2025 Finance Bill: labor costs, PTZ, MaPrimeRénov, VAT on boilers... what changes for the construction industry?

The latter already knew that they would be asked to contribute through tax increases on the largest of them. The president of Medef, Patrick Martin, was even willing to "discuss" it, on condition that the State take its share of the massive savings to be made in parallel.

In total, the finance bill contains about a third of tax increases on businesses and individuals, and two thirds of savings, according to government calculations.

Thus, 400 companies with a turnover of at least one billion euros will pay an additional "contribution" on their corporate tax, with a gradation between those with a turnover of between one and three billion euros, and those exceeding these three billion.

The measure is expected to generate 8 billion euros in 2025 and 4 billion in 2026.

It is contested by the Macronist camp, as going against a policy that has lowered the corporate tax rate (IS) from 2017% to 33,3% since 25. This would have notably favored the fall of two points in the unemployment rate in seven years.

What annoys

Large maritime transport companies will also be taxed, for 500 million euros in 2025 and 300 million in 2026. This would be a lesser evil for them, who also benefit from an advantageous tax niche.

A tax on share buybacks will also hit companies that buy back their shares to cancel them and distribute better dividends to their shareholders. It will be permanent and will bring in 200 million euros next year. It will apply to operations carried out from Thursday.

But what really angers the bosses is rather in the Social Security financing bill (PLFSS) also presented on Thursday.

First, the planned reduction in tax breaks on low wages, which will undergo a first round in 2025 before a more complete reform in 2026. The idea is to prevent the minimum wage from "becoming a salary for life", according to Bercy, but while smoothing out the breaks, the government is removing five billion euros worth in the process.

On Wednesday in Les Echos, Patrick Martin, the president of Medef, feared "hundreds of thousands" of jobs lost with such a measure.

All companies involved

On Thursday, while stressing that "the situation of public finances is serious", he judged to the AFP that the draft budget "places too much of the burden of savings on businesses with structural and sustainable measures" penalizing "all businesses".

The same tone is heard from the U2P (local businesses), whose president Michel Picon deplores the fact that the exemptions from charges will now only concern apprentice salaries up to 0,5 times the minimum wage instead of the current 0,79.

And, to find 1,2 billion euros, aid to companies employing apprentices, whose number has tripled since 2018 to almost a million, could be reduced from 6.000 to 4.500 euros, regardless of the apprentice's level of education and the size of the company.

"This is just one scenario among others," the Ministry of Labor said.

"When I think that TotalEnergies and its apprentice engineer would be treated like the baker from Ajaccio and his saleswoman!" Michel Picon protests, for whom we want to "take from the pockets of small businesses so as not to offend the big ones".

The Confederation of Small and Medium-Sized Enterprises (CPME) also expressed alarm this week about the planned limitation of the cost of sick leave, which would have repercussions on employers.

The bosses know who to turn to now: "We will do our work in Parliament, starting Monday," assures Mr. Picon. "The economic situation must lead Parliament to make the right choices for the country by favoring measures that do not alter the economic dynamic," emphasizes Mr. Martin.

Learning to diet after the boom years

A serious blow to a system that has been strongly encouraged in recent years to support youth employment: the government has decided in its 2025 budget to revise downwards the apprentice hiring bonus, causing employers to jump.

"An effort on (hiring) bonuses of 1,2 billion euros is requested," indicated the Ministry of Labor, specifying that the option of a single aid reduced from 6.000 to 4.500 euros is "one scenario among others."

The avenues of "modulation by level of qualification" or "by size of company" are also being considered, according to the same source, while small companies are demanding differentiated treatment.

Apprenticeships have been one of the main drivers of the fall in unemployment in recent years. Accessible to young people aged 16 to 29, they are based on the principle of alternating between theoretical education and vocational training with an employer.

The government now plans to stabilize the number of apprentices, which rose from 317.000 in 2017 to 853.000 in 2023. President Emmanuel Macron had set himself the goal of one million apprentices per year.

