Déclaration d'impôts : les points clés pour éviter les erreurs et optimiser - Allo La Martingale #56

The discussion revolves around French tax declarations for 2026, covering 2025 income, with experts Jean-Baptiste Asley from Justae and Romain Livrini from Nillo. They emphasize the importance of timely and accurate declarations given the administration's advanced tools for detection. Jean-Baptiste introduces Justae as a multi-family office wealth management consultancy, primarily assisting business leaders, top managers, high-level athletes, and artists with financial investment strategy and wealth engineering, including income tax declarations. Romain presents Nillo, a company that has helped over 10,000 clients optimize their property income tax declarations, primarily for LMNP (non-professional furnished rental), bare rental, and SCI (civil real estate company), aiming to minimize or eliminate their tax burden. The experts highlight that the French tax administration is highly equipped, using data mining and artificial intelligence to detect anomalies. In 2025, 17 billion euros in rights and penalties were notified, a 3% increase from the previous year. Over 50% of controls on individuals were initiated by these digital tools. While some still attempt to evade, it's a risky bet as the administration can re-examine taxes for the past three years, or even more. Key declaration dates for 2026 are: - Departments 1 to 19: May 21st - Departments 20 to 54: May 28th - Departments 55 and above (including overseas territories): June 4th - Non-residents: May 21st Declarations are primarily online, with paper forms reserved for those without internet access, which requires proof. Even if a declaration is validated, it can be modified online until the respective deadline. For those who miss the deadline, a corrective period opens from late August to December 31st for modifications without penalties. Errors from previous years (2024 and 2023) can be corrected by filing a claim with the tax administration. Common errors include forgotten deductions (donations, expenses) and choosing the wrong tax option, especially for real estate. The experts stress that while the tax year 2025 is closed for adding income or charges, optimizing existing declarations is crucial. New tax developments include an extension for PER (retirement savings plan) tax deductions, allowing a look-back of 5 years instead of 3. However, the CSG (general social contribution) has increased from 17.2% to 18.6%, impacting the flat tax, which is now 31.4% (previously 30%). This makes the flat tax less "flat" and raises concerns about its future, especially with upcoming presidential elections. The flat tax's stability is uncertain, and there's a possibility of further increases or even a return to the progressive income tax system for capital gains, dividends, and interest, which could be less favorable for many taxpayers. The experts note that the current government's need for funds is evident in recent tax changes, some of which have retroactive effects, negatively impacting long-term investment planning, particularly for real estate. A listener question from Clara, working in Portugal with French income, brings up the issue of international taxation. Generally, individuals are taxed in their country of residence on their worldwide income. France has tax conventions with other countries, including Portugal, to avoid double taxation. If Clara has French-sourced income, France may retain the right to tax it at fixed rates (20% for income up to €30,000, 30% beyond that), not the progressive scale. Non-residents can also request the application of the average tax rate, where the French administration calculates tax on worldwide income to determine an effective rate, which may be more favorable than the fixed rates. Consulting a specialized advisor is strongly recommended for such complex situations. For isolated parents, checking the specific box on the declaration can lead to a significant tax reduction, up to €4,200, compared to €1,800 if forgotten. The decision to keep a child in the tax household depends on their income and whether a pension is paid. If a child has no income and receives no pension, it's generally advantageous to keep them in the household, adding 0.5 tax parts. If a pension is paid (e.g., for a student's living expenses), up to €6,800 can be deducted from the parent's income. If the parent's marginal tax rate is 41% or higher and they pay at least €6,800 in pension, detaching the child may be more beneficial. The tax administration's "brochure pratique" is a useful resource for these calculations. Regarding professional expenses, the 10% flat-rate deduction is usually more advantageous than real expenses for 90-95% of employees. Real expenses are typically beneficial for those with long commutes or specific professional costs that exceed the 10% forfait. Claiming real expenses, however, tends to attract more attention from the tax administration. The LMNP (non-professional furnished rental) regime is a significant topic. Despite recent reforms, it remains highly advantageous. Romain explains the differences between bare rental and furnished rental. - Bare rental: - Micro-foncier regime: 30% deduction on rental income. - Réel foncier regime: Deduct actual expenses (including works) from rental income. If expenses exceed income, the deficit can be deducted from other income (e.g., salary), up to €10,700 per year, with the excess carried forward for 10 years. - Furnished rental (LMNP): - Micro-BIC regime: 50% deduction on rental income (up to 71% for classified tourist accommodations). - Réel regime: Deduct all actual expenses (co-ownership charges, loan