In February 2025, the French government finally approved the Finance Act 2025, the key points of which include, among others, the introduction of a new tax on the highest incomes. This is the so-called differential contribution on high incomes – the CDHR which has become the subject of much discussion in France. In this article, we present the most important information concerning the CDHR.
1. What is the CDHR tax and what is the purpose of its introduction?
The Finance Act 2025 implemented a differential contribution on high incomes, i.e. contribution différentielle sur les hauts revenus, CDHR for short, into the French tax system. This is a special, additional tax to ensure a minimum tax treshold of 20% for particularly wealthy persons, as well as to repair the State budget.
2. Who is concerned by the CDHR?
The CDHR is imposed on taxpayers who earn high incomes and whose place of residence for tax purposes is in France. In other words, this concerns the richest French tax residents. Therefore, it doesn’t apply to non-tax residents, i.e. persons who work in France, but have their place of residence for tax purposes abroad.
The differential contribution on high incomes covers households whose reference tax income (revenu fiscal de référence, RFR for short) exceeds:
- EUR 250 000 per year in the case of single, widowed, divorced or separated persons;
- EUR 500 000 per year in the case of married couples or partners subject to joint taxation.
The above tresholds won’t be increased for taxpayers with one or more dependants.
3. Rules for payment and settlement of the contribution
In order for the taxpayer to pay the CDHR contribution for 2025, a special advance payment system has been provided for. In the framework of such a mechanism, a person who is subject to the tax in question is obliged to make an advance payment equal to 95% of the estimaded amount of the CDHR due, covering both income earned from 1 January to 30 November 2025, as well as probable income obtained between 1 December and 31 December 2025. This shall be done between 1 and 15 December 2025.
The total and actual income earned in 2025, i.e. from 1 January to 31 December 2025, shall be reported in the tax return for that year, submitted in spring 2026. The final amount under the CDHR will be settled in the tax notice (avis d’impôt). Thus, the remaining part of the differential contribution on high incomes will have to be paid in 2026. In the event that the amount paid as an advance payment exceeds the actual amount of tax on the highest incomes, the taxpayer should receive a refund of the excess.
4. Penalties
In order to ensure that the CDHR advance payment is made, the are financial penalties applicable in situations where:
- the taxpayer make the advance payment late;
- the taxpayer fails to comply with the obligation to make the advance payment;
- the payment made by the taxpayer is less than 95% of the amount due.
5. Duration of the CDHR
The CDHR tax is temporary and is intended to apply to the taxation of income for 2025. However, it isn’t excluded that it will be extended in subsequent years or even made permanent depending on the economic situation in France.
6. Legal notice
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