Emmanuel Macron has started his presidency and has announced since his campaign a tax cut of 15 billion. The regime of cohabitants being very penalizing, what impact could this quinquennium have on their taxation?

Joint taxation

In France, some households choose to marry because of the tax advantages, while couples in a common-law relationship who do not wish to choose this system are forced to declare their income separately. The measure that Emmanuel Macron wishes to introduce is simple: to be able to declare one's income jointly, without having to make a declaration of notorious cohabitation. This device would simplify the procedures and encourage cohabitants to use the common taxation. The advantage could be significant, especially if there is a disparity between the incomes of the two cohabitants.

However, this measure will not affect the tax on real estate wealth. Indeed, the tax household considered for the IFI is not the same as for the income tax. Common law couples, i.e. those who have a stable and known relationship with each other, must file their IFI tax return together.

The transfer between cohabitants

The problem of inheritance between cohabitants remains the main obstacle to cohabitation. Indeed, cohabitants do not have a status in the sense of inheritance law. The difficulty when a household is formed under the regime of cohabitation is the transmission. Beyond a lack of protection for the surviving spouse, the taxation is excessively onerous.

Indeed, if a donation or a will is made in order to anticipate the inheritance sharing, the operation will be taxed at 60%. In the event of a will, a deduction of 1 594€ can be made for the surviving cohabitant. For example: for a legacy of 200 000€, the taxation after deduction will be 119 044€, an exorbitant cost!

Unfortunately, the President of the Republic did not express himself regarding the transmission between cohabitants. Nevertheless, he wishes to change the current system by introducing a 100,000€ allowance for indirect line transmissions (= cousin, niece and nephews etc...), it remains to be seen if this allowance will be extended to cohabitants.

There are ways to optimize and secure the situation of cohabitants thanks to various legal arrangements, Wealth A7 can help you in the development of your future, contact us!

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