Since April 7, 2022 the tax campaign for the year 2021 has begun. It is important to note the various changes for this year so that you can benefit from them.

When to report?

Revaluation of the income tax scale

Each year, the Finance Act revalorizes the different income tax brackets according to inflation. While last year the percentage that was applied remained low, 0.2%, the Finance Act of 2022 has chosen a much higher rate, 1.4%.

Income tax rates, comparison between 2020 and 2021 

Income 2020                                    Income 2021                                      Rate

Up to 10 084€                                  Up to 10 225€                                     0%

From 10 084 to 25 710€                  From 10 225€ to 26 070€                    11%

From 25 710 to 73 516€                  From 26 070€ to 74 545€                     30%

From 73 516 to 158 122€                From 74 545€ to 160 336€                   41%

More than 158 122€                        More than 160 336€                              45%

Thus, this year the increase of the ceilings of the different brackets will not make any loser and whatever your income the consequences will only be beneficial on your taxes.

The Finance Act 2022 renews the deduction on capital gains on the sale of shares of business leaders

Article 19 of the Finance Act renews the system of capital gains tax deduction on the sale of shares of business leaders until 2024. This system allows executives to benefit from a 500,000 euros tax credit when they decide to retire, subject to a limited period of time to sell their shares. The origin of this partial exemption can be found in the Covid-19 crisis, during which the parliamentarians became aware of the difficulty for leaders to find a buyer.

In order to benefit from this tax credit, the Finance Act 2022 provides that when an executive has retired between January 1, 2019 and December 31, 2022, he or she has a period of three years to resell the shares and benefit from the allowance, compared to two years previously.

Upward revaluation of the mileage scale by 10%.

Inflation and rising fuel prices have resulted in a significant increase in work-related costs for households. Each member of a tax household has a choice between two methods of deduction for expenses related to his or her employment, the flat-rate deduction of 10% or the deduction of actual expenses. The 10% increase in question concerns the deduction of actual expenses and could encourage households to make this choice. In addition, the expenses calculated from the mileage scale are increased by 20% for electric vehicles.

Scale of mileage allowances for cars

Comparative example: for a 5 HP vehicle that has driven 25,000 km in 2021, the taxpayer can claim an actual expense amount equal to €10,125 compared to only €9,200 in 2020.

However, it is important to check that your expenses are actually higher than 10% of your income. The flat-rate system also offers certain advantages, notably a minimum of 448€ even if you have only worked part of the year.

New tax credit for the installation of electrical terminals

Article 200 quater C of the French General Tax Code introduces a new tax credit for taxpayers who wish to install a charging station for electric vehicles between January 1, 2021 and December 31, 2023. The scheme allows for a tax credit of 75% of the cost of the expenditure with a ceiling of 300 euros per installation. A single person will be able to benefit from two tax credits for two installations, one in his main residence and one in his secondary residence. A married or civil union couple with a joint taxation will be able to carry out four installations, two in their main residence and two in their secondary residence and will be able to benefit from the tax credit for each of the installations.

The system benefits the owner, the tenant and the simple occupant. However, it is necessary to be able to provide an invoice upon request from the administration and therefore to have the terminal installed by a professional. Finally, the advantage is subject to the tax niches ceiling of 10 000 €.

Your wealth manager can assist you in your administrative procedures for the year 2021, ask him for advice.

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