The draft 2024 French tax budget presented on 27 September 2023 mainly contains measures affecting businesses and companies.There is a departure from tax reductions and a greater focus on green incentives and combatting tax evasion. It also includes the usual updates to the tax scale bands, tax ceilings and limits to follow inflation, this time at a proposed overall rate of 4.8%. Budget measures may still evolve during the consultation process before the final vote expected by the end of this year.
The new barème and set allowance limits applicable to 2023 income are expected to be as follows:
| Income Bands (€) |
% |
| Up to 11,294 |
0 |
| Between 11,294 and 28,797 |
11 |
| Between 28,797 and 82,341 |
30 |
| Between 82,341 and 177,106 |
41 |
| In excess of 177,106 |
45 |
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The tax benefit for each extra half family share is capped at €1,759 (“plafonnement”), with specific rules in respect of disabled dependants, parents who have brought up children on their own, war widows, and army veterans.
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Households which include married or civil partnership children or with dependants may benefit from an annual tax-free allowance of €6,674. The same amount is awarded as a tax deduction when providing ongoing financial support (food allowance) to a child over 18.
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Capping of the 10% annual pension allowance: €4,321 per household, with a minimum deduction of €442.
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Capping of the 10% allowance on salaries: €14,171 per person, with a minimum of €495.
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Annual allowance for housing a person aged over 75: €3,968.
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The deemed total annual income which can trigger a mandatory taxation based on “unexplained” external signs of wealth is updated to €52,867. This is calculated through a notional means-test using deemed income streams and levels for each “sign of wealth”.
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The means-tested tax allowance for the over-65s or disabled will increase to €2,746, where the taxable income falls below €17,200 and to €1,373, between €17,200 and €27,670 of taxable income.
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The maximum annual charitable donation eligible for a tax credit in respect of all donations made in 2024 to “organisations assisting people in difficulty” will remain at €1,000.
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The taxable income below which a taxpayer may benefit from a nil rate under the “Pay-As-You-Go” system between 1 January 2024 and 31 August 2024 would be €27,473 and €28,792 from 1 September 2024 to 31 December 2024 .
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The minimum income tax rate applicable to French source income received by non-residents of France is set at 20% up to €28,797 and 30% thereafter.
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The withholding tax scale on 2024 French source salaries and pensions paid to non-French residents is updated as follows:
| Income Bands (€) |
% |
| Up to 16,820 |
0 |
| Between 16,820 and 48,790 |
12 |
| In excess of 48,790 |
20 |
1. €77,700 for the Micro BNC and services including furnished rentals.
2. €188,700 for sales of goods and hotel-like rentals including holiday lets of properties registered as meublés de tourisme classés.
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The auto-entrepreneur regime applies if the household’s net annual worldwide taxable income (or revenu fiscal de référence as shown on the tax assessment) is below a certain limit. This limit would also be updated, and fixed at €28,797, plus an extra 50% or 25% applicable per half or quarter extra family shares applicable to the household.
Other areas of consideration or proposed changes
Update of the plafond de la sécurité sociale and effect on PUMA
The annual “plafond de la sécurité sociale” (“PASS”) is to be updated to €46,368 as per the 2024 social security budget. For those covered under the PUMA this means an update to the levels of contributions.
As a reminder, the PUMA health cover is compulsory for:
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anyone who resides habitually in France, and
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who is not covered under an EEA NI regime (which may include certain British citizens living in France post-Brexit), and
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whose 2023 annual professional earnings are below €9,273 (limited to 20% of the “PASS” – see below). The PUMA contributions payable through the URSSAF, are set at 6.5% on net investment gains and income reported in the previous year. This total assessable base is capped at 8 PASS i.e. €351,936 (2023) and €370,944 (2024). There is also an abatement of 50% PASS i.e. €21,996 for 2023 and 23,184 for 2024.
New tax regime for furnished lettings
Recently introduced to the 2024 budget, is a proposed change to the tax treatment of furnished lettings as defined at Article L324-1 of The French Code of Tourism. Broadly speaking, this concerns short-term lettings of furnished villas, apartments or studios which are exclusively used by visitors. These activities would automatically fall under the Micro BIC regime (see our insight publication on furnished lettings BDO Limited: Guernsey audit, assurance, advisory and tax services – BDO) if the turnover in the previous year falls below €77,700. The turnover threshold of €188,700 would no longer apply to these lettings and the set allowance for expenditure would be fixed at 50% instead of the potential 71% for properties registered as meublés de tourisme classes. The change is aimed at preserving primary residences in touristic areas. Where the balance between residential and tourist accommodation is not so stretched an additional 21% expenditure allowance may be granted to taxpayers whose rental turnover is below €50,000 in the previous year. This threshold would be revisited every three years with the next update due in 2026. If voted this measure will first apply to 2023 furnished rentals and will not affect taxpayers operating gîtes or guest rooms.
Assessment reviews and “Oops” procedure
2023 French tax assessments on 2022 income and 2023 real estate wealth should by now have been received by all, except in cases of paper or late filing and for the more complex computations. A few years ago, the French Government sought to decriminalise small inadvertent errors made at the time of return completion, often rushed, due to the narrow window between the availability of the tax forms and the submission deadlines.
You still have up until the 6th December to rectify your tax form online which will lead to a rectification of your tax assessment and a possible adjustment to the monthly pay as go levies.
Should you have any queries in relation to your French tax affairs please email Virginie Deflassieux or Catherine Le Pelley at French.tax@bdo.gg