Electric car grants to second-home taxes: What's in France's 2024 budget
France's prime minister on Wednesday used the 49.3 constitutional tool to push through the 2024 budget without debate in parliament. Here is how that budget affects people living in and owning property in France.
France's prime minister, Elisabeth Borne, for the 13th time used the legislative tool 49.3 to push through the country's 2024 budget bill (le projet de loi de finances).
READ MORE: What is Article 49.3 and how often do French politicians use it?
The prime minister justified her decision, saying that "no opposition group is prepared to vote for this bill, and our country needs this budget."
Borne added that the bill would allow for "€16 billion in savings", in addition to more investment intended to accelerate the 'green transition'.
While some have called it an 'austerity budget', the French government did reject some cuts - namely calls from the right wing to cut €6 billion from unemployment benefits.
Here is an overview of what is in the Budget;
More funding for 'green transition' grants
In what France's finance minister, Bruno Le Maire, has called a 'green' budget, the French government will invest another €7 billion to "accelerate the ecological transition", BFMTV reported.
For householders, one of the primary ways this will become apparent will be the greater investment in France's MaPrimeRénov scheme, which allows grants for property owners to be able to carry out energy-related renovations. The budget allows for an extra €1.6 billion to be allocated to MaPrimeRénov, bringing its total budget up to €5 billion. The French government's primary objective is to carry out at least 200,000 major 'energy renovations' in 2024.
READ MORE: MaPrimeRenov: How France’s property renovation grants will change in 2024
As for the remainder of the 'green' budget funds, French media reported that the government would increase funding for electric cars, namely leasing schemes for renting EU-made electric cars at €100 per month, as announced by President Emmanuel Macron in September. Additionally, funds will help to decarbonise France's heavy industry.
Loans for first-time buyers
The French government will extend the interest-free loan scheme for property purchases (prêt à taux zéro, or PTZ) from €80,000 to €100,000 for first-time buyers.
The interest-free loan scheme, which was set to end in 2023 and will continue to 2027, is intended to help both low and middle income households purchase a primary residence.
While the scheme will remain means-tested, maximum salaries for eligible parties will also increased making it more available to middle income households. An estimated 6 million more households will become eligible for the interest-free loan in 2024.
The budget bill specifies that the loan will be available for those looking to purchase a new-build property in an area with a housing shortage (zone tendue) or an older property in need of repairs in areas outside the zones tendues.
READ MORE: French property: What is a 'zone tendue' in France?
Recently, the French government also added hundreds more towns and cities to the 'zones tendues' list, meaning more areas will be eligible for the PTZ.
Airbnb and short-term rentals
In response to complaints from across the country arguing that short-term lets, namely through Airbnb, had contributed to a lack of affordable housing, the French government will adopt a new scheme reducing the tax deductions offered to people renting out short-term furnished tourist accommodations.
Essentially, renting short-term will become less advantageous for property owners, specifically for those renting out their properties that are classified as 'furnished tourist accommodations'.
This classification allows for tax deductions (abattements) of up to a flat-rate of 71 percent. However, the new budget law will drop that maximum from 71 percent to 50 percent in areas with a housing shortage. Eligibility for the deduction will also be capped at €77,700 worth of rental income in these areas.
In areas without a housing shortage, the maximum deduction will be kept at 71 percent, but income earned will be capped at €50,000.
Tax changes for second-homes
The new budget bill will give local officials more leeway in setting tax rates for second homes. The budget 'decouples' rates of the property-owners' tax taxe foncière and the taxe d'habitation, which is now only paid be second-home owners. It would allow local officials in areas with high numbers of second homes to keep property taxes low for owner-occupiers, but raise them for second homes.
At present local officials can only impose a surcharge on second-homes if they have been declared a zone tendue (area with a housing shortage).
Around 10 percent of residences in France are second homes, the great majority of them owned by French nationals, and in some communes - especially the Alps - up to 90 percent of properties are second homes.
The budget also allows for some exceptions to the capital-gains tax when property is sold to allow for more home development, in an effort to respond to the ongoing housing shortage.
Non-profit aid extended
Known as the 'Coluche' scheme, the French government currently allows for the first 75 percent of earnings for NGOs that help 'people in difficulty' - including the Red Cross and Restaurants du cœur - to be free of tax. This will be extended for another three years.
Combating tax fraud
The bill will allow for an extension to the use of tax advisers (aviseurs) - who will be paid for by the French government - to better combat and detect tax fraud.
More funds for assessing pesticides
The new budget will index taxes on insecticides, fungicides and herbicides to inflation. Second, it allows for greater funding for the French Health and Safety Agency to be able to assess and authorise the marketing of pesticides.
Pesticides, particularly the controversial herbicide glyphosate, have been the subject of intense debate in France and the EU after a French family revealed it was entitled to €1,000 a month in compensation after experts were able to find a causal link between a mother's exposure to glyphosate while pregnant and her son's birth defects.
Drinking water in overseas territories
Access to clean drinking water in Mayotte, France's island territory off the coast of Africa, has become increasingly difficult due to drought. The new budget bill will exempt the population of Mayotte from paying bills for drinking water until 2027.
Windfall profits
Members of the political left in France have been calling for taxation of windfall profits from energy suppliers. While oil refineries will not be targeted by taxes on 'super-profits', electricity producers will, starting in 2024.
The government envisages raising €500 million from this new tax scheme.
Tax exemptions to bring in international sports federations
Starting in 2024, international sports federations - like FIFA - will pay significantly lower taxes in France, as they will become exempt from corporation tax, business property tax and CVAE (business-value added tax). Employees of these federations will also receive more exemptions when it comes to paying income tax.
