2018 French President Emmanuel Act – Individual Tax
first 2018 Finance Act set up under the President Macron
Government has been approved by the Constitutional Council
on December 28, 2017.
It will substantially impact both the 2017/2018 income tax
and the 2018 wealth tax, as follows:
1. ABOLISHMENT of the French wealth tax on all financial
On January 1, 2018, all French and foreign financial assets
are fully exempt of French wealth tax.
This concerns the bank accounts, portfolio investments,
shares, life insurance policies, ..., owned on January 1,
2018. Therefore, NO 2018 ISF will be due on these assets.
2. NEW WEALTH TAX “IFI” assessed on French and foreign
The existing wealth tax (ISF) will be replaced by a new
wealth tax called IFI or « Impôt sur la Fortune Immobilière»
which will concern the real estate not used by the owner for
The new IFI will concern both tax residents as well as
non-residents owning real estate in France.
The current threshold of € 1,300,000 will stay in place and
the 2018 ISF tax brackets and rates remain unchanged at
progressive tax rates from 0.50% to 1.50%.
For French tax residents, the French principal residence
will still benefit from the 30% rebate.
New - The IFI will also concern
the real assets owned via investment funds.
Caution – The deductible debts
will be drastically reduced.
The interest only mortgages or « emprunt in fine » will not
be anymore fully tax deductible. Only the part of the
mortgage recalculated using the method of the amortized loan
or « prêt amortissable » will be tax deductible.
This also concerns the existing mortgages subscribed by the
Only the French « taxe foncière » will be deductible and not
anymore the « taxe d’habitation » neither the French income
tax allocated to any rental income deriving from the real
New – For real estate with
value over 5M Euros, the total debts exceeding 60% will only
be deductible for 50%.
The donations up to 50,000 Euros will be authorized as a tax
credit. Please note that the donations can be made until the
due date of the tax return which should be next May (2018).
However, the tax credit concerning the investments in
non-quoted companies and new technology investments products
will be abolished.
For new arrivals in France, the five-year wealth tax holiday
providing a full exemption of French wealth tax granted on
the real assets located outside of France during the first
five years of residence in France will still be applicable.