If daily life in Paris felt stressful in 2019, take a deep breath. The start of the New Year may bring some important changes in France to our laws and pocketbooks…but uncertainty hovers. The past year was punctuated every weekend with Yellow Vest demonstrations to protest inequalities in wage earnings against the high cost of living, and the last month of 2018 was hit by a “limitless nationwide strike” initiated by major unions in both the public and private sector to resist government-planned pension reforms in 42 special regimes.
UPDATE: The 8th nationwide strike is announced for January 29th as several hardline unions continue to refuse all pension reform proposals from the French government. Strikers plan to hit the streets again to make their voices heard on the eve of a special conference with some key union representatives to discuss the structure of financing for the proposed pension reforms, which have already been submitted to the Council of Ministers for approval. Public transportation appears to be improving after eight grueling weeks of strikes.
So what can we expect in 2020? To help those living in Paris and throughout France ease into a new decade, let’s revel in the good changes we can expect in our lives before tackling some of the anticipated, disruptive or costly ones.
Prohibition of certain single-use plastics
The French government has taken a major step to help reduce the use of disposable plastic. From January 1, plastic straws, disposable tableware and stir sticks will be prohibited in restaurants, take-out counters, canteens and food shops.
The sale of plastic cotton swabs will also be prohibited. Other plastic objects will be banned in 2021.
Veggie lunches for school kids
School canteens will offer at least one vegetarian menu per week on two-year trial basis. Leave it to the French to provide healthy balanced meals for our children’s wellbeing and the environment.
Suppression of certain food additives
From January 1, 2020, following a joint decree of the Ministers of the Economy and Finance and of the Ecological and Inclusive Transition, titanium dioxide (E1741) will be prohibited in foods.
This food additive considered cancerous is used in particular as a coloring and clouding agent in certain chewing gums, prepared meals, sweets and sauces.
Health Benefits for your eyes and teeth
Glasses and dental prostheses are to be reimbursed. With the 100% Health reform, the Government wants all French people to have access to fully supported care and equipment. Optometrists should recommend glasses that fall in a certain price range for full reimbursement. Since 2019, 100% Health has been gradually deployed and will reach its full effectiveness in 2021.
Dolipran, aspirin and Ibuprofen availability
As of January 15, 2020, paracetamol-based drugs and certain non-steroidal anti-inflammatory drugs (aspirin and ibuprofen) will only be available behind the counter at the pharmacy. Please note, these medicines will still be available without a prescription. The objective is to strengthen the preventive and advising role of the doctor and/or pharmacist in order to avoid a possible overdose resulting from self-medication.
Towards a total non-reimbursement of homeopathic medicines
From January 1, homeopathic medicines will see their reimbursement rates drop. In the past, some were reimbursed at 30%; now they will be reimbursed at 15%. This reduction is also aimed at implementing a full non-reimbursement of these products from January 1, 2021. This decision was announced on July 9 by the Ministry of Health, after the High Authority for Health (HAS ) found a lack of efficacy in homeopathic products. This decision concerns some 1,200 drugs, including the well-known Arnica montana, Gelsemium and Nux vomica.
Cigarettes keep going up
Consider the rising cost of cigarettes to quit smoking. The price of a packet of cigarettes rises from €9,10 to €9.20 and the price is set to hike up by another 50 centimes in April.
Increase in stamp price
The price of postage stamps for individuals will increase on average by 10% on January 1, 2020. The price of the Green Letter stamp goes to €0.97 compared to €0.88 in 2019, that of the Priority Letter stamp (red) goes to €1.16 compared to €1.05 in 2019.
Upgrading the Smic
The minimum growth wage known as Smic in France increases by 1.2% from January 1 to reach 10,15 euros an hour, or 1539,42 euros a month calculated on a 35-hour workweek.
According to the Minister of Labor, this increase in the minimum wage represents an additional €15 gain per month, or a monthly value of €1,219 net.
Driver’s license for one euro per day
Starting January 1, 2020, young people from the age of 15 to 25 will be able to benefit from the “license at one euro per day,” allowing them to finance their category B, A1 or A2 license (car and motorcycle). It is a zero-rate loan ranging from 600 to 1,200 euros depending on the course selected at certain labeled driving schools. This public aid comes from a local authority or the state and facilitates access to training. The repayment of this loan is made in monthly installments of 30 euros maximum, over a period of 20 to 40 months.
