2025 Draft Finance Act

Following the adoption of the 2025 Draft Finance Act (’ PLF 2025 ’) using the ’ 49.3 procedure ’, a vote of no confidence was tabled on Monday. This vote of no confidence was rejected today by the deputies in a vote at the National Assembly.

This was the last obstacle to the implementation of the PLF 2025, originally drawn up by the Attal government, amended by the Barnier government, and corrected again by the Bayrou government.

After many months of confusing discussions on the text, we think it would be useful to list the main tax measures in the final version of the PLF 2025:

1. For individuals

• The text provides to index the 2024 income tax scale to inflation. This change would therefore apply retroactively to income of the 2024 tax year. 
• The surtax on high incomes remains in this version of the PLF 2025. As a reminder, it is intended to ensure that high income taxpayers pay a minimum tax of 20% on their income in 2025. This applies to single taxpayers whose income exceeds €250,000, and married taxpayers whose common income exceeds €500,000.
• Changes are also planned to the tax regime for non-professional furnished lettings. In the event of the property being sold, the text provides for the deducted depreciation to be added back into the calculation of the capital gain, thereby increasing the taxable capital gain.
• It should be noted that the Senate’s proposal to replace the tax on real estate wealth with a tax on ‘unproductive’ wealth with a broader tax base was ultimately rejected;
• Consideration had also been given to increasing the rate of the lump sum withholding tax on capital income (’ PFU ’) to 33%, but this amendment was also ultimately rejected. The rate of the PFU remains at 30%.
  
  2. For companies

• An exceptional contribution on the profits of large companies (CEBEGE) has been created and would apply to companies with a turnover in excess of €1 billion. It is planned to apply such new tax only to the 2025 and 2026 tax years.
  The rate is set at 20.6% in 2025 and 10.3% in 2026 for companies with sales of between €1 billion and €3 billion.
  For companies with sales in excess of €3 billion, the rate is 41.2% in 2025 and 20.6% in 2026.
  Turnover is defined as the turnover generated in France by the taxpayer during the tax year or period and, for the parent company of a group, as the sum of the turnover of each of the companies in the group.
• The PLF 2025 provides for the introduction of a tax on capital reductions carried out by large companies headquartered in France by cancelling their own repurchased shares. Large companies are defined as those with sales in their last financial year
  of more than €1 billion excluding tax.
  The rate would be set at 8%. The new tax would apply to capital reduction transactions carried out between 1^st March 2024 and 28 February 2025.

The text also sets the rate of the tax on financial transactions at 0.4% (currently 0.3%). This rate change will apply from the first day of the second month following the enactment of the Finance Act 2025.