Unveiled on 1 October, the Lecornu government’s draft 2027 budget aims to achieve savings of €54 billion as part of the plan to restore public finances. The draft budget seeks to combine expenditure control, savings on social security and new revenue streams, whilst rejecting a general tax rise. However, several measures would have a tangible impact on incomes, benefits or taxation.

€25 billion in savings on public spending

Several ministries are seeing their budgets frozen or cut. Conversely, some of them – such as those for defence, justice, the home affairs and national education – appear to be spared. Local authorities would also be called upon to contribute, to the tune of around €5.5 billion. As for the civil service, the index point is set to be frozen for the fourth consecutive year, and the workforce of the State and its agencies is set to be reduced by a total of 1,076 posts. Certain ministries responsible for core government functions are also set to be spared.

What about pensioners?

As anticipated by many observers, pensioners are among the main groups being asked to contribute. Between the reduction in the ceiling for the 10 per cent tax allowance on pensions – which would be lowered from 4,439 to 3,000 euros – and de-indexation or under-indexation, the contribution is also estimated at 5.5 billion euros.

For businesses, a mixed bag

Whilst the surtax on the profits of large companies is set to be renewed, it is expected to be reduced to 5 billion euros after generating 7.5 billion in 2026. The research tax credit and the Dutreil Pact are also expected to remain unchanged. However, relief on employers’ social security contributions is set to change. Consequently, various bonuses that were previously exempt would now be subject to contributions. Furthermore, motorway and airport operators, shipowners and kerosene suppliers would face higher taxes.

Property owners and rental investors to face greater demands

As has been the case every year for several years now, a change to the tax regime for non-professional furnished lettings (LMNP) has been announced. The depreciation allowance would be capped at 2.5 per cent of the property’s value, up to a limit of 7,000 euros per year per tax household. For furnished holiday lets, the cap would be 1.5 per cent, up to a limit of 5,000 euros. As the ‘housing recovery’ scheme in the 2026 budget has not yet succeeded in boosting the development of long-term rental accommodation, the stated aim is to make furnished lettings less attractive. Conversely, the zero-interest loan scheme is set to be extended to new households.

The draft presented on 1 October is not yet the final budget. It will, without doubt, be amended by Parliament. Nevertheless, this 2027 budget sets a trend: to contain expenditure through targeted savings and to supplement this effort with new revenue streams. In this context, foresight, preparation and support take on their full significance. Finankap’s wealth management advisers are here to adapt your investment, asset holding and wealth transfer strategies to this new tax environment, taking into account your personal and professional objectives – Contact us!

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