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2024 Financial Landscape in France: Taxation, Banking & Savings

In 2024, France will experience several financial and regulatory changes, impacting banking, property, and taxation. This overview delves into the upcoming shifts.

The iconic Livret A bank account maintains its 3% interest rate for the entire year. More broadly, banking rules, property reporting requirements, and tax brackets are set to evolve.

French Pensions and Benefits Rise

Significant increases in French pensions and benefits are on the horizon. Basic pensions and the Aspa supplementary pension will see a 5.2% rise starting in January, though the enhanced rate will first be paid in February.

Various Caf benefits, including RSA income support, prime d’activité, AAH disability aid, and family allowances, are slated for a 4.6% increase in April.

RSA: New Obligations

For RSA recipients, 2024 brings new responsibilities. Individuals relying on this low-income support must now dedicate at least 15 hours weekly to employment-enhancing activities, such as job training and application assistance. Additionally, they must enrol in France Travail, the successor to Pôle Emploi. Exceptions exist for certain groups, like single parents without childcare and individuals with disabilities or health issues.

Jobseekers will find themselves under the umbrella of France Travail, a rebranded and revamped version of the Pôle Emploi service.

Property Ownership Declaration

In 2024, the Biens immobiliers property declaration remains a crucial requirement for property owners in France, especially if significant changes have occurred since the last declaration. This includes purchasing property, altering its use, or acquiring new tenants.

The initial plan to declare these changes by June 30, as set out last year, is likely still in effect, despite a previous delay due to technical issues. Property sellers, however, are exempt from this requirement.

The most efficient way to comply is through the impots.gouv.fr website, using the dedicated Biens immobiliers section. Usually, your property details will be pre-filled, requiring just a review and confirmation.

A crucial aspect in 2024 is the property’s status as of January 1, 2024. This date determines liability for local property taxes.

For those finding the process challenging, assistance is available through various channels: the local tax office, the tax office for non-residents (for those outside France), or France Services branches. Additionally, the 0809 401 401 helpline can be contacted in France for guidance.

The tax office previously showed leniency regarding the €150 fine for non-compliance, but they may adopt a stricter stance this year. For further assistance, non-residents can seek help with account setup and reference numerous 2023 articles on the website for more information.

Inheritance Challenge

A group of individuals, including a reader of Connexion, have contested the French 2021 legislation concerning mandatory inheritance. This law particularly impacts British citizens residing in France who wish to bequeath their estate according to UK or US inheritance laws. An announcement from the European Commission regarding this matter is expected soon.

Taxe D’habitation and Taxe Foncière

Starting in 2023, the taxe d’habitation now exclusively applies to second homes. Property owners in popular or tourist-heavy areas, which experience housing strain, should be prepared for potential tax increases in 2024. This is due to the authorization granted to thousands of additional communes to impose a surcharge on this tax starting this year. To clarify if this increase affects your property, it’s advisable to consult your local mairie.

Regarding the taxe foncière, it’s anticipated to see a minimum rise of 3.9% this year, aligning with inflation rates. Local councils can adjust this tax further, potentially increasing or, in rare instances, reducing the total amount due.

UK State Pensions

There are uncertainties surrounding the future of the voluntary class 2 National Insurance Contributions (NICs) system. Individuals in France widely use this scheme to enhance their eligibility for a UK state pension. While announcements regarding its status are anticipated in 2024, the system is expected to remain operational for the UK financial year 2024-2025.

Additionally, there have been changes in UK pension regulations, notably removing the Lifetime Allowance. However, the introduction of the Lump Sum Allowance (LSA) and Lump Sum and Death Benefit Allowance (LSDBA) is set for April 6. These provisions could undergo further alterations, especially with the Labour Party, currently the opposition, vowing to reinstate the Lifetime Allowance if they assume power. Considering a General Election is due in the UK within the next 12 months, these pension policies could see more changes.

Interest-Free Mortgage Loans Continue

The prêt à taux zéro, an interest-free mortgage loan program in France, has received an extension. Initially set to conclude by 2024, it will now continue until 2027. In a significant enhancement, the loan amount has been increased from the previous cap of €80,000 to €100,000. Additionally, the program will be accessible to a broader range of individuals, as the income thresholds for eligibility have been raised. The expansion also includes a more comprehensive geographical coverage, allowing more areas of the country to benefit from this scheme.

Livret A

The widely favoured tax-free savings account, Livret A, will maintain its interest rate at 3% throughout the current year. This account, known for its government-regulated interest rates, is available at most banking institutions. The stability in its interest rate offers a consistent saving opportunity for account holders.

HSBC Customers Move to New Bank

Customers holding high street bank accounts with HSBC are currently undergoing a transition to a new bank, Crédit Commercial de France. This change follows the acquisition of HSBC’s European retail banking operations by Crédit Commercial de France. The move signifies a notable shift for these account holders as they adapt to a new banking service provider.

New Savings Account

This year sees the introduction of a novel regulated savings scheme, the plan d’épargne avenir climat, explicitly designed for individuals under 21. This ‘climate future savings plan’ will channel investments into sectors actively engaged in ecological transition.

Mirroring the popular Livret A, this new account will have a similar maximum deposit limit of €22,950 and will also be exempt from taxes and social charges. Unlike the Livret A, however, it will not feature a government-fixed interest rate. Instead, the returns will vary based on the performance of the investments.

The economy minister has expressed optimism about this new savings option, suggesting it could be “doubtless more attractive” than the Livret A, which currently offers a 3% interest rate.

Changes for UK Pension Lump Sums

Upcoming changes to UK pension lump sum allowances are anticipated, with announcements expected later in the year.

In addition, the UK state pension is set to see an increase from the current rate of £203.85 to £221.17 per week starting in April. This adjustment represents a significant update for those reliant on state pension benefits.

Capital Gains Tax Proposal

French MP Daniel Labaronne shared his plans to revisit the proposal to temporarily eliminate the capital gains tax on second homes, potentially for a year or even longer. This initiative aims to motivate owners of unused properties to sell them, thereby increasing housing availability for families facing challenges in the real estate market.

Labaronne views the housing bill scheduled for 2024 as an opportune moment to reintroduce this concept. The proposal initially presented as an amendment to the 2024 finance bill, was previously rejected but is set to be reconsidered in the upcoming legislative session.

No Changes for Furnished Rental Properties

A recent proposal aiming to alter the taxation rules for short-term furnished holiday rentals was turned down. The initial suggestion by ministers was to implement stricter tax measures in 2024. These included the removal of a 71% micro-BIC expenses allowance, which some holiday lets currently enjoy, in favour of a standard 50% allowance applicable to long-term furnished rentals. Additionally, there was a proposition to reduce the high micro regime ceiling from €176,200 to €72,600.

Despite its inclusion in the 2024 finances bill, the government declared that these changes will not be enacted. Instead, a cross-party committee is slated to examine potential modifications in more detail early next year, postponing any immediate alterations to the taxation of furnished holiday lets.

Income Tax Bands

The income tax bands set for the 2023 income, which will be declared in May-June 2024, are as follows:

  • 0% for income up to €11,294
  • 11% for income exceeding €11,294 and up to €28,797
  • 30% for income exceeding €28,797 and up to €82,341
  • 41% for income exceeding €82,341 and up to €177,106
  • 45% for income above €177,106

These tax brackets will apply to the income earned in 2023 and declared in the subsequent year.

If you need any help understanding how these changes will affect you, or with any of your financial management and planning this year, get in touch. One of our experts will be happy to give you bespoke advice tailored to your unique circumstances and needs.

This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

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