A] Prelude
For more information on pension systems, risk and coverage, feel free to visit our dedicated webpages:
https://expatpensionholland.nl/europe-expat-pensions
https://expatpensionholland.nl/global-pillars-systems
https://expatpensionholland.nl/global-investments-risks-0
https://expatpensionholland.nl/global-social-security-coverage
For even more information feel free to visit the following external sites:
https://www.aljazeera.com/news/2025/1/14/france-new-pm-announces-renegotiation-of-contested-pension-reforms
https://dsv-europa.de/en/news/2025/04/renten-konklave-frankreich.html
B] The Issue
Proposed changes to the tax system for pensioners in the 2026 Budget are already raising anger. Here’s what is planned and how it affects foreign retirees.
France has only just managed to pass its 2025 Budget, but already attention is turning to the 2026 spending plans, with prime minister François Bayrou giving a press conference outlining the financial problems that the country faces, and what must be done to tackle them.
France faces a soaring budget deficit and the parliamentary crisis of 2024 – which brought down a prime minister and left the country without agreed spending plans at the start of the year – have made the situation worse. While the Bayrou government did eventually manage to pass a Budget, it did not address the major problem of the nation that is unable to balance its books – which is why attention is already upon the 2026 Budget, scheduled to be debated in the autumn of this year.
Among the ideas that have been floated is the scrapping of the 10 percent tax credit that French pensioners are entitled to; in effect condemning retirees to pay more tax.
C] What is the proposed change?
At present, recipients of a French pension benefit from a 10 percent abattement fiscal – or tax allowance. This means that 10 percent is automatically deducted from their pension income before their income tax is calculated.
So let’s take the example of a couple who each receive a monthly pension of €1,800 – their total combined pension income from the year would be €43,200, but with the 10 percent discount their taxable income would only be €38,880.
The 10 percent discount also applies to workers, and is intended to act as a deduction for professional expenses – there are, at this stage, no plans to change it for workers. It has been in place since 1977, and was initially a one-year measure for pensioners in the year after their retirement, intended to compensate for the loss of income as they stopped work. It was extended to a permanent measure in 1978.
D] How does this affect foreigners?
The tax deduction applies to people who are in receipt of a French pension – so it would affect foreigners who worked in France and then retired here, but it would not affect people who retired to France but have never worked here. For those who have ‘split’ careers with half their working life spent in France and half abroad, it would apply to the French part of their pension.
Foreigners who retire to France and have a pension paid overseas have different tax arrangements – the exact detail depends on the tax treaty between France and the country where the pension is paid, but in most cases pensions are taxed in the country of origin. There are, however, some exceptions and in the case of British retirees it depends on the type of pension (public or private).
E] Will this be implemented?
The change is being proposed in large part due to France’s financial problems. The government’s stated aim is to save €40 billion in the 2026 Budget, with the scrapping of the pensioner tax credit estimated to save around €5 billion.
Government discussions are expected to start, with parliamentary debates due to begin in the autumn. It’s likely that this ‘cost cutting’ budget will be hard-fought. Any measures that disadvantage pensioners are generally considered taboo in French political circles, so it remains to be seen if this idea will make it into the final bill.