In this article, I’m sharing 4 ways the 2025 budget called “Loi de Finance” might impact your French business. You might have seen in the news that the French parliament "Assemblée Nationale" is negotiating the 2025 budget. There's been much talk about things that could be changing. Unfortunately, the timescale for this is quite long…
How does the French budget work
After the Parliament discusses changes, it will then go to the Senate. It could even come back for discussion at the Parliament. Or Prime Minister Michel Barnier could decide to skip the Senate stage by using Article 49.3.
Besides this standard process, the final implementation decree will be passed into law on 31st December 2024. This means that we’ll only have the final text in January 2025. Bear in mind that new laws aren’t retroactive in France, it will therefore be applicable from 1st January 2025.
We’ve heard many scary news and propositions called “amendements”. And before you start getting too worried, let me remind you that 1900 amendments were made at the Parliament! There is no way that all these amendments can be discussed. And considering that the budget is unusually late, because of the government dissolution in June and the late appraisal of a new Prime Minister and government in September, there is little time for major changes. Tough topics are likely to be postponed for the 2026 budget, focusing on savings in the meantime.
In the meantime, here are the 4 things, which could impact your French business in 2025:
- Non-professional gites & Airbnb rentals
- Professional gites & Airbnb rentals
- Increased flat tax on dividends
- Reduced micro-entrepreneur turnover threshold for services
1 - Non-Professional gites & Airbnb rentals
This one sounds odd if you are just starting to look at holiday rentals. Of course, you will be professional in the way you work! But in France, we make the distinction between someone who manages a holiday rental as a side income called “non-professionnel” to someone who runs an activity full time as a business.
Non-professionals include non-residents renting their French property while remaining in their country of origin. As well as someone with another activity in France (employee, business owner, pensioner) renting their property for extra income. These aren't considered businesses and are declared as Loueur Meublé Non-Professionnel (LMNP).
Until 2024 the rules for LMNP were:
- Declared to the Mairie + as LMNP to get a SIRET number.
- Regime called “micro BIC”.
- Maximum rental capped at 23,000€/year.
- Secondary source of income declared directly to impots (even for non-residents.
- Standard tax rebate of 50 or 71% whether classified as "meublé de tourisme" or not with Atout France.
- Taxes of 17.2% on the remaining amount.
Major changes will be made to this regime in 2025, as Airbnb are seen as having a major impact in preventing locals from finding long-term rentals. The LMNP regime was also a great tax loop, as the standard rebate was high.
Since 1st January 2024, there have already been some changes made to this regime. Including a reduced turnover threshold of 15,000€/ year. This was an error made in the 2024 Loi de Finance, which triggered more debates all year long. Including a full report written by deputee Mme Le Meur, with many suggestions for changes, included in many 2025 amendments.
The jury is still out on this one and I will only believe the law when I see the decree published. They already messed this one up in 2024 when they typed 15,000€ in the text of law instead of 23,000€…
Where do we stand with LMNPs so far?
End of October the Parliament voted on these rules (which still have to go the the Senate):
- Turnover limited to 15,000€/ year for non-classified gites.
- Rebate of 30% for non-classified gites.
- The alternative above 15,000€ is to be under régime réél simplifié.
- Depreciation “amortissement” being reintegrated when selling the property, hence increasing the plus-value and taxation.
Again, no need to panic. If things got to the worst and the LMNP disappeared, there would be other ways to manage your property remotely. One option would be creating an “Société Civile Immobilière” (SCI) liable to incorporation tax, as you wouldn’t need a business visa. This would also change the way you manage the property, as you would aim to claim for all your expenses and depreciate your investments (improvements, restoration, furniture, etc).
My advice is to hold on tight for this one. Go ahead and buy the property, BUT wait until January 2025 for the final law to decide which legal structure and tax regime makes sense.
