Financial update France – November 2026

As the end of the year approaches, potential tax changes for 2027 have taken centre stage following both the UK Autumn Budget and the publication of the French Draft Finance Law (Projet de Loi de Finances) in October.

Whilst most of the UK Autumn Budget proposals do not directly impact French-resident British nationals, the confirmation that UK pensions will be included in estate values for UK Inheritance Tax (IHT) purposes from April 2027 remains significant. This proposal has prompted those with larger pension pots to assess whether it is more advantageous to leave their pensions untouched or to draw down funds under France’s favourable 7.5% lump-sum pension tax regime (prelevement forfaitaire libératoire).

Additionally, the abolition of the restrictive two-year rule—under which pension death benefits were subject to extra tax—has been widely welcomed, given the expected administrative complexity of managing estates containing pensions after April 2027.

Geopolitical uncertainty and global economic pressures continue to influence inflation levels worldwide. While the French government originally intended to freeze income tax brackets last year before increasing them by 0.9%, the new Draft Finance Law proposes indexing tax bands by 2.1% for income earned in 2026 (taxed in 2027) to align with inflation. Taxpayers whose income has remained unchanged over the past year should see a slight reduction in their tax liability.

The proposed tax bands for 2026 income are as follows:

Pensioners may face higher taxation next year. The 10% tax abatement ceiling on pension income is set to be reduced from €4,439 to €3,000. Under these changes, households receiving more than €2,500 of pension income per month will find themselves subject to income tax. Child support payments and disability benefits will remain unaffected by this amendment.

The Draft Finance Law proposes a temporary increase in the tax-free gift allowance for parents under 80 gifting to adult children, grandchildren, great-grandchildren, nieces, or nephews. Between 1 January 2027 and 30 June 2027, the usual tax-free allowance of €31,865 will be raised to €50,000. Amounts above this allowance up to €100,000 would benefit from a reduced tax rate of just 6%. It remains to be seen which of these proposals will make it into the final Finance Law for 2027.

The deadline to amend your 2025 tax return online is 30 November. In previous years, the online correction portal remained open until the end of the calendar year, but the tax authorities have brought the cutoff date forward to the end of November.

If you hold French bank deposit accounts, savings accounts (excluding tax-free accounts like the Livret A, LDDS, or Livret Jeune), or bonds, and your Taxable Income (Revenu Fiscal de Référence – RFR) for 2024 was under €25,000 (single) or €50,000 (couple), you have until 30 November 2026 to notify your bank. Doing so prevents them from automatically withholding the 12.8% advance income tax on your interest in 2027.

For dividend income from investment accounts (compte-titres), the 2024 RFR thresholds are higher: €50,000 for single taxpayers and €75,000 for couples. Opting out of upfront withholding is particularly beneficial if your overall income falls into the 0% or 11% tax brackets. You can use the official French tax administration model letter here.

Global equity markets continue to demonstrate resilience despite softer sentiment surrounding artificial intelligence (AI) valuations. While political events such as the US mid-term elections may generate short-term volatility, fundamental drivers—including economic growth, corporate earnings, underlying AI capital expenditure, inflation trends, and central bank interest rate policies—remain the dominant market catalysts.With colder weather arriving and more time spent indoors, now is an ideal time to review your financial strategy. Please feel free to get in touch to discuss your wealth planning, tax strategies, and priorities for the year ahead.