDP - far above the 60 percent or less demanded of eurozone members.





Join the conversation in our comments section below. Share your own views and experience and if you have a question or suggestion for our journalists then email us at [email protected].
Please keep comments civil, constructive and on topic – and make sure to read our terms of use before getting involved.

Please log in to leave a comment.

See Also