Here are the 5 tax advantages most favored by the French

As the government prepares the 2024 budget bill, certain tax loopholes appear to be in the crosshairs—particularly those that cost the government the most. Here are the top 5 tax benefits most favored by the French.
 

No. 1 – Tax credit for employing a domestic worker: 6.7 billion euros
Approximately 4.5 million households report expenses for in-home services, whether through programs such as the CESU or by hiring a service company or nonprofit organization. These expenses qualify for a tax credit, which means that, unlike other tax benefits, they result in costs for the government, even for those who do not pay taxes.

No. 2 – 10% tax deduction on pensions: 4.54 billion euros
Nearly 15 million people benefit from this tax measure, the second most costly in terms of income tax. These beneficiaries include both retirees and taxpayers receiving alimony. The estimated cost of this measure, aimed at “supporting retirees,” will total 4.54 billion euros in 2024.

It is important to note that this measure is not a tax credit. The 3 million lowest-income beneficiaries of this measure are not subject to income tax, which means that it imposes no cost on the public treasury in their case. Furthermore, this tax measure is capped at 4,123 euros per tax household in 2023.

The 10% flat-rate deduction for business expenses, which applies to all working individuals, including employees, is not considered by the Ministry of Finance to be a “tax expenditure,” but rather a “simplification measure” intended to spare taxpayers the burden of reporting their actual expenses. Similarly, the application of the family quotient is not considered a “tax expenditure” according to the Ministry of Finance.

No. 3 – “Employee Savings” Tax Exemption: 2.58 billion euros
When your employer grants you a profit-sharing or incentive bonus, you have two options: 1. “Cash out the amount,” which adds it to your taxable income, or 2. invest the bonus in an employee savings plan (PEE, PER, Perco, etc.), which makes it tax-free. This tax exemption costs the government more than 2 billion euros each year, although it is difficult to determine precisely how many people benefit from this measure.

No. 4 – Exemption from family allowances: 1.85 billion euros
The fourth measure, titled “Exemption from family benefits and the allowance for adults with disabilities,” represents a revenue shortfall of slightly less than 2 billion euros for the tax authorities. The government does not provide details on the number of beneficiaries.

No. 5 – Overtime Tax Exemption: 1.78 billion euros
This measure was implemented by Emmanuel Macron’s government in response to the Yellow Vests movement. Since January 2019, overtime pay has been exempt from income tax, provided that it does not exceed 7,500 euros in overtime pay per year. The cost to the government was capped at 1 billion euros in 2019, but has now reached nearly 2 billion euros.