Add a few euros to your Taxi rides
A ruling issued in 2019 will increase taxi fares in Paris by 2 %. Take that into consideration if you are using a taxi to get to Charles de Gaulles or Orly airport from the city center. It will cost an average of 50-58 euros to Roissy in the north depending on whether you are leaving from the right or left bank and 32-37 euros to Orly located in the southwest end.
Payment break for new owners of HLM low-income housing
The ordinance passed on May 8, 2019 becomes effective. It means the new owners of low-cost housing will not be obliged to pay out all co-ownership charges incurred immediately. A clause defers the transfer of ownership for the purchaser of their share in the common areas for a period of less than 10 years.
This new law allows buyers to familiarize themselves with the legal regime of the condominium, while avoiding some of its constraints, notably financial. The HLM organization will ensure, during this period, the management of the common parts of the building without applying the rules relating to co-ownership, assuming only the financial burden of the major works of the building.
Home Employees start paying withholding tax at source
Do you pay a nanny, a cleaning lady, a gardener or a student for homework help or babysitting in your home? On January 1, 2020, individuals employed in someone’s home in France must also have their taxes paid from their source of income declared each month.
Since January 1, 2019, a majority of employees began to pay their taxes at the source of income. Now, employees hired by individuals will also be obliged to use the same system. Their payroll will be reduced if they are taxable. This one-year period allowed the establishment of the source deduction (PAS) on the Cesu sites for home service workers and Pajemploi for childminders or babysitters.
The administrative work falls upon the employers. Individual employers will pay the net salary directly to their employee. The contributions and the amount of the employee’s income tax will then be deducted from the employer’s account, by Cesu or Pajemploi, and then paid back to the tax authorities.
In France in 2017, 3 million individuals declared such employment: 1.9 million for home services (i.e. 600,000 employees declared each month on average) and 1.1 million for a childminder at home.
For details on how to declare in 3 steps, consult this link:
Reduced tax rate for lower-income in France
In 2019, in direct response to the Yellow Vest protests that rocked France all year, the French government announced a reduction in income tax for 2020, despite the worsening state of public finances, to appease the discontented population.
The reduction in income tax comes from proposed changes to both the rate and bands that will apply in 2020 based on 2019 income. Learn more.
The first rate and band of earnings up to €9,964 remain unchanged, to which a 0% rate will continue to apply. The principle change comes in the second band of income between €9,964 and €27,519, with a reduction in the rate from 14% to 11%, but also a reduction in the income threshold to which this rate applies, down to €25,405 from €27,519.
That will mean that those whose marginal rate is the third band of 30% will benefit less from the rate reduction.
Finally, there is also a reduction in the income threshold at which the 41% rate kicks in, from €73,779 to €72,644.
Here’s what tax breaks to expect:
|Tax Band 2019||Tax Band 2020||Rate 2019 Income|
|Up to €9,964||Up to €9,964||0 %|
|€9,964 to €27,519||€9,964 to €25,405||11%|
|€27,519 to €73,779||€25,405 to €72,644||30 %|
|€73,779 to €156,244||€72,644 to €156,244||41 %|
|+€156,244||€71,398 to €151,200||45 %|
The French government estimates that about 12 million households whose marginal rate is in the second band will gain an average of €350 a year, while 5 million in the third band will gain an average of €180.
NB: Under the French tax system income is taxable on a sliced basis according to household ‘parts’, so do not infer from the table that, say, if your income is €35,000 you will pay income tax on your total income at the rate of 30%.
Lower or no tax changes in certain fields
Expect no changes in local resident tax. The changes to this local residence tax, announced in 2017, continue to remove households from taxe d’habitation. While some already avoid this tax, the number increases so that next year only 20% will have to pay it and by 2023 it will no longer exist.
For the “IFI” real estate wealth tax, the current threshold of €1,300,000 will stay in place for 2020, with no changes to the scale rates of tax. The 75% limitation also remains unchanged.
No changes to social charges were announced, so it looks like they will remain:
9.7% for employment/self-employment income
9.1% for pension income
17.2% for investment income including rental income.
The main rate of corporation tax in France remains at 31%, but it is reduced to 28% for companies with turnovers under €250 million.
Hope you are one of the fortunate ones to benefit from tax changes and breaks in 2020!