During the heated debates that began on Monday, MPs continued to examine amendments to the 2025 draft budget, which was extended until Saturday. In total, more than 3,650 amendments were tabled by deputies on the “revenue” part of this finance bill, of which around 45% were from the “common base” LR-macronie.
Some changes to the text have already been voted on by deputies, but to come into force they will have to survive the parliamentary shuttle or the possible recourse to 49.3 by the government. Le Parisien takes stock.
The tax contribution of high-income families has been expanded and made sustainable
On Tuesday evening, the National Assembly adopted the new tax contribution for high-income families proposed by the government “exceptionally” in its draft budget, but in a modified version.
Initially this tax provided for the establishment of a minimum rate of 20% for families declaring more than 250,000 euros of annual income for a single person (500,000 euros for a couple). The deputies modified the initial text by voting for the expansion of the tax base and the removal of the time limit, thanks to the amendments presented by the left and the MoDem, despite being a member of the government coalition.
A new tax on the wealth of billionaires
MPs adopted on Friday an amendment proposed by the LFI, which creates a new tax on the wealth of billionaires, against the government’s advice. The latter would tax 2% of the top fraction of a family’s wealth exceeding one billion euros.
“It will drain the assets of affected fellow citizens to the tune of 13 billion euros,” criticized Budget Minister Laurent Saint-Martin.
The “exit tax” was reinstated in its 2011 version
A large majority of deputies, bringing together the left, RN and LR, decided to re-establish a first version of the “exit tax”, created in 2011 under Nicolas Sarkozy. The system allows the unrealized capital gains of entrepreneurs who decide to transfer their tax domicile abroad to be taxed, unless they keep their shares for at least 15 years after their departure.
In 2018, Emmanuel Macron shortened the maturity to two years, citing France’s attractiveness to investors. The deputies thus reduced this term to 15 years, without the votes of the elected Ensemble Pour la République (EPR), Horizons and MoDem.
The conditions for exemption from capital gains tax on the sale of the main residence are tightened
An amendment that tightens the conditions for exemption from capital gains tax payable by the owner who resells his main residence was adopted with the favorable votes of 85 deputies, mainly from the left, but also of some elected representatives Liot, Horizons and Modem. This text specifies that it will now be necessary to have been domiciled in the property for five years to be exempt from this tax, compared to the previous six months.
Please note that profits from the sale of real estate are subject to income tax at a rate of 19% and social security contributions on property income at a rate of 17.2%. The idea, with this new five-year deadline, is to discourage “speculative leaps”, a process that consists of purchasing and then reselling properties intended for main residence in a short period of time.
A reduction in taxation for rentals of unfurnished properties
On Wednesday, deputies adopted another amendment reforming housing taxation. It allows owners who rent an unfurnished property to benefit from a reduced rate from the micro-real estate regime of 50%, compared to the current 30% up to 15,000 euros, thus aligning with the rates for furnished rentals. Objective defended by the elected representatives who carry out this measure: to encourage long-term rentals.
The restoration of the “half tax rate for widows and widowers”
The National Assembly has reinstated the “half tax rate for widows and widowers,” abolished in 2014 under President François Hollande. This amendment, proposed by Daniel Grenon, excluded from the RN for racist accusations, was adopted thanks to 96 votes among the ranks of his former party, belonging to the LR, Eric Ciotti’s group (UDR), but also to some votes from the MoDem and the Horizons.
All widows and widowers who have raised at least one child should therefore pay less tax. If the budget were adopted in this version, two million taxpayers could be affected. A measure costing around a billion euros.
The tax law on food changes
The deputies also adopted a socialist amendment which allows the maintenance received by the parent with custody of the child to be exempt from tax and to eliminate the tax advantage enjoyed by those who pay it. “Currently, the spouse who pays alimony can deduct it from his income, thus reducing the tax, while the one who receives it must add it to his taxable income”, underlines the motivation of the text.
The left voted in favour, the government coalition against and the RN was divided between abstention and a minority against. The Budget Minister, Laurent Saint-Martin, declared himself against this amendment, underlining that those who have custody of the child already benefit from the family quotient.
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Interview between Time.news Editor and Tax Policy Expert
Editor: Welcome to Time.news! We’re here today with Dr. Marie Lefevre, a renowned expert in tax policy. Dr. Lefevre, thank you for joining us.
Dr. Lefevre: Thank you for having me! It’s a pleasure to discuss these important changes.
Editor: The French Parliament is currently in heated debates over the 2025 draft budget, with over 3,650 amendments on the table. Can you give us some context on what that means for taxpayers?
Dr. Lefevre: Absolutely. With such a high number of amendments, it reflects the diverse opinions and priorities within Parliament. The “revenue” part of the finance bill is particularly contentious, as many MPs want to ensure that taxation is fair while addressing various economic challenges. The changes being proposed could have significant implications for different income brackets.
Editor: One notable change that caught headlines is the expansion of the tax contribution for high-income families. What are your thoughts on this new tax structure?
Dr. Lefevre: The modification of this tax is crucial. Initially set at a 20% minimum for individuals earning over 250,000 euros and couples over 500,000 euros, the changes help ensure that it remains sustainable and fair. The removal of the time limit also indicates a push towards long-term policy thinking.
Editor: And we also saw the introduction of a new tax on billionaires’ wealth. The government criticized it, saying it could drain 13 billion euros from affected citizens. How do you view this perspective?
Dr. Lefevre: This is certainly a polarizing issue. While proponents of the tax argue it’s a necessary step towards wealth equity, critics, including Budget Minister Laurent Saint-Martin, fear it may discourage investment among the ultrarich. It’s about striking a balance between taxation and fostering a competitive economic environment.
Editor: Speaking of competitive environments, the “exit tax” was reinstated in the original 2011 version. What implications do you foresee from this reinstatement?
Dr. Lefevre: Reinstating the “exit tax” pertains to preventing capital flight, especially among high-net-worth individuals. By taxing unrealized gains for those who may relocate their tax domicile, it acts as a deterrent. However, the government must be careful to ensure it doesn’t inadvertently make France less attractive to existing and potential investors.
Editor: There have also been amendments tightening exemptions from capital gains tax on the sale of a main residence. What impact could this have on homeowners?
Dr. Lefevre: The tightening of capital gains tax exemptions means homeowners need to stay in their properties longer to qualify for tax relief, which aims to curb speculative trading. The five-year requirement encourages stable homeownership over quick turnovers, potentially leading to a more stable housing market.
Editor: And on a lighter note, we’re seeing an amendment reducing taxes for unfurnished rental properties, aligning their rates with furnished rentals. How important is this change for rental markets?
Dr. Lefevre: This is a positive step towards promoting long-term renting. By incentivizing landlords to offer unfurnished properties, it could help meet the demand for affordable long-term housing, easing pressures in the rental market.
Editor: the restoration of the “half tax rate for widows and widowers” has sparked significant discussion. Why was this measure important to reinstate?
Dr. Lefevre: This restoration is crucial for supporting vulnerable populations. Providing a reduced tax burden for widows and widowers acknowledges their unique financial challenges and can help stabilize their economic situations during what is often a tumultuous life transition.
Editor: Thank you, Dr. Lefevre, for your insights today. As we see these budget discussions unfold, it’s clear that tax policy will remain a pivotal focus for the government and the public alike.
Dr. Lefevre: Thank you for having me! These discussions are vital for shaping a fair and equitable tax system, and I look forward to seeing how the debates progress.
Editor: Stay tuned, everyone, as we continue to cover these developments closely. Thank you for joining us!