Staying in France: What the 2027 Budget and a Nervous Bond Market Mean for Your Money

October 2026

By Will Glyn

In July I wrote about the people leaving France ahead of taxes that might one day arrive, and suggested that anyone staying should look over their arrangements before budget season. This year that season opened on Thursday 1st October, when the government sent its 2027 budget to parliament.

This piece is for the people who are staying — those who have retired to France, who work there or who are raising a family there. The draft contains a handful of measures worth knowing about: a lower cap on the tax allowance for pensions, a six-month window for family gifts and a limit on what owners of furnished lets can deduct. One clause, Article 6, deserves a careful read from anyone living in France with a life assurance policy or investment bond issued in another country.

One thing before I go further: Proctor Wealth Associates are financial planners and not tax advisers. This article is for information and is not tax advice. Everything below describes the draft bills as they stood on 6th October 2026, and French budgets change a good deal on their way through parliament. We work alongside French tax advisers and can put you in touch with one if you don’t already have somebody.

What the government is trying to do

The government is aiming for a deficit of 5.0% of GDP in 2027, down from a revised 5.4% this year, and counts €43 billion of measures in its two budget bills to get there. France’s own fiscal watchdog, the Haut Conseil des finances publiques, considers the 2027 growth forecast optimistic and describes the deficit target as a minimum.

The government is trying to do that while paying more to borrow. Yields on government debt have risen across the developed world this year, which I wrote about in August, and in the week of the budget the yield on France’s ten-year debt reached about 5%, its highest since the early 2000s according to Reuters. Ministers expect the interest bill on the public debt to rise from €79 billion this year to €91 billion next year, and give that as a reason the deficit has to come down.

What the draft would change for a household

The government’s own summary is that there is no general tax rise, and the thresholds for the income tax bands would go up by 2.1% in line with forecast inflation. The measures that touch retired people, families and property owners are narrower:

• Pension income — retirement pensions currently get a 10% tax allowance, capped at €4,439 per household. The draft cuts the cap to €3,000, starting with this year’s income. The government says households with up to about €30,000 a year of pensions would see little or no effect. Allowing for the rise the old cap would have had this year, the most a household could lose is roughly €1,500 of allowance — about €460 a year of extra tax in the 30% band and about €630 in the 41% band. The cap would cover pensions taxed in France, including those paid from abroad.
• French pensions — in 2027 only people whose French pensions total €1,260 a month or less would be guaranteed the normal inflation rise on their basic pension. Pensions paid from other countries are not affected by this measure.
• Gifts — between 1st January and 30th June 2027, a cash gift to a child, grandchild or great-grandchild aged 18 to 49 would be taxed at a flat 6% on up to €100,000 per giver and per recipient, and would be left out of the usual 15-year tally of earlier gifts. Two parents giving to two children in that age range could pass on €400,000 for €24,000 of gift tax. For the same six months the tax-free limit on family cash gifts, for givers under 80, would rise from €31,865 to €50,000.
• Furnished lets — owners who let furnished property under the non-professional regime (LMNP) would see the depreciation they can deduct capped at a rate of 2.5% a year and €7,000 per household, or 1.5% and €5,000 for holiday lets, with no carry-forward of the unused part.

The government’s text makes no change to the flat tax on investment income, the property wealth tax (IFI) or the inheritance tax scales.

Article 6: if your policy was issued outside France

Many people who move to France hold their investments in a life assurance policy issued in another country, typically Luxembourg or Ireland. The French Treasury works on a figure of around €100 billion held by French residents with foreign insurers. At present France gives policies from insurers in the EU or EEA the same favourable treatment as a French life assurance policy, an assurance-vie: lower income tax on withdrawals after eight years, with an annual tax-free allowance, and separate rules on death under which each beneficiary can receive €152,500 free of tax from premiums paid before age 70. Policies from insurers outside the EEA — in the Isle of Man or the Channel Islands, for example — don’t get the income tax advantages, but they do come under the rules on death.

Article 6 of the draft would make that treatment conditional. To keep it, a foreign policy would have to meet three tests:

• Cash only — premiums paid from 1st October 2026 are paid in cash, and not by transferring existing investments into the policy.
• Permitted assets — the assets inside it are similar to those a French policy is allowed to hold.
• No connected holdings — any fund set up for that policy alone, or for a closed group of policies (a dedicated fund), holds nothing issued, guaranteed or owed by the policyholder, the life assured, a beneficiary, their close family or a company they control.

A policy that fails would lose the reduced tax rate and the annual allowance on gains from premiums paid from 1st October. From 1st July 2027 the proceeds on death would also be taxed as an ordinary inheritance. For a husband or wife that changes little, since spouses and civil partners (PACS) are exempt either way. For someone who isn’t a relative in French law, such as a partner you are neither married to nor in a PACS with, the difference is large: on a €300,000 policy funded before age 70, €29,500 of tax under the life assurance rules against close to €180,000 as an ordinary inheritance at 60%. A child would usually pay more too, by a much smaller margin.

The government says the measure concerns a limited number of policies, mostly held by wealthy savers and built around dedicated funds, although its own costing assumes that a quarter of foreign policies would not currently pass. Whether yours passes is a judgement for the insurer and a French tax adviser, and the government expects the taxpayer and the insurer to supply the evidence. The rule on death would apply only to deaths from 1st July 2027, which would leave time to bring the investments into line. The cash-only test has no such grace period, so I’d take advice from a French tax adviser before transferring existing investments into a policy while the text is still in draft.

None of this is law yet

The National Assembly debates the tax side of the finance bill from 13th to 19th October and votes on it on the 20th. It votes on the social security bill, which carries the pension uprating, on 27th October, and on the whole finance bill on 17th November. The government has no majority, and the last two budgets didn’t become law until the middle of February. A presidential election follows on 18th April and 2nd May 2027, after which a new government can revisit all of it.

Several parts of the draft would apply from dates that have already arrived. Article 6 would count premiums paid from 1st October 2026, and the income tax measures — including the pension cap and a new limit of about €48,000 on tax-free severance pay — would apply to income received this year, so those are the parts worth looking at now.

What I’d do now

• Ask the Article 6 question — if your policy was issued outside France, ask the insurer in writing whether it meets the three tests, and review any dedicated fund with a French tax adviser well before 1st July 2027.
• Work out the pension figure — if your household’s pensions come to more than about €30,000 a year, ask your accountant or tax adviser what the lower cap would mean for your tax return on 2026 income.
• Pencil in the gift window — if you were already planning to help children or grandchildren, the first half of 2027 may be a good time, provided the measure is confirmed. Your home country may treat the same gift differently, so take tax advice on both sides first.

Where to go from here

The tax questions, including whether a particular policy meets the Article 6 tests, belong with a qualified French tax adviser, and we’ll introduce you to one suited to your circumstances if you don’t have somebody. The planning questions are the ones we can help with: how your savings and investments are held, and whether your arrangements would still work if the rules change again after the election.

If you’d like to go through your own position, you can book a call with me.

Will is an Independent Financial Adviser with over a decade of experience helping expats make the most of their international status.