At a glance, the key changes for French taxpayers in 2009 are as follows:

A supplementary tax on savings revenue

The arrival of a new investment tax will see social deductions levied on savings income increase in 2009 by 1.1% to 12.1%. Notably affected are dividends, capital gains from investment in property and on the stock market, life insurance and land revenue.

Global ceiling enforced on tax benefits

From 2009, the total amount of tax breaks that may be claimed by any one individual will be limited to EUR25,000 plus 10% of gross taxable income.

Certain areas, hitherto offering unlimited tax relief for investors, will now be capped.

For property investments in ‘DOM-TOMs’ (French Overseas Departments and Territories), a ceiling of EUR40,000 in net returns or 15% of gross taxable income will limit tax deductions.

Under the Malraux Law, pertaining to renovation works undertaken in protected zones, tax breaks will be replaced in 2009 by a tax credit. Depending on the zone, the tax credit will correspond to 30% or 40% of the cost of works carried out, up to a limit of EUR100,000.

From 2009, landlords renting professional property, particularly as regards investments in new ‘service’ residences, such as retirement homes and student accommodation, will be entitled to reduce the amount of tax levied. The tax reductions will represent 5% of the sum involved, up to a limit of EUR25,000.

Renovation work undertaken on historical monuments will, however, remain exempt from the global cap on deductions.

Restrictions on wealth tax reductions

The system designed to permit a reduction of wealth tax for investment in small and medium-sized enterprises via a holding company will be restricted from June 16, 2009. The holding company will not be allowed more than 50 shareholders, nor be able to offer to guarantee capital or to exit automatically after a five year term.

Sweeping reform of the Robien initiative

In a bid to provide simplified ‘transparent’ tax relief for rented property investors, from January 1, 2009 until December 31, 2012, a new tax reduction will be introduced. Spread out over a period of nine years, and applying to the purchase of either a new property or property being renovated, the rate will equate to 25% of the cost of the residence in 2009 and 2010, then 20% in 2011 and 2012. The reduction will, however, only apply to that part of the cost price less than EUR300,000 and will be limited to one property acquisition per year.

In 2009, taxpayers may choose between the former Robien initiative, where the cost of the property is ‘absorbed’ or deducted from rental income, and this new tax reduction.

Simplification of the ‘bouclier fiscal’ or tax shield

Currently, when tax payments exceed 50% of income, taxpayers reclaim a reimbursement from the tax authority. From 2009, however, any overpayment may be imputed to wealth, land or property tax.

Environmental car tax

The incentive scheme designed to either award a bonus payment of up to EUR1,000 for those purchasing new ‘environmentally-friendly’ vehicles emitting less than 130g of carbon dioxide per kilometre, or to charge a penalty payment for the purchase of vehicles emitting more than 160g of carbon dioxide per kilometre, will continue to apply. However, from 2009, the penalty charge levied on the purchase price of a vehicle will be reduced for families with three or more children.

Owners of new vehicles, registered in France in 2009, emitting more than 250g of carbon dioxide per kilometre, will incur an additional annual penalty charge of EUR160.

Public transport charges for employers

The controversial measure to levy transport charges on employers, ‘la prime transport,’ enters into effect from 2009, obliging employers to contribute 50% of public transport costs incurred by staff. The initiative will be extended to the whole of France from 2009 and will include the costs of hiring bicycles.

Audiovisual tax

Currently a sum of EUR116 per year, the audiovisual tax will be indexed to inflation from 2009.

Simplification of the inheritance tax

From 2009 to the end of 2011, within the three months following the fiscal declaration of an inheritance or donation, the taxpayer may voluntarily request a tax audit. Should the tax office fail to conduct an audit within that one year following the request, then the ‘declaration of succession’ will automatically be deemed correct and the matter closed.

Zero-rate loans

Zero-rate loans will be doubled from January 15, for the purchase of a new residence in 2009.

Zero-rate ‘eco’ loans

A zero-rate ‘eco’ loan will be available from 2009 to help individuals finance energy improvement work on their property, such as thermal insulation work or the installation of renewable energy equipment, for heating or hot water systems for example.

Single parent allowance

Single parents who have raised one or more children alone, currently benefit for life, following the departure of their children, from one-and-a-half times the family dependent’s allowance or ‘le quotient familial’ set against income tax. Controversially, from 2009, in order to qualify for this benefit, single parents will be required to have raised a child on their own for at least five years.