Legal news

The withholding tax came into effect in 2019. How are tax reductions and deductions integrated? When do you get an advance? We tell you all about it.

Tax credits and tax reductions: What are they?

A tax credit is an amount deducted from your income tax. If the tax credit is greater than the tax, the excess (or the full amount if you’re not liable for tax) is refunded by the Direction Générale des Finances Publiques.

The tax credit is also an amount that is deducted from your income tax. However, unlike the tax credit, there is no refund when the tax reduction is greater than the amount of tax due or if you are not liable for tax.

This is not to be confused with tax deductions, such as alimony: in this case, the amount is deducted from your taxable income.

With the introduction of withholding tax, tax reductions and deductions are still taken into account when calculating income tax. They are calculated based on the expenses reported in the annual tax return and are paid with a one-year delay. Thus, in 2025, households will receive their tax credits/rebates for expenses incurred in 2023 and declared in spring 2024.

Payment of tax credits and reductions: What is the 60% advance for certain recurring tax credits and reductions?

On 15 January, an advance of 60% was paid via bank transfer to recipients of certain tax deductions and reductions. The amount of the advance was calculated based on the tax situation for the previous year.

Taxpayers whose bank details are not known to the tax authorities will receive the advance in the form of a cheque sent by post.

The payment on account relates to certain tax reductions and deductions, such as

– tax breaks for rental investments (Pinel, Duflot, Scellier, Censi-Bouvard, Loc’Avantages),

– tax breaks for donations to charitable organisations,

– tax deductions for trade union membership fees.

In spring 2025, as part of the tax return for income and expenses actually incurred in 2024, the final amount of the tax reductions and deductions to which the taxpayer is entitled will be calculated and adjusted in summer 2025, taking into account the advance paid in January 2025 (the balance of the remaining 40%).

Is this your first time taking advantage of this tax benefit? Therefore, you could not receive an advance payment in January 2025 and you will receive all your tax reductions/deductions in summer 2025.

Payment of tax reductions and deductions: Which tax reductions and deductions are not affected by the 60% advance?

Certain tax deductions and reductions, such as the tax reduction for capital contributions in an SME, do not give rise to an advance payment. They will be repaid in full in summer 2025, after the tax return.

Payment of tax reductions and tax credits: What is the immediate advance of the tax credit?

Since January 2022, if you use home care, you can get an instant advance on your tax deduction.

Thanks to this instant tax credit advance, it can be immediately deducted from the amounts due: you only pay 50% of the amounts due (salary and social security contributions).

This service allows households to get the tax deduction immediately up to an annual spending limit of €12,000 (increased to €20,000 if there is a member of the tax household receiving a disability card or a mobility and inclusion card for the disabled), so there is no delay of several months.

The service is free and can be accessed by subscribing to it.

It is primarily aimed at

– Individual employers who enrol their employees via the ‘Cesu+’ service (by activating the ‘Cesu Avance immédiate’ service),

– Individuals using approved personal service organisations.

Med venlig hilsen / Kind regards

Cabinet Nicolas BRAHIN

Advokatfirma i NICE, Lawyers in NIC

Camilla Nissen MICHELIS

Assistante – Traductrice

1, Rue Louis Gassin – 06300 NICE (FRANCE)

Tel :   +33 493 830 876      /    Fax : +33 493 181 437

Camilla.nissen.michelis@brahin-avocats.com

www.brahin-avocats.com

When did the obligation to file a tax return come into force?

The obligation to file a tax return for taxpayers subject to the controlled tax return system has been in force since 30 April 1950. Taxpayers must file an annual tax return, the content of which is determined by decree (Article 97 of the General Tax Code).

Inheritance tax returns will gradually be filed electronically, with the obligation to file and pay electronically from 1 July 2025. The deadline for taxpayer’s resident in France is 15 June and 15 July for non-resident taxpayers.

For financial institutions, the deadline for submitting the required information is brought forward to 15 July from 2025.

What is the statute of limitations for tax returns in France?

The statute of limitations for tax returns in France is generally three years. This period is set out in Article L. 169 of the French Tax Procedure Code (LPF).

However, this period can be extended to ten years in cases of tax fraud or insufficient taxation revealed by legal or administrative procedures. In addition, the statute of limitations for associations that do not file their tax return is six years.

When does the tax limitation period start to run?

The limitation period for tax returns begins to run on 31 December of the year in which the tax return was or should have been filed.

This rule is interpreted in case law as a ‘three-year limitation period for the offences referred to in Articles 1741 and 1743 of the General Tax Code, which only runs from 31 December following the date on which the tax return was or should have been filed’.