Medical fees
The social-security budget - which deals with changes to things like medical fees, prescription charges and disability benefits - was passed separately earlier in the parliamentary term. You can find full details on what it contains HERE.
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France's prime minister, Elisabeth Borne, for the 13th time used the legislative tool 49.3 to push through the country's 2024 budget bill (le projet de loi de finances).
READ MORE: What is Article 49.3 and how often do French politicians use it?
The prime minister justified her decision, saying that "no opposition group is prepared to vote for this bill, and our country needs this budget."
Borne added that the bill would allow for "€16 billion in savings", in addition to more investment intended to accelerate the 'green transition'.
While some have called it an 'austerity budget', the French government did reject some cuts - namely calls from the right wing to cut €6 billion from unemployment benefits.
Here is an overview of what is in the Budget;
More funding for 'green transition' grants
In what France's finance minister, Bruno Le Maire, has called a 'green' budget, the French government will invest another €7 billion to "accelerate the ecological transition", BFMTV reported.
For householders, one of the primary ways this will become apparent will be the greater investment in France's MaPrimeRénov scheme, which allows grants for property owners to be able to carry out energy-related renovations. The budget allows for an extra €1.6 billion to be allocated to MaPrimeRénov, bringing its total budget up to €5 billion. The French government's primary objective is to carry out at least 200,000 major 'energy renovations' in 2024.
READ MORE: MaPrimeRenov: How France’s property renovation grants will change in 2024
As for the remainder of the 'green' budget funds, French media reported that the government would increase funding for electric cars, namely leasing schemes for renting EU-made electric cars at €100 per month, as announced by President Emmanuel Macron in September. Additionally, funds will help to decarbonise France's heavy industry.
Loans for first-time buyers
The French government will extend the interest-free loan scheme for property purchases (prêt à taux zéro, or PTZ) from €80,000 to €100,000 for first-time buyers.
The interest-free loan scheme, which was set to end in 2023 and will continue to 2027, is intended to help both low and middle income households purchase a primary residence.
While the scheme will remain means-tested, maximum salaries for eligible parties will also increased making it more available to middle income households. An estimated 6 million more households will become eligible for the interest-free loan in 2024.
The budget bill specifies that the loan will be available for those looking to purchase a new-build property in an area with a housing shortage (zone tendue) or an older property in need of repairs in areas outside the zones tendues.
READ MORE: French property: What is a 'zone tendue' in France?
Recently, the French government also added hundreds more towns and cities to the 'zones tendues' list, meaning more areas will be eligible for the PTZ.
Airbnb and short-term rentals
In response to complaints from across the country arguing that short-term lets, namely through Airbnb, had contributed to a lack of affordable housing, the French government will adopt a new scheme reducing the tax deductions offered to people renting out short-term furnished tourist accommodations.
Essentially, renting short-term will become less advantageous for property owners, specifically for those renting out their properties that are classified as 'furnished tourist accommodations'.
This classification allows for tax deductions (abattements) of up to a flat-rate of 71 percent. However, the new budget law will drop that maximum from 71 percent to 50 percent in areas with a housing shortage. Eligibility for the deduction will also be capped at €77,700 worth of rental income in these areas.
In areas without a housing shortage, the maximum deduction will be kept at 71 percent, but income earned will be capped at €50,000.
Tax changes for second-homes
The new budget bill will give local officials more leeway in setting tax rates for second homes. The budget 'decouples' rates of the property-owners' tax taxe foncière and the taxe d'habitation, which is now only paid be second-home owners. It would allow local officials in areas with high numbers of second homes to keep property taxes low for owner-occupiers, but raise them for second homes.
At present local officials can only impose a surcharge on second-homes if they have been declared a zone tendue (area with a housing shortage).
Around 10 percent of residences in France are second homes, the great majority of them owned by French nationals, and in some communes - especially the Alps - up to 90 percent of properties are second homes.
The budget also allows for some exceptions to the capital-gains tax when property is sold to allow for more home development, in an effort to respond to the ongoing housing shortage.
Non-profit aid extended
Known as the 'Coluche' scheme, the French government currently allows for the first 75 percent of earnings for NGOs that help 'people in difficulty' - including the Red Cross and Restaurants du cœur - to be free of tax. This will be extended for another three years.
Combating tax fraud
The bill will allow for an extension to the use of tax advisers (aviseurs) - who will be paid for by the French government - to better combat and detect tax fraud.
More funds for assessing pesticides
The new budget will index taxes on insecticides, fungicides and herbicides to inflation. Second, it allows for greater funding for the French Health and Safety Agency to be able to assess and authorise the marketing of pesticides.
Pesticides, particularly the controversial herbicide glyphosate, have been the subject of intense debate in France and the EU after a French family revealed it was entitled to €1,000 a month in compensation after experts were able to find a causal link between a mother's exposure to glyphosate while pregnant and her son's birth defects.
Drinking water in overseas territories
Access to clean drinking water in Mayotte, France's island territory off the coast of Africa, has become increasingly difficult due to drought. The new budget bill will exempt the population of Mayotte from paying bills for drinking water until 2027.
Windfall profits
Members of the political left in France have been calling for taxation of windfall profits from energy suppliers. While oil refineries will not be targeted by taxes on 'super-profits', electricity producers will, starting in 2024.
The government envisages raising €500 million from this new tax scheme.
Tax exemptions to bring in international sports federations
Starting in 2024, international sports federations - like FIFA - will pay significantly lower taxes in France, as they will become exempt from corporation tax, business property tax and CVAE (business-value added tax). Employees of these federations will also receive more exemptions when it comes to paying income tax.
Medical fees
The social-security budget - which deals with changes to things like medical fees, prescription charges and disability benefits - was passed separately earlier in the parliamentary term. You can find full details on what it contains HERE.
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