The government intends to impose higher taxes on the wealthiest taxpayers in order to reduce the public deficit. An increase in the flat tax and a freeze on the upper brackets of the income tax scale are reportedly under consideration. But would these measures apply this year?
© NICOLAS SANDANASSAMY
– The tax increase could hurt the wealthiest French people.
Nothing is official yet, but a tax increase for the richest is no longer taboo. On Sunday, September 22, on France 2, Prime Minister Michel Barnier assured that he did not intend “not to further increase taxes on all French people” before specifying “reflect on this effort of solidarity to which the richest must take their share». And the thinking of the Matignon tenant seems to be well advanced since a partial freeze on the income tax brackets and an increase in the flat tax – a flat tax of 30% which affects many investments – are already being studied and could be included in the draft finance bill for 2025, presented to Parliament at the beginning of October.
Measures which would not be painless for the households concerned, a freeze on the marginal tax brackets (MTB) of 30%, 41% and 45% could result in a tax increase of several hundred euros. Same consequence in the event of an increase in the rate of flat taxthe flat-rate deduction (PFU) of 30% which, if it rose to 33%, would result in a loss of 30 euros for 1,000 euros of interest on a savings account, for example. Hence a very legitimate question for wealthy taxpayers. What income would be affected by these new measures? Those of 2024 or 2025?
Retroactivity unlikely in the event of an increase in the flat tax
As this is a freeze on the higher brackets of the tax scale, there is no suspense, explains Paul Féral-Schuhl, tax lawyer associated with the firm Arfé Avocats: “What will be voted on is the scale applied in 2025 to income from 2024, salaries, retirement pensions, property income and furnished rental income or financial income for which taxpayers opt for tax rather than the flat tax.” It is therefore from the income received this year, in 2024, that the scale voted on this fall will be applied by the tax authorities at the end of the 2025 income declaration, next spring.
Income tax return: here is the tax scale in 2024
On the other hand, the possible increase in the flat tax rate would only affect income from financial investments (dividends, interest on savings accounts, term accounts, bonds, life insurance, etc.) received in 2025. However, the government could try, during the study of the 2025 Budget, to have a rate raised to 33% voted on, which would also apply to income from 2024. A “small retroactivity” which would nevertheless risk running into the bulwark of the Constitutional Council, warns Lukasz Stankiewicz, director of the Center for Financial and Fiscal Studies and Research at Jean Moulin Lyon 3 University: “There would need to be a compelling reason of general interest to allow this retroactivity.”
Which seems far from being won, as shown by a decision rendered on December 5, 2014 following a priority question of constitutionality concerning the creation of an exceptional contribution on high incomes within the framework of the Budget for 2012 voted at the end of 2011. The Sages had then affirmed that “the legislator’s desire to increase tax revenues does not constitute a sufficient reason of general interest” to exclude retroactivity of this tax on income from 2011. In view of this case law, retroactivity of the possible increase in the flat tax on income from 2024 is therefore highly improbable.
Flat tax: how much would a reform of this tax bring to the State?
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