Med venlig hilsen / Kind regards
Cabinet Nicolas BRAHIN
Advokatfirma i NICE, Lawyers in NICE
Camilla Nissen MICHELIS
Assistante – Traductrice
1, Rue Louis Gassin – 06300 NICE (FRANCE)
Tel : +33 493 830 876 / Fax : +33 493 181 437
Camilla.nissen.michelis@brahin-avocats.com
www.brahin-avocats.com

French real estate wealth tax – Impôt sur la Fortune Immobilière – (‘IFI’) was introduced in France in 2018, replacing the Impôt de Solidarité sur la Fortune (‘ISF’). French real estate wealth tax relates to property owned by individuals, and its taxable base includes the net value of the property, i.e. after deduction of liabilities. In this article, we look at the main items that can be deducted as liabilities in the ‘IFI’.

What is ‘IFI’?

The ‘IFI’ is an annual tax that applies to taxable households whose net wealth exceeds 1.3 million euros on 1 January of the tax year. Unlike the ISF, the IFI focuses exclusively on property assets, whether primary residences, second homes, rental properties or land.

Deductions from liabilities

Debts incurred by the taxpayer can be deducted from taxable wealth if they exist on 1 January of the tax year and are actually borne by the taxpayer, his or her spouse, PACS partner or cohabitant and any minor children for whom they have the legal management of the wealth.

Only debts relating to taxable assets, if any, can be deducted in proportion to the part of their taxable value.

The tax authorities believe that debts related to the main residence are deductible in full, but they must not exceed the taxable value of the main residence (i.e. 70% of its fair market value).

To determine the net taxable value, a number of debts can be deducted from the gross property assets. The main deductions allowed are the following:

Property loans: Debt incurred for the acquisition, construction or improvement of property is deductible. It is important to note that only debts outstanding as of 1 January of the tax year can be deducted.

Property loans make up a large part of the debt that can be deducted from the IFI’s liabilities. If the taxpayer has taken out a loan that allows for repayment of the capital at the end of the contract (‘bullet’ loan), the deduction is limited to the sum of the theoretical annual instalments remaining until the end of the contract.

This amount is calculated as follows: total amount of the loan – (total amount of the loan × number of years elapsed since the disbursement of the loan / total number of years of the loan).

In the case of loans where there is no deadline for repayment of the capital, the debt is deductible each year up to the total amount of the loan minus an amount equal to one twentieth of this amount per year that has passed since the loan was paid.

These special deduction rules apply to loans taken out to acquire taxable property or property rights, as well as loans taken out to finance the acquisition of company shares. However, loans to finance construction work are not covered.

Conditions for deductibility

For these loans to be deductible, certain conditions must be met:

Existence as of 1 January: The debt must exist on 1 January of the tax year. This means that the outstanding capital on this date is deductible.

Documentation: It is important to be able to provide appropriate documentation for loans, such as loan agreements, amortisation schedules and bank statements showing the outstanding amount.

Direct use for property: Loans must be taken out specifically for the acquisition, construction or improvement of property included in the IFI’s tax base.

Tax debt: Local property taxes, such as property tax or tax on empty dwellings, can be deducted if the debt is due on 1 January of the tax year.

However, income tax and social security contributions are not deductible. Council tax on holiday homes is not deductible.

Renovation work: Debts incurred to finance renovation, repair or improvement work on the property can be deducted. The work must be supported by estimates and invoices and the debt must be outstanding on 1 January. This means that the invoices are due on 1 January 2024.

Limits and conditions

There are limits and conditions for these deductions:

– Debts between members of the same taxable household or between close relatives (ascendants, descendants, brothers and sisters) are not deductible.

– Debts must be legal and justifiable. Informal or undocumented loans cannot be deducted.

Understanding debt deductions is important to optimise the “IFI” calculation. Taxpayers must be careful to document and justify liabilities to ensure they qualify.

If in doubt, it is advisable to consult a tax law expert for personalised advice that complies with current legislation.

Our Law Firm is at your disposal to help you manage your property assets for ‘IFI’ purposes. Do not hesitate to contact us if you have any questions or would like a personalised consultation.

Med venlig hilsen / Kind regards

Cabinet Nicolas BRAHIN

Advokatfirma i NICE, Lawyers in NICE

Camilla Nissen MICHELIS

Assistante – Traductrice

1, Rue Louis Gassin – 06300 NICE (FRANCE)

Tel :   +33 493 830 876      /    Fax : +33 493 181 437

Camilla.nissen.michelis@brahin-avocats.com

www.brahin-avocats.com

Tax changes in 2025

The Finance Act for 2025 increases the income-tax reduction for FCPI subscriptions from 18 % to 25 %. This applies to FCPIs approved between 1 January 2024 and 31 December 2025.

What will change for the tax in 2025?

With the roll-out of online returns, taxpayers who filed online last year will no longer receive a paper return in 2025.

What will change for homeowners in 2025?

