In 2012 and 2013 the income tax bands will not be adjusted in order to take inflation into consideration.

The income tax bands are thus as follows for income earned in 2011 declared in 2012:

0% not exceeding 5 963 EUR 
5.50 % between 5 964 EUR and 11 896 EUR
14 % between 11 897 EUR and 26 420 EUR
30 % between 26 421 EUR and 70 830 EUR
41 % above 70 830 EUR


The rules applying to tapered relief have been modified.

Previously tapered relief applied after 5 years of property ownership at a rate of 10% of the net capital gain per annum leading to total exoneration after 15 years of ownership.

From 1st February 2012, the rates and time periods will be as follows:

-No relief for the first 5 years of ownership (unchanged)

-2% relief from the 6th to 17th year of ownership

-4% relief from the 17th to 24th year of ownership

-8% relief after the 24th year of ownership

After 15 years of ownership, the capital gain is exonerated for 20% of the amount

After 20 years of ownership, the capital gain is exonerated for 36% of the amount

After 25 years of ownership, the capital gain is exonerated for 60% of the amount

After 30 years of ownership, the capital gain is exonerated for 100% of the amount

30 years ownership is now necessary to be totally exonerated from capital gains tax


The above applies to secondary residences. The sale of the principal residence remains exonerated as under the previous rules.

For French residents, there has also been an increase in social security contributions which will lead to a total rate of taxation of 32.5% (currently 31.3%). The actual rate of CGT remains unchanged at 19%.

There is exoneration for those selling a second home who do not own their principal residence and have not done so for the previous four years, subject to the condition that they subsequently re-invest (within 24 months) the product of the sale in whole or in part in the purchase of their principal residence. In addition, elderly people who sell in order to move into a nursing home benefit from exoneration should they sell within 24 months.


The reduced rate of VAT is to be increased from 5.5% to 7% (hostelry, restaurants, work on homes, books, cinema, domestic services...). Only certain types of food, energy, and equipment and services for handicapped people are unaffected by this increase.


This tax, known as PFL, is applied to interest and dividends. It is a tax at source exempting the taxpayer from declaring the income on their income tax return. The rate will be increased from 19% to 24%. To this amount it is necessary to add social security contributions of 13.5% leading to an overall taxation on such income of 37.5%.



The tax-saving measures for investment in new-build rental property, known as Scellier, will be removed at the end of 2012. For 2012, for those new-builds respecting the Low Energy Rating norms (BBC) the effective rate for the income tax reduction is lowered to 13% (those buildings which do not comply with the norms will no longer attract any form of income tax saving).


This scheme concerns investment in certain types of residence such as for tourists and the elderly associated with a commercial lease signed with the operator of the residence. It too will disappear at the end of 2012, although the VAT refund on the purchase price should remain (subject to confirmation). For 2012, the income tax reduction is reduced to 11%.


These loans, known as Prêt à Taux Zéro (PTZ), apply to first-time buyers subject to certain criteria in terms of revenue and energy performance of the investment. These loans will now only be available for those purchasing new-build property.