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FISCALITY: WHAT CHANGES FOR YOU IN 2018

Wealth tax transformed into "tax on real estate wealth"

The wealth tax (ISF) is refocused on real estate assets only so that securities (shares, bonds, life insurance...) are no longer taxed. This will result in a tax cut of 3.2 billion euros to encourage investment in the economy.

Some luxury movable goods such as pleasure boats, sports cars or the sale of precious metals will still be subject of special taxation but the total will only bring between 40 and 50 million euros.

Creation of “flat tax”

In addition to ISF reform, as of 2018, a single flat-rate levy (PFU) of 30%, also known as a “flat tax”, was implemented. This levy will be set up on the investment income, with the exception of Livret A, PEA (savings in shares) and life insurance contracts of less than 150,000 euros and kept for more than eight years. This reform, aimed at simplifying the taxation of capital and bringing it closer to the level of other European countries, will result in a decrease of the levies of 1.3 billion euros in 2018.

In addition, the tax reduction on income ("Madelin") for an investment in SMEs goes from 18 to 25% in limits of 10,000 euros.

The "Pinel" device re-entered

The Pinel tax system that proposes a tax reduction of up to 21% if the investor in new real estate agrees to rent his property 6, 9 or 12 years is extended for four years until December 31, 2021, but the perimeter has been restricted. To benefit from this part, homeowners will now have to buy their new home in one of the cities where the price per square meter is the highest. What does that mean? Paris, and the municipalities of Ile-de-France, as well as the Côte d'Azur and the Geneva region.

Withholding tax postponed

Withholding tax, a key measure of the previous five-year period, will not come into effect as planned on January 1, 2018. The new executive preferred to postpone this reform for a year which consists in collecting the tax on the income when the salary is paid, not a year later as in the current system.

The administration, which had launched a test phase in early July to "examine the technical robustness" of the device and evaluate the "induced burden" for employers, considering a possible switch in 2019, the project was relaunched. The reform will come into force in early 2019.


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