Lhe question of inheritance tax could return to the centre of debate. While Michel Barnier’s government must confront the public deficit slippage to close its 2025 budget – so much so that it is considering increasing taxes for the wealthiest individuals and large companies – a report from the Court of Auditors considers that it is “possible” to touch inheritance tax by reducing tax advantages in particular, and advocates a “balanced reform”.
This report presented to parliamentarians this Wednesday, September 25, had been requested last year by the president of the Finance Committee at the National Assembly, Éric Coquerel. In this file, consulted by The Echoes And Releasethe institution wants to improve inheritance tax, the terms of which have not been reviewed for around ten years.
“No reduction in levies”
In its report, the Court of Auditors rejects the proposals put forward by the National Rally and the Macronist camp during the legislative elections, which suggested reducing inheritance tax. “A reform of inheritance tax, if it were to take place, would necessarily have to be done at constant product. The situation of public finances, in particular after the 2023 financial year, does not allow any reduction in compulsory deductions that would not be offset by savings in expenditure,” states the report, referring to the heavy slippage in the public deficit.
Without commenting on a tightening of inheritance taxes, demanded by the left, the Court of Auditors indicates that wealth taxation will already reach 4.1% of GDP in France in 2022, “the highest rate in the European Union”.
Two tax loopholes in the sights
However, the Court of Auditors suggests a “balanced reform” and recommends tackling two tax loopholes which allow the wealthiest to significantly reduce the average effective rate of inheritances.
Dutreil Pact
First, there is the “Dutreil pact” which allows you to benefit from an exemption during the family transfer of a business.
Life insurance contracts
Second, life insurance contracts, which benefit from favorable taxation. For example, according to The Echoesinheritances of more than 2.5 million euros will actually only be taxed at 15%, instead of 30%, for direct heirs thanks to these two tax advantages.
According to the report, reducing these tax benefits would make it possible to finance a reduction in the tax rates weighing on indirect heirs, and therefore to “better take into account family and societal developments”. Indirect heirs are very disadvantaged compared to children and grandchildren, despite the rise of blended families. Reducing these tax loopholes could thus restore a certain fairness among heirs, estimate the magistrates and financiers of the Court of Auditors.
