The 2025 French budget
The 2025 French budget has finally passed. Here is a summary of the main measures:
- French income tax brackets increase by 1.8%
- Temporary minimum tax introduced for very high earners. This is known as the contribution différentielle sur les hauts revenus (CDHR) and means that those who earn more than 250,000 euros in 2025, or 500,000 for a couple, will be taxed at at least 20%. This is a minimum tax rate, it is not in addition to their existing taxes but it will affect some people who have reduced their income taxes via various reliefs and deductions. This measure will only apply for 2025.
- Strengthened vehicle taxes for combustion engine vehicles. This will be introduced from March 2025 and will impact vehicles that produce at least 113 grammes of carbon dioxide emissions per kilometer, compared to the previous limit of 118 grammes.
- Sales tax (TVA) increased to 20% for the supply and installation of gas boilers, compared to 5.5% previously.
- Taxes on plane tickets have been increased from 2.63 euros to 7.30 for economy class tickets to France or Europe.
- Property purchase taxes increased by 0.5% with an exemption for first-time buyers. Check out our French Mortgage FAQ here.
- Interest-free loans extended to new-build properties throughout France rather than being available only for purchases in areas with property shortages. Interest-free loans are also available for the energy efficiency renovations of existing properties.
- Sick pay reduced slightly for French public sector workers with the status of “fonctionnaire”.
- A temporary tax has been introduced for big businesses for 2025. This will affect businesses who have a turnover of at least 1 billion euros.
- A tax on very large companies who use their funds to buyback their shares has been introduced. Again, this will only affect businesses with a turnover of at least 1 billion euros.
- The financial transactions tax has been increased from 0.3% to 0.4%
- Increased powers for French regions to tax businesses, called the “versement mobilité”
- Reform of the pricing of electricity produced from nuclear power has been maintained, which some say could increase energy prices.
- Cuts in several French government departments. Some of the main reductions include the following measures:
- 1 billion euros of cuts to the higher education research budget
- 1.2 billion euros of cuts to the international aid budget
- 150 million euros of cuts to the culture budget
- 80 million euros of cuts to the public radio and television budget
- 225 million of cuts to the national education budget
- 89 million euros of cuts to youth programs, including to national service
- Funding increases in the following areas:
- 26 million euros increase to the home office (Le ministère de l’Intérieur)
- 10.5 million euro increase to the justice department budget
In total the government is looking to make 50 billion euros of economies, made up of 20 billion in tax increases and 30 billion in spending cuts, but this isn’t 50 billion euros of economies in today’s budget, it just means that the they will save 50 billion compared to what they would have spent if they didn’t change anything. The plan is to limit the public deficit to 5.4% of GDP. The previous budget, which led to the resignation of the former Prime Minister, Michel Barnier, aimed to limit the deficit to 5% of GDP. The budget deficit before these measures was about 6.1% of GDP. You can read more about the French budget in French here and here.
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The views expressed in this article are not to be construed as personal advice. Therefore, you should contact a qualified, and ideally, regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. Consequently, if you do not, then you are acting under your own authority and deemed “execution only”. Additionally, the author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Importantly, this article is dated and is based on legislation as of the date. It should be noted that legislation changes, but articles are rarely updated. Sometimes a new article is written; so, please check for later articles. Additionally, check for changes in legislation on official government websites. Finally, this article should not be relied on in isolation.