interest, insurance) and, crucially, amortize the property. Amortization is a fictional charge that reduces taxable income. For example, if a property is valued at €100,000 with €20,000 for land (non-depreciable), the remaining €80,000 can be amortized over about 20 years, leading to an annual deduction of €4,000. This often results in zero taxable income. The recent reform for LMNP has changed how amortization affects capital gains upon sale. Previously, amortization reduced taxable income during the rental period but was not reintegrated into the capital gains calculation upon sale. Now, these amortizations are reintegrated, meaning they will reduce the acquisition cost for capital gains purposes, potentially increasing the taxable gain. However, this only applies to sales within a certain timeframe. The goal of the reform is to encourage long-term rentals and discourage short-term tourist rentals and quick property resales. Despite the reform, LMNP remains attractive, especially for long-term holdings. Exemption from capital gains tax on property sales is achieved after 22 years of ownership for income tax and 30 years for social contributions. This means that if a property is held for over 30 years, any capital gain from the sale, even after amortization, will be completely tax-free. For holdings over 5 years, the réel regime is almost always more advantageous than the micro-BIC regime (in 95% of cases). For holdings under 5 years, a case-by-case analysis is needed. The real estate market is currently complex due to high interest rates and regulatory changes. While rates around 3-4% might not seem high historically, they impact the profitability of rental investments, especially in areas where property prices have not adjusted downwards to compensate. This has led to a stagnant market, as many owners with low historical mortgage rates are reluctant to sell, opting instead to rent out their properties and rent new ones for themselves. The future of real estate is tied to demographics and location. While overall demand might decline in some rural areas, urban centers with strong student populations or economic dynamism will likely remain attractive. Therefore, the choice of location is critical, overshadowing tax considerations. The PER (retirement savings plan) is discussed as a tool to reduce current income tax. The main advantage is the tax deduction on contributions. For example, placing €10,000 into a PER can reduce tax by €3,000 for someone in the 30% marginal tax bracket. However, the money is generally locked until retirement, with some exceptions (e.g., primary residence purchase). The key calculation is to compare the current marginal tax rate with the projected marginal tax rate at retirement. If the retirement rate is lower, the PER is advantageous. It also provides forced savings and benefits from compounded interest. A critical point is choosing a PER with low fees, as many bank-offered PERs have high hidden costs that erode returns over the long term. The maximum contribution to a PER is generally 10% of professional income. A listener, Julie, asks about declaring a €20,000 transfer to her son for a car. The first question is whether it's a gift or a loan. - If it's a gift (donation): It's permissible not to declare a manual gift immediately, but it must be declared upon a subsequent donation or a tax audit. It's recommended to declare it within a certain period to benefit from a specific abatement for cash gifts, which is around €32,000. This is done via the impots.gouv.fr website. - If it's a loan: For loans over €5,000, a written agreement is mandatory, and it must be declared to the tax administration as an annex to the income tax declaration. While a 0% interest rate is common, a market rate can be applied. However, repeatedly lending to many individuals can be seen as an illegal banking activity. Also, the loan duration should not exceed the lender's life expectancy, otherwise, the tax authorities might reclassify it as a disguised donation and tax it accordingly. For IFI (real estate wealth tax), good practices include consistency in valuation methods from year to year. The LMNP (professional furnished rental) status can be advantageous, as properties under this status can be exempt from IFI if the owner spends at least 50% of their professional time managing the properties. The administration's data mining capabilities mean that significant undervaluation of real estate assets will become increasingly detectable. It's recommended to proactively adjust valuations or seek an amicable resolution with the tax authorities. Finally, a question about negative interest rates on informal loans is addressed. While an arbitrarily fixed negative rate might not be sustainable, indexing a loan to a reference rate that could turn negative is theoretically possible, provided it's formally documented and declared. Regarding undeclared foreign bank accounts (e.g., Revolut), the penalty is €1,500 per undeclared account. Even accounts with zero balance must be declared. It's advisable to regularize the situation proactively by notifying the tax administration, as they are increasingly aware of these accounts through data exchange with foreign financial institutions. In cases of good faith and proactive regularization, penalties might be waived or reduced. The discussion concludes with advice for couples with significant income disparities. While a common tax rate is standard, choosing an individualized rate can be beneficial for the lower-earning spouse, preventing them from paying a higher effective tax rate due to the higher-earning spouse's income. This is often a matter of couple's financial agreement and psychological comfort.