France and 2010 Budget

On 30 September 2009, France’s Minister of Finance presented the 2010 budget (projet de loi de finance pour 2010) to Parliament following its approval the same day by the Council of Ministers. The draft social security finance law (projet de loi de financement de la sécurité sociale 2010) was also recently announced.

Tax Rates/Brackets

for those residences that do not meet the BBC standards. The rate will be restricted to 30 percent in the first year, and then 15 percent for the following four years for dwellings built or acquired in 2010; then 25 percent in the first year and 10 percent for the following four years for dwellings built or acquired in 2011; and 15 percent in the first year and 5 percent for the following four years for dwellings built or acquired in 2012. For homes built in 2009, the current provisions will not be modified.

From 2013, when the mandatory standard will be the BBC, taxpayers may claim the 40-percent reduction over seven years for homes that meet the higher green standards (the so-called positive energy buildings or “BPOS”).

“Scellier” Investments

The tax reduction has been available to taxpayers since the beginning of the year for people who buy or build a new home intended to be rented as a principal residence (the so-called "Scellier" provision). Under proposed rules, the tax reduction will be reserved for green homes, i.e., those that meet the BBC environmental standards – this standard will become mandatory for all new construction starting in 2013. Currently, the tax reduction is set at 25 percent for investments made in 2009 and 2010, and 20 percent for those made in 2011 and 2012, as long as the eligible housing meets the energy standards required by legislation in force (standard RT 2005).

However, the proposed new rules will make this tax reduction available only to those dwellings that are built according to the BBC standards. For all others, the tax reduction will be reduced from 25 percent to 20 percent for dwellings built or acquired in 2010 and from 20 percent to 15 percent for homes purchased or built after 2011. For homes purchased or built in 2009, the rate of tax reduction of 25 percent remains in force.

for those residences that do not meet the BBC standards. The rate will be restricted to 30 percent in the first year, and then 15 percent for the following four years for dwellings built or acquired in 2010; then 25 percent in the first year and 10 percent for the following four years for dwellings built or acquired in 2011; and 15 percent in the first year and 5 percent for the following four years for dwellings built or acquired in 2012. For homes built in 2009, the current provisions will not be modified.

From 2013, when the mandatory standard will be the BBC, taxpayers may claim the 40-percent reduction over seven years for homes that meet the higher green standards (the so-called positive energy buildings or “BPOS”).

“Scellier” Investments

The tax reduction has been available to taxpayers since the beginning of the year for people who buy or build a new home intended to be rented as a principal residence (the so-called "Scellier" provision). Under proposed rules, the tax reduction will be reserved for green homes, i.e., those that meet the BBC environmental standards – this standard will become mandatory for all new construction starting in 2013. Currently, the tax reduction is set at 25 percent for investments made in 2009 and 2010, and 20 percent for those made in 2011 and 2012, as long as the eligible housing meets the energy standards required by legislation in force (standard RT 2005).

However, the proposed new rules will make this tax reduction available only to those dwellings that are built according to the BBC standards. For all others, the tax reduction will be reduced from 25 percent to 20 percent for dwellings built or acquired in 2010 and from 20 percent to 15 percent for homes purchased or built after 2011. For homes purchased or built in 2009, the rate of tax reduction of 25 percent remains in force.

d’entreprise) deposited with the insurer or 12 percent on amounts that are set aside within the company (when they are not transferred to an insurer) and 8 percent on pensions paid to retirees for the portion exceeding one third of the annual ceiling for Social Security. All these aforementioned amounts will be doubled under new rules proposed in the PLFSS. The “chapeau” pension plans, therefore, could become more expensive for companies, though not for the employee-beneficiaries. For the employees, the tax remains unchanged; the contributions paid by the company are not subject to income tax and the annuity paid to term remains, as before, subject to income tax under the category of “pensions” and, as such, may qualify for the tax abatement of 10 percent.

Source: KPMG