As part of the latest budget law for 2025, a new differential tax on high incomes (CDHR) was introduced.
This measure aims to establish a minimum tax rate of 20% on income for the year 2025.
It applies to taxpayers who are tax residents of France whose reference taxable income for the year 2025 exceeds:
- €250,000 for single, widowed, separated, or divorced taxpayers
- €500,000 for married taxpayers or those in a civil partnership who file a joint tax return.
In practice, the CDHR applies to taxpayers whose income consists primarily of income from financial investments taxed at a flat rate: dividends, interest, and capital gains subject to the single flat-rate withholding tax of 12.8%, as well as redemptions from life insurance or capitalization contracts taxed at 7.5% or 12.8%.
Taxpayers for whom a significant portion of their income is subject to the progressive tax scale should not be required to pay this contribution.
The tax authorities require the payment of an advance payment equal to 95% of the estimated amount of the CDHR between December 1 and 15, 2025, with the balance to be settled when the final tax return is filed next June.
It is therefore advisable to plan for this payment now in order to avoid any delays in payment or errors in calculating this down payment, since:
- In the event of a delay or failure to pay the deposit, a 20% surcharge may be applied to the deposit amount.
- If the advance payment is more than 20% less than the amount due, a 20% surcharge will also apply to the tax base corresponding to the shortfall in the advance payment.
The FareWell team is available to provide you with further details about the CDHR: its scope of application, calculation methods, reporting requirements, and payment procedures for this advance payment.
