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
