May 24, 2017
Emmanuel Macron has been the new president of the French Republic since Sunday 7 May and changes to taxation of savings and assets are expected.
The new president’s intention is to direct savings towards financing the economy by offering investors less burdensome, neutral taxation, irrespective of the way in which gains are held and realised.
The changes are as follows:
- Income from assets, irrespective of their characteristics (interest, dividends and capital gains) would be taxed at a flat rate of 30%, of which 15.5% are social security contributions. In other words income from assets would henceforth be taxed at a rate of 14.5%, excluding social security levies.
The beneficiaries would nevertheless keep the option of applying the progressive income tax scale to which the 15.5% social security levies would be added.
The beneficiaries will thus be entitled to decide between a flat-rate levy, excluding social security levies, and the marginal income tax rate.
As for dividends, the flat levy would exclude the 40% discount, maintained however in the event of opting for the progressive income tax scale.
- Taxation on redemption of life insurance policies would be modified only for policies worth more than €150,000 which have been subject to additional payments after the entering into force of the 30% flat levy. Future redemptions of these policies would be subject to the 30% flat levy applicable to income from assets.
For the other policies the current tax regime is maintained.
- No change is forecast to the favourable inheritance regime applicable to the redemption of life insurance policies following the death of the insured person.
- With regard to wealth tax (ISF), the presidential programme intends to end Wealth Tax by replacing it with a tax on property wealth which would preserve the same application threshold and scale as the current Wealth Tax regime.
Liquid wealth, including life insurance, would thus escape the capital tax.
The future of these tax provisions contained in the presidential programme will obviously depend on the composition of the parliament following the legislative elections which will be held on 11 and 18 June 2017. In the absence of a clear majority in the Parliament, the presidential program may still be amended as compromises are made.
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