HELPLINE: 
Higher CSG on capital income will push flat tax rates up in 2026, says Daniel Butcher of DTB Wealth Management
France has adopted the Social Security Financing Bill (PLFSS) for 2026, which increases the CSG (Contribution Sociale Généralisée) rate on capital income from 9.2% to 10.6%. This will push social charges higher, so investors will see a rise in the tax burden on their savings and investments.
“This change directly affects income from investments such as dividends, interest and certain capital gains,” said Daniel Butcher, founder of DTB Wealth Management. “When you combine the higher CSG with existing levies, total social contributions on affected capital income rise from 17.2% to around 18.6%.”
When added to income tax under the prélèvement forfaitaire unique (PFU), France’s flat tax regime (PFU), the total tax burden could reach 31.4%. For many expats, particularly retirees relying on portfolio income, this means a reduction in net returns.
The increase applies primarily to financial investment income, including dividends and interest held in standard investment accounts, as well as capital gains on financial assets. However, the changes do not apply to all assets.
“Assurance vie contracts, savings products, such as PELs and rental income, or property capital gains for private individuals remain outside the scope of this increase,” said Daniel. “That makes asset selection and structuring increasingly important.”
For those who have accumulated wealth across countries, this distinction matters, as investments that were considered tax-neutral could now be less efficient.
Tthe government is also adjusting the thresholds for social charges on pensions in line with inflation. CSG and CRDS rates on pension income will continue to depend on a household’s revenu fiscal de référence (RFR), meaning some retirees may move into a higher or lower contribution band depending on their overall income.
“Pensioners should review their position, especially where investment income pushes total income above key thresholds,” added Daniel.
For British nationals living in France, the PLFSS 2026 changes do not affect the S1 healthcare form. “However, whether social charges apply still depends on the type of income and individual circumstances,” added Daniel.
UK ISAs are another frequent area of misunderstanding. “For French tax residents, all income and gains within an ISA are treated as ordinary capital income,” said Daniel. “If that income falls within the scope of French social charges, the higher rates will apply. The ISA wrapper itself provides no shelter under French tax law.”