2018 money changes

Here are some key changes to expect:

• The CSG social charge is rising by 1.7%, taking overall social charges on investment and rental income from 15.5% to 17.2% and on pensions to 9.1% for those who pay at the full rate. The rise should be offset for many people by other changes.

• A ‘flat tax’ at 30%, officially called the prélèvement forfaitaire unique (PFU) will apply to investment income, combining income tax and social charges, and for many people it will mean a tax cut. It will be levied on interest and dividends from savings accounts, shares etc, but not on income from property. People on lower incomes (ie. who do not pay income tax or who pay in the lowest band) will be able to remain in the current system if it is more advantageous.

Concerning assurance vie withdrawals after eight years, which already benefit from low tax, the flat tax will only apply to those with €150,000 or more in an AV (the amount is double for a couple) and only to sums paid in after September 27, 2017.

• Impôt de Solidarité sur la Fortune (ISF) wealth tax is being abolished with immediate effect and replaced by a new version based on property wealth. The new Impôt sur la Fortune Immobilière (IFI) aims to tax assets that are seen as relatively unproductive for the economy – especially luxurious main and second homes.

Immobilière means relating to real estate, literally ‘immoveable’ property.

Apart from this characteristics of the tax remain similar including a 30% reduction on a main home. Properties rented out professionally (more than a total €23,000 in income and more than 50% of someone’s income) are exempt.

An amendment was adopted adding in certain ‘luxurious’ items like yachts, jets and powerful cars, despite the fact they are clearly ‘moveable’ forms of property…

• The government promises that 80% of the population (excluding higher earners) will benefit from the first phase of planned taxe d’habitation reductions as of this year (see page four).

• Ceilings for payments with contactless cards have risen to €30 for new bank cards.

• The percentage rates of the income tax bands remain the same as in 2017 but income levels have risen by 1%, giving the following:

Up to 9,807: 0%,

then to 27,086: 14%

then to 72,617: 30%,

then to 153,783: 41%, and then 45%.

• Home owners will now finally be able to change their mortgage insurance every year, when it comes up for its annual renewal. This new flexibility comes on top of the right to change it in the first year of your mortgage, brought in by the 2014 Loi Hamon.