To help first-time buyers, the 2025 Finance Act allows Departmental Councils to reduce or waive land-registration tax and registration fees on qualifying purchases.

Tax rate to be applied to the range

Example: Applying the 2025 scale to 2024 income, tax due is €5,765 for a single person (€11,530 for a couple). From €29,316 to €42,000: €12,684 taxed at 30 % = €3,805.

What are the tax reductions for 2025?

A €500 donation in 2024 gives a 66 % reduction (€330). You receive €178 in January 2025 and €152 in summer 2025.

What is the new inheritance cap for 2025?

• Inheritance & gift: €100,000 between parents and children.
• Gift: €31,865 between grandparent and grandchild; €5,310 between great-grandparent and great-grandchild.
• Cash gifts: extra €31,865 allowance if the donor is under 80 (children, grandchildren…).

What new laws will apply to homeowners in 2025?

The Malraux scheme is extended to 31 December 2024, giving a 22 %–30 % tax reduction on restoring listed buildings.

What changes will come into effect on 1 March 2025?

From 1 March 2025, higher airline-ticket tax and a tougher car eco-tax will raise household costs. RSA and activity-allowance recipients will benefit from fully pre-filled income declarations.

What are the new obligations for landlords in 2025?

From 1 January 2025, property ads must mention the obligation to clear undergrowth—pruning trees and removing debris to slow wildfires.

What is the maximum amount that cannot be exceeded to avoid paying tax in 2025?

For the 2025 return, a single person is exempt if net annual income is below €18,961 (i.e. €1,580.08 per month). Thresholds rise with household size.

How do I know if I will receive the tax credit for 2025?

The final 40 % of refundable credits will be paid in summer 2025, based on the spring 2025 return, provided eligible 2024 expenses were incurred.

How do you calculate your 2025 tax? What are the tax steps in 2025?

1. €11,498 – €29,315 → 11 %
2. €29,316 – €83,823 → 30 %
3. €83,824 – €180,294 → 41 %
4. > €180,294 → 45 %

What is the tax shield in France?

The tax shield applies to residents of France on 1 January of the income year and covers the taxpayer’s household.

How does the tax shield work?

It is a refundable credit designed to offset part of the loss of socio-fiscal transfers after an increase in labour income, effectively providing a work-bonus credit.

What are the main changes in the 2025 tax return?

From September 2025, married or cohabiting couples will automatically have individualised withholding-tax rates—no action required.

Med venlig hilsen / Kind regards
Cabinet Nicolas BRAHIN – Lawyers in Nice
Camilla Nissen MICHELIS, Assistant – Translator
1 Rue Louis Gassin – 06300 Nice – France
Tel: +33 4 93 83 08 76  |  Fax: +33 4 93 18 14 37
Camilla.nissen.michelis@brahin-avocats.com
www.brahin-avocats.com

Deduction for business expenses: How does it work?

Every year, when taxpayers file their tax return, they receive an automatic flat-rate deduction of 10% of their income. The purpose is to cover some of their daily expenses, especially those related to transport, meals, etc. This 10% flat-rate deduction is automatically deducted from their salary. So you don’t have to do anything special to benefit from it.

However, if you feel you’ve spent more on business expenses, especially commuting, you can choose to forgo this standard deduction and instead deduct your actual expenses.

You can do this by using the kilometre rates published by the tax authorities each year.

What distances are taken into account?

You can deduct the costs you incur commuting to and from work, but only for a limited distance.

There are three options, depending on the distance to your workplace:

– If you live 40 kilometres or less from your workplace (i.e. 80 kilometres round trip), you can take the full distance into account when calculating
your travel expenses.
– If your home is more than 40 kilometres from your workplace, you can only include 40 kilometres in your tax return.
– However, the full distance can be taken into account if you can justify this distance with special circumstances. These special circumstances can be related to your job or to special family or social situations. You need to attach an explanatory note to your tax return stating the reasons for the distance.

For full details, visit impots.gouv.fr

To make it easier for you to estimate your expenses, you can use the mileage scale to calculate the deduction you need to declare on your tax return.

What is the mileage scale for cars?

The scale is calculated based on the power of the vehicle and the number of kilometres driven.

It includes depreciation of the vehicle, repair and maintenance costs, tyre costs, fuel consumption and insurance premiums.

For electric cars, battery rental and battery charging costs are included as fuel costs and are therefore already included in the scale.

The mileage table used to indicate actual costs will not be revised in 2025.

So, for example, for 4,000 kilometres driven on business with a vehicle with a 6 hp combustion engine, you can claim actual expenses equal to: 4,000 km x 0.665 = 2,660 euros.

