While we await the conclusion of the saga surrounding the 2026 budget bill, the first end-of-year “gift” has finally come in the form of the 2026 Social Security Financing Act (LFSS 2026).
 
What’s changing:
  • The General Social Contribution (CSG) rate is increasing from 9.2% to 10.6% on a large portion of investment income
  • The overall social security contribution rate is increasing from 17.2% to 18.6%
  • The portion of the CSG that is deductible from income tax remains unchanged (6.8%)
Income affected by the 1.4% increase:
  • Dividends
  • Capital Gains on the Sale of Securities
  • Capital Gains on the Sale of Digital Assets 
  • Capital gains and receivables subject to the exit tax 
  • Net gains realized through an SME Innovation Account 
  • Distributions of Capital Gains and Assets by Certain Collective Investment Schemes 
  • Capital Gains Distributions by Venture Capital Firms (SCR) 
  • Proceeds from employee savings plans accrued through profit-sharing or under a savings plan (PEE, PEI, Perco) when beneficiaries request the release of their rights, securities, or assets 
  • Certain BIC, BNC, or BA income, when not subject to social security contributions as professional income 
  • Proceeds, annuities, and lump-sum payments from all retirement savings plans (PER), when subject to social security contributions
For income subject to the single flat-rate withholding tax (PFU), the overall rate therefore increases from 30% to 31.4%
 
Excluded income (CSG maintained at 9.2%):
  • Property Income
  • Capital Gains on Real Estate
  • Life insurance products and savings plans
  • Interest and savings bonuses on home savings accounts (CEL) and PEL accounts opened on or before December 31, 2017 
  • Income, life annuities, and savings premiums from People’s Savings Plans (PEP) that are exempt from income tax
Effective Date and Retroactivity:
As with the reform implemented by the Social Security Financing Act (LFSS) for 2018, the legislature has established two different effective dates, depending on the nature of the income.
 

Income from assets (Article L. 136-6 of the CSS): Effective for the 2025 tax year!

  • Income from assets earned starting in 2025 is therefore subject to the tax increase, even if it was received before the law was passed.
  • This includes, in particular: capital gains from the sale of securities, income from furnished rentals, and life annuities purchased for consideration
  • Example: A capital gain on the sale of securities realized in March 2025, under general tax law, will be taxed at a total rate ranging from 31.4% to 38.6% at the time of tax settlement, compared to 30% to 37.2% before the reform.
  • Note: As an exception, capital gains arising from the contribution of securities to a company controlled by the contributor, for which tax deferral applies (Art. 150-0 B ter of the General Tax Code), remain subject to the rate in effect in the year they are realized.
Investment Products (Article L. 136-7 of the CSS) : Effective January 1, 2026
This category includes, in particular, interest and distributed income subject to the flat-rate withholding tax (which does not constitute final payment) provided for in Articles 125 A and 117 quater of the General Tax Code.
 
This increase in the CSG, combined with a retroactive provision for investment income, underscores the importance of a detailed analysis of the nature of income, the date it is realized, and how it is taxed.