French Finance bill 2025: what to expect?

2^nd october 2024

The early French parliamentary elections, which took place last June, have made the timing and content of the upcoming finance bill for 2025 unclear. The new Government has now been appointed and must contend with these challenges while also addressing the excessive deficit procedure that France is under at the EU level.

The Finance Bill must be submitted to the National Assembly on the 1^st Tuesday of October, however it has been announced that it will be submitted the week starting on October 9, meaning that it will be one week late at best. The Parliament will then have 70 days to examine and adopt the bill, with the ordinary parliamentary session closing on December 21^st.

During his General Policy Statement on October 1^st, the French Prime Minister Michel Barnier announced his intention to improve the efficiency of public spending by eliminating redundancies and ineffective tax breaks and cracking down on tax fraud and abuses – quite standard elements of every finance law. Also, we understand that the idea of transforming the contribution on inframarginal rent is still under consideration. Additionally, he wants to call for an exceptional ‘targeted and shared’ effort between the largest companies and the wealthiest individuals to ensure greater tax fairness in reducing the deficit. A temporary surtax on corporate income tax applicable to the largest companies with significant profits could meet such an objective. However, the technicalities of these measures have not yet been clarified (which companies, which rate, which financial years).

Finally, despite some rumors circulating in the press over the past few weeks about the content of the 2025 Finance Bill, Michel Barnier did not confirm several of these elements during his speech. These include freezing the income tax brackets, adjusting the Dutreil Pact tax benefits, and possibly restricting the scope of the research tax credit. On VAT, the new Government could choose to remove the reduced rates in the hotel industry and bottled water sectors and to increase the reduced rate from 10% to 12.5%.

The newly appointed Ministers of Finance and Budget have also announced that a rectificative finance bill may be envisaged later.