Flat tax could rise to 33% in 2025. What does this mean for my savings?

Q: Flat tax could rise to 33% in 2025. What does this mean for my savings?

A: On 16 October 2024, France’s Finance Committee proposed raising the flat tax from 30% to 33%. 

Introduced in 2018, the flat tax (Prélèvement forfaitaire unique) combines 17.2% social security and 12.8% income tax on capital income. 

If approved, the income tax rate would increase to 15.8%, while social security contributions stay at 17.2%. 

This 10% hike could generate €800 million annually for the state and impact: interest on bank accounts, share dividends, capital gains on investments, assurance vie gains (under eight years) and PEL/CEL interest (opened since 2018).

The French budget remains uncertain to pass, creating challenges for the country and leaving outcomes dependent on parliament’s decision, along with the potential risk of the government being dismantled.