Useful information

You can also add loan interest if you bought the car on credit, in relation to business use, tolls and parking fees at the business location (garage, car park, parking meter). Don’t forget to save your receipts: the tax authorities will be able to verify your declarations, especially by checking maintenance and repair invoices showing the number of kilometres driven. Please note that using the kilometre scale does not exempt you from providing documentation to the tax authorities.

Since 2021, the amount of travel expenses calculated based on these scales has been increased by 20% for electric vehicles.

Do you rent out a furnished house or apartment on a long-term basis? Your income from this activity is taxable and must be declared. Income declaration, tax system, social contributions… Here’s what you need to know to stay on top of it.

What changes in 2025?

The Finance Act for 2025 reforms the real tax system for non-professional furnished lettings (LMNP). When the property is resold, any book depreciation that can be deducted from the taxable rental income will now be added back when calculating the capital gain on the sale.

The following properties in particular are excluded from this tax change: student accommodation, housing for the elderly and housing for the disabled.

Owners will continue to be subject to the capital gains tax applicable to private individuals and will remain exempt from capital gains tax after 22 years of ownership of their property and from social security contributions after 30 years.

Furnished lettings: What are we talking about?

Furnished rental’ refers to a dwelling that is provided with a decent standard of furniture “in sufficient number and quality to enable the tenant to sleep, eat and live there in a way that meets the requirements of everyday life”, according to article 25-4 of law no. 89-462 of 6 July 1989.

To qualify as such, the accommodation must contain at least a certain amount of furniture. The list is established by decree :

– bedding, including duvet or blanket,
– blinds or curtains in rooms intended to be used as bedrooms,
– cooking hobs,
– oven or microwave oven,
– refrigerator and freezer, or at least a refrigerator with a compartment where the temperature is -6°C or lower,
– tableware for meals,
– kitchen utensils,
– table and chairs,
– storage shelves,
– light fittings,
– cleaning equipment adapted to the characteristics of the home.

Good to know

You can also rent out your furnished accommodation for a short period of time as part of a seasonal rental scheme (e.g. furnished tourist accommodation). In this case, the rules are different. This article describes the rules and taxation that apply to furnished rentals with a rental contract. In this case, the tenant makes your property their main residence. For more information, visit service-public.fr

Furnished rentals: What income must be declared?

All income from renting out furnished accommodation is taxable and must be declared to the tax authorities.

However, there is a situation where income from furnished rentals is not taxable. A number of criteria must be met:

– you are renting out or subletting part of your main residence,
– the room(s) rented out constitute the main residence of the tenant or subtenant (or their temporary accommodation if they are seasonal workers),
– The rental price must be set within ‘reasonable’ limits based on an annual ceiling per square metre, which for 2024 is 206 euros per year per square metre for renting or subletting in the Île-de-France region and 152 euros per year per square metre in other regions.

Furnished rental property: How do you declare your income?

The income you receive from renting out furnished accommodation is subject to income tax in the industrial and commercial profits (BIC) category.

You must declare all rental income received in 2024 in April 2025 when you file your annual tax return.

To help you with your tax return, see the 2025 tax brochure.

Useful information

If your annual rental income is less than €23,000 or is less than the total amount of your tax household’s other income (salary, other BIC income from commercial, industrial or artisanal activities), you are considered to be a non-professional landlord (LMNP). If this is not the case, you are considered to be a professional landlord (LMP). You can find more information on this topic on the service-public.fr website.

If your annual income is less than €77,700 excluding VAT

– You are covered by the micro-BIC tax scheme
You report the total amount you received from furnished rentals (including rent and taxes) on your supplementary self-employed tax return (no. 2042 C-Pro). You will be taxed at the income tax rate after a fixed deduction of 50% with a minimum of €305 to cover expenses.

– You can also choose the actual tax system
For each of your fiscal years, you must submit a 2031-SD tax return (industrial and commercial profits) to your local business tax office. You can deduct all your expenses on the same tax return.

In addition, when you file your tax return, you must indicate the amount of your profit on your supplementary tax return 2042 C-Pro in the relevant section.

If your annual turnover exceeds €77,700 excluding VAT

You are automatically subject to the actual tax regime. For each of your financial years, you must submit a 2031-SD tax return (industrial and commercial profits) to your local business tax office.

In addition, when filing your tax return, you must indicate the amount of your profit on your supplementary tax return 2042 C-Pro in the relevant section.
You are also responsible for:
– property tax as the owner of the property you rent,
– property tax for businesses (cotisation foncière des entreprises – CFE),
– and above a certain amount (sales over €152,500 excluding VAT), VAT for businesses (CVAE).

Useful information

Within the first 14 days of starting your business, you must submit a declaration of creation or start-up electronically via the Business Formalities Office.

This will enable you to:
– obtain a SIRET number
– publicise the existence of your business,
– indicate the tax regime you have chosen.

Furnished rental: Do you have to pay social security contributions?