Published on: Decembee 17, 2025 | Article No: 344 | By: @rprasanth_kumar
France is preparing a significant change to how certain investment income is taxed. From 1st January 2026, the Contribution Sociale Généralisée (CSG) on certain dividends and capital gains will be increased. This increase is officially called the Contribution Financière pour l’Autonomie (CFA). Its goal is to fund France’s Autonomy branch, which supports elderly care, EHPAD nursing homes, and home-based assistance.
For retail investors and company directors, this change matters because it directly increases the flat tax (PFU) paid on several common financial investments in France.
If you have any questions, please feel free to use the comments section at the end of this article.
Quick Summary: Key Points at a Glance
- CSG on some capital income increases from 9.2% to 10.6%.
- So, Total social charges including CSG increase from 17.2% to 18.6%.
- Finally, Flat tax (PFU) in France increases from 30% currently to 31.4%.
- Not all investments are affected and th changes will be applied automatically by financial institutions and French tax authorities.
Increase in social charges is part of the Projet de loi de financement de la sécurité sociale pour 2026 (PLFSS 2026). On 16th December 2025, the French National Assembly definitively adopted the PLFSS 2026
PLFSS means French Social Security Budget
Related article: My Personal Savings and Investment Portfolio Audit – India & France
Understanding the Basics
What is the CSG? : The CSG (Contribution Sociale Généralisée) is a French social charge used to fund the welfare system. It applies to salaries, pensions, and many types of investment income.
What are social charges?. Social charges known as prélèvements sociaux include:
- CSG: contribution sociale généralisée
- CRDS: contribution au remboursement de la dette sociale
- Other minor contributions
Together, they currently total 17.2% on most investment income.
What is the Flat Tax (PFU)? The PFU (Prélèvement Forfaitaire Unique), often called the flat tax in France, applies to most financial investment income. It consists of 12.8% income tax and 17.2% social charges. Total today is at 30%.
What Is Changing in 2026?
From 2026,
- CSG on certain investment income will increase to 10.6%
- Social charges rise to 18.6%
- Flat tax will increase from 30% to 31.4%
This increase is called the Contribution Financière pour l’Autonomie (CFA) and adds 1.4 percentage points to social charges. Here is a table summarizing the 2026 changes for easy understanding.
| Flat Tax Components | Change in 2026 |
| A. Social Charges | 17.2% to 18.6% |
| CSG | 9.2% to 10.6% |
| Prélèvement de solidarité | 7.5% |
| CRDS | 0.5% |
| B. Income Tax | 12.8% |
| Total (A + B) | 30% to 31.4% |
Why is France doing this?
- Funding for elderly care and EHPADs
- Recruitment of around 4,500 professionals.
- Better financial stability for care institutions.
- Support for home-based care (“virage domiciliaire”).
- Contribution to reducing the social security deficit (target: below €20bn by 2026)
Investments Impacted & Exempted
Investments affected by the change in 2026: The flat tax increase mainly targets the following savings and investment products,
- PEA (Plan d’Épargne en Actions)
- CTO (Compte-Titres Ordinaire)
- PER (Plan d’Épargne Retraite)
- Non-regulated savings accounts (compte sur livret, etc.)
- Dividends paid to TPE/PME company directors who pay themselves partly this way.
So, These investment products will face higher social charges on dividends and capital gains
Investments explicitly exempt from the change: To avoid penalising small savers and property investors, several products are excluded from the CSG increase.
- Assurance-vie
- Rental income (revenus fonciers)
- Real estate capital gains
- PEL and CEL interest
- PEP (Plan d’Épargne Populaire)
These will remain taxed at the current 9.2% CSG rate.
Note: Regulated savings accounts like Livret A, LDDS, and LEP are not concerned by this change because they are tax-free even today and will remain the same. More details on Types of Savings Accounts in France and interest rates.
Source: Projet de loi de financement de la sécurité sociale pour 2026
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DISCLAIMER
Any finance-related information shared is not professional legal, tax, or investment advice. The information provided is of an educational and general nature and is not investment advice within the meaning of Articles L. 321-1 and D. 321-1 of the French Monetary and Financial Code. Investment carries risks of loss and past performance does not guarantee future performance. Please consult a financial advisor for any professional advice.
Will the bank interests, dividends etc in India (needed to be declared in French ITR) attract this revised CSG of 10.6% in flat tax or otherwise?? If yes, then from when – 2025 onwards or 2026 onwards?
Hello Amit ji,
I have made detailed video tutorials on this topic https://prasanthragupathy.com/2024/05/tax-step-by-step-tutorials-on-income-tax-declaration-in-france/
New rates are applicable from 1st January 2026.
Cheers,
Prasanth
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Dear Prasanth,
Hope you are all fine…I sincerely appreciate all your efforts through your articles/blogs/videos in helping Indians about various things of France, particularly the income tax issues…
Presently I am in India and came to know about this increased CSG of 10.6%(in place of 9.2%) announced in the latest French budget…The impact of it on the Indian income (Bank interests, dividends etc.) for Indians was not clear in your above article…So I raised the question…
I understand now that the flat tax for the Indian income part would also become 31.4% (18.6% being the SS Tax & 12.8% is the Income Tax) from 01/01/2026…
Please confirm my above understanding…
With all my best wishes,
Amit DUTTA