Both the Finance Bill and Social Security Financing Bill were eventually passed after months of parliamentary deadlock, with the government resorting to constitutional procedures to secure their passage.
The government narrowly avoided a motion of censure, largely due to budgetary concessions made to the Socialist Party, which declined to support the no-confidence vote.
Several key measures contained in the original budget tabled by the government were either dropped or substantially modified. They included a freeze on income tax thresholds, the abolition of the 10% tax allowance for pension income, and a freeze on social security benefits.
The controversial pension reform plan (increasing retirement ages and contribution periods) was suspended until after the 2027 presidential election, effectively delaying it until January 1, 2028.
Plans for broader new tax on ultra-rich individuals (beyond the continued surtax on high earners) tabled by the Socialist Party were abandoned, although a tax on holding companies used to accumulate personal wealth was adopted.
In the end, the budget aims to reduce the public deficit to around 5% of GDP, still well above the EU’s preferred 3% ceiling, but down from an estimated 5.4% in 2025. The initial government goal was to reduce the budget deficit to 4.7% of GDP in 2026. The level of public debt rises to 118% of GDP (up from 116% in 2025).
The main measures likely to be of greatest interest to readers are set out below. Increases to social benefits and changes to departmental spending programmes are not considered.
Income Tax
In principle, income tax brackets typically adjust each year for inflation. This indexation, amounting to 0.9%, was agreed. We reported on the new thresholds at Income Tax in France 2026.
A minimum effective tax on high earners, called the Contribution Différentielle sur les Hauts Revenus (CDHR), has been carried over from 2025. It ensures that taxpayers earning more than €250,000 (single) or €500,000 (couples) pay an effective tax rate of at least 20%.
Gift Declarations
All substantial gifts between individuals (of money, valuables, cars, art, etc.) must now be declared online via the tax authority’s digital portal.
Tax Break for Charitable Giving
The tax reduction for donations to eligible charities has been enhanced. The ceiling for the 75% deduction has been doubled, rising from €1,000 to €2,000 per year.
Social Charges on Capital Income
One of the most significant changes affecting savers and investors is an increase in the social charge ‘CSG’ on capital income, from 9.2% to 10.6%. This raises the overall levy (social charges and income tax combined) on capital income to 31.4%.
Certain investment vehicles — including assurance-vie policies and PEL savings plans — are exempt from this increase. Regulated savings accounts remain fully exempt.
Social charges on pension income remain the same, as we reported in Social Charges on Pension Income 2026.
Holding Companies Non-Operational Assets
A new annual tax has been introduced on certain holding companies, particularly holdings patrimoniales (family or pure investment holdings). The measure targets entities that primarily hold passive or financial assets, such as dividends, cash, investment securities, or real estate not linked to an operating business. The tax is set at 2% on qualifying assets exceeding €5 million.
Minimum Wage
The minimum wage (SMIC) has been increased to reflect the movement in wages. The gross amount is now €1,823, up from €1,801 in 2025. SMIC is the benchmark to determine the minimum income threshold for a long-term visa/residency, although the net figure of around €1,500 is used.
Non-Resident Lettings
For non-residents who rent furnished properties in France, the budget modifies how the key test for professional status is applied. We will cover the issue in more detail in a future newsletter.
Investment in Rental Housing
A new tax incentive has been granted to landlords who invest in the renovation and letting of collective housing.
Long-Term Visas/Residency Permits
The fee for a first application or the renewal of a standard long-term visas/residence permit (visas de long séjour valant titre de séjour) has been increase from €200 to €300, as well as an increase in associated minor taxes. The fee for citizenship has also increased by several hundred euros. Full details of the changes are yet to be published.
Postal Tariff Increases
Postal service costs such as letters and registered mail increase by 7 %. We will report further in due course.
Tax on Small Imported Parcels
A €2 levy on imported parcels from non-EU countries (often cheap online goods) has been introduced.
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