2 - Professional gites & Airbnb rentals
Rules are different for those of you planning to move to France and set up a gite, retreat or Airbnb as a business. We are talking about European citizens moving to France or non-European citizens applying for a business visa or carte de sejour (visa profession liberale, visa talent, carte de sejour entrepreneur). We are also talking about you if you have already set up a business here.
I still recommend starting your activity with a Micro Entrepreneur, but know that the rules will change in 2025:
- The Micro Entrepreneur turnover will be capted at 77,000€ for professional gites, AirBnBs classified with Atout France.
- Automatic tax rebate going from 71% down to 50%.
This is fine for new micro entrepreneurs, giving you time to develop your customer base and get your classification with Atout France. It may not be the case for large gites in business for many years needing improvements and having high running costs. In this second option, you may move to a different regime called “réél simplifié”, where you will claim back all your business expenses and depreciate your investments.
This change for professionals isn’t as radical as for non-professionals (LMNP) and I would say that it will still work as a micro entrepreneur.
One of the key changes that will be voted for professional and non-profession gites, is the reduction of the automatic tax rebate from 71% to 50%. The aim is for long-term rentals to become as attractive as gites or Airbnb rentals. So far you were earning more income from tourists than long-term rentals. This is the key point that deputies seem to agree on.
One of your key objectives for 2025 will be to get your gite classified with Atout France ASAP! A quick reminder that this process has no connection whatsoever to declaring your gite as “meublé de tourisme” with the Mairie. Getting classified means having someone from this network come to your property and rating it against 100-ish criteria to validate your ranking from 1 to 5 stars.
3 - Increased flat tax on dividends
The third likely change is an increase in the flat tax on dividends paid by incorporated companies. The current flat tax rate is 30% and would increase to 33% from 2025. You would still have the second option to include your dividends into your French income tax declaration, rather than pay the flat tax. With this second option, a standard rebate of 40% is applied to your dividends, before adding them to your other income and applying to the French taxation grid.
Again we'll have to wait for the law to be voted to confirm this change.
4 - Reduced micro-entrepreneur turnover threshold for services?
I heard about this amendment from Gregoire Leclerc, president of the national network representing micro entrepreneurs called Fédération Nationale des Auto Entrepreneurs (FNAE) - In his last newsletter, Grégoire was trying to rally micro entrepreneurs to make some noise and reject an amendment asking to reduce the maximum turnover threshold for services from 77,000€ to 60,000€ per year.
This amendment would aim to push micro-entrepreneurs towards a different regime or legal structure: régime réel, EURL/SARL, SAS/SASU. Meaning more social charges and taxes for the government.
I don't think this one will be voted on, as I hadn’t heard about it before, compared to all the noise about Gites/ AirBnB and the Le Meur report. Looking at their website and petition page, the FNAE mentioned a few old potential amendments, such as limiting the micro entrepreneur to 2 years,
And again, this is one of 1,900 amendments suggested and considered over a few weeks. And as for many budgets before we always hear about restrictions on the micro entrepreneur that don’t get voted, for instance restricting this regime to 2 years, cutting VAT thresholds by 2. There seems to be a bit of scaremongering to get people to enrol in the petition and join their membership.
The update on 30th October was that the parliament rejected the amendments limiting the micro entrepreneur regime for 2 years. The amendment to limit the turnover to 60,000€ for services has been voted by the parliament. There was already a mistake on that item, as they mentioned 60,000€, then 50,000€... Let's see what happens with the Senate next.
as you can see some amendments even seem to contradict each other. The turnover for gites has been voted to be aligned with services at 77,700€. But... the micro entrepreneur threshold has also been voted at 60,000€ in this amendment! Contradicting numbers for the same activity. This is because groups of deputies are working on different amendments and not necessarily merging the final rules yet.
As a micro entrepreneur, you may want to sign FNAE’s petition to defend your regime
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I will cover changes as they are voted on and their final impact on you - whether you plan to move to France in 2025 or whether you already have a business in France.
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