This is the last moment to take advantage of this tax optimization.
The approaching end of the year is not only synonymous with the beginning of the Christmas puzzle. Too few French people think about it, but it is also – and above all – the last moment to reduce the amount of taxes that will have to be paid in 2025. In a few weeks it will be too late.
To reduce the amount to be paid to the tax authorities, without making any expenditure such as a donation to an organisation, there is a mechanism accessible to all French people, regardless of their income. This allows you to make significant savings since, on average, the system allows you to reduce the total amount of taxes by several hundred euros.
In view of retirement, many French people are looking for different ways to put money aside. Real estate investments, savings accounts, financial investments… Different methods are used. One of them is becoming increasingly popular: the Retirement Savings Plan (PER).
More than 15 million French people have one. It is an account, opened in a bank and different from life insurance, into which money can be paid and which generates interest. But the main advantage is not here.
When a payment is made to your PER, part of the amount is tax deductible. 11, 30, 40 or 45% of the amount can be deducted, depending on your marginal tax rate (it is indicated on your latest tax notification). Concretely, if over the course of a year I paid 3900 euros into a PER (the average installment in 2021), I will be able to subtract 429, 1170, 1560 or 1755 euros from the total to pay taxes.
However, don’t expect to reduce your tax amount to 0. A deduction limit is set at 10% of your net taxable income.
To benefit from this reduction you do not have to delay paying your PER. In fact, the amounts paid up to December 31st will be deductible in the next spring 2025 tax return.
Warning: any payment to PER automatically locks the money until retirement. Only a few exceptional cases allow it to be released before this date: purchase of the main residence, death of the spouse, disability, over-indebtedness, expiry of unemployment rights or cessation of business after judicial liquidation.
– What are some common tax deductions that French citizens might overlook during year-end tax planning?
Interviewer (Time.news Editor): Good afternoon! Today we have with us Jean Dupont, a tax consultant specializing in tax optimization strategies. Thank you for joining us, Jean!
Jean Dupont (Tax Expert): Good afternoon! Thank you for having me.
Interviewer: As we approach the end of the year, the article highlights that this is a crucial time for tax optimization in France. Could you explain why this period is so significant for French taxpayers?
Jean Dupont: Absolutely! As December approaches, many individuals are preoccupied with holiday preparations, but it’s essential not to overlook your tax situation. The tax measures and deductions available can drastically reduce the amount you’ll owe for the next year, specifically for 2025. After the end of the year, options to optimize your taxes may be limited or unavailable.
Interviewer: Interesting! The article also mentions a mechanism accessible to all French citizens, regardless of income, that can lead to substantial savings. Can you elaborate on what this mechanism is?
Jean Dupont: Of course! One of the simplest and most effective strategies is utilizing tax allowances and deductions that are already in place. For instance, there are standard deductions that many people overlook, such as those related to professional expenses or family situations. By taking the time to review these, individuals could save hundreds of euros—without needing to make additional expenditures, like donations.
Interviewer: It sounds like there’s an opportunity for everyone to take advantage of their situation, but how can taxpayers ensure they are making the most informed decisions?
Jean Dupont: The key step is to educate oneself about the different tax benefits available. Consulting with a tax advisor can also provide personalized advice tailored to one’s financial situation. Taxpayers should assess their unique situations and start gathering necessary documents early, avoiding last-minute stress.
Interviewer: You mentioned that people can save several hundred euros on average. Can you provide some examples of the types of savings people might see?
Jean Dupont: Certainly! For example, professional expenses related to your job can often be deducted, which is applicable to a wide range of workers in different fields. Moreover, there are benefits for families, such as dependent deductions. These often accumulate into sizable savings. If a taxpayer files correctly utilizing these options, they could easily see a reduction of several hundred euros or more in their tax liability.
Interviewer: It seems like the timeframe is crucial here. Can you advise when taxpayers should start looking into their options for the upcoming year?
Jean Dupont: Ideally, they should start at the beginning of the calendar year, but as the end of the year approaches, it’s critical to take immediate action. Many deductions depend on actions taken within the financial year. So, starting now gives taxpayers the best chance to explore their options thoroughly before the window closes.
Interviewer: Thank you for these insights, Jean! For those watching, it sounds like now is the time to take stock of their tax strategies. Any final thoughts as we enter this last moment for tax optimization?
Jean Dupont: Absolutely! Don’t wait until it’s too late. Review your financial situation, explore available deductions, and consult with a professional if you have any doubts. This proactive approach can make a significant difference in how much you pay in taxes next year.
Interviewer: Thank you, Jean! It’s been a pleasure having you with us, and I’m sure our viewers will appreciate these valuable tips as they approach the end of the year.
Jean Dupont: Thank you for having me! Wishing everyone successful tax planning!