The growth in apprenticeships can be explained both by the 2018 reform (which notably liberalized the opening of training centers and extended the system to 26-29 year-olds), as well as by hiring bonuses.

Don't "break the dynamic"

"We must be very careful" not to "break the momentum", argued the head of Medef Patrick Martin, with the U2P (local businesses) calling for not "sacrificing" apprenticeships "on the altar of budgetary savings".

"Where we need to help is with kids who are failing. When businesses in the regions do it, attacking them is a bad choice," said U2P president Michel Picon.

Gilles Gateau, general director of the Association for the Employment of Executives (Apec), also pleaded in a column not to break this "social elevator".

Implemented during the health crisis in July 2020, the hiring aid had been extended several times and had been set since January 1, 2023 at 6.000 euros for both minors and adults.

But since May 2024, employees on professionalization contracts (apprentices outside initial training) under 30 who were initially affected are no longer affected.

Another source of savings is that the exemptions from employee and employer contributions that apprenticeship contracts benefit from will only apply in 2025 up to half the minimum wage, and not up to 0,79 of the minimum wage as is the case today, which will increase the cost for employers of the highest-paid apprentices.

"Windfall effects"?

For the latter, the net salary will decrease: they will pay more social security contributions and will also see their remuneration above half the minimum wage subject to CSG and CRDS.

Prime Minister Michel Barnier had warned that he intended to look "at whether certain apprenticeship aids could not be retargeted" and that he intended to avoid "windfall effects".

A recent report from the General Inspectorate of Finance (IGF) calculated that the cost of apprenticeship aid had increased 3,4 times between 2018 and 2022.

"Of the 14 billion currently in public support for apprenticeships, four billion are intended to support employers, 10 billion to finance training. There are things that we can do to better manage by quality," said Labor Minister Astrid Panosyan-Bouvet on Thursday.

Economist Bruno Coquet (OFCE) has estimated national spending on apprenticeships in 2023 at 24,9 billion euros, or 26.000 euros per apprentice, including the social and tax exemptions from which these contracts benefit and unemployment insurance expenditure.

In 2022, the Court of Auditors had already expressed alarm about a "financial impasse". Faced with an increase in numbers mainly driven by higher education apprentices, the Sages noted that from the bachelor's degree onwards, "the added value on professional integration is low" even if this "contributes to democratizing, professionalizing and financing higher education".

The budget also worries individuals and small entrepreneurs

Individuals and small businesses will also be affected by certain measures in the government's draft budget presented on Thursday, intended to release an "effort" of 60 billion euros on public finances.

Daniel, a plumber in Strasbourg, is very unhappy about the planned reduction in aid for recruiting apprentices: among other scenarios, this could go from 6.000 euros per year per apprentice to 4.500 euros.

"When you're a small business, even when you work like a dog, you can't make ends meet at the end of the month. They're already taking 46% of our income. So if they want to take away this little advantage, there's a real problem," fumes this entrepreneur, whose company, Eldan Sanitaire, employs a new apprentice every two years.

He will probably now have to pay social security contributions on his salary above 0,5 times the minimum wage, while salaries below 0,79 times the minimum wage are currently exempt.

His apprentices, boys aged 16 to 18 "generally failing at school", "learn a trade and are happy with the experience", he assures.

And their presence has allowed him to take on projects that he would otherwise have been unable to do alone. "You can't change a water heater alone, you need two people," he observes.

If there are cuts in aid, "I won't take on any more apprentices, it's as simple as that," he says.

Minimum wage per month

Angy (name changed), a 29-year-old interior designer, rents a small one-bedroom apartment in the centre of Nice on AirBnb. She inherited it and decided to rent it to tourists because, as a self-employed entrepreneur, she considers her activity "random".

"I opted for seasonal rentals because it brings in a lot more (than traditional rentals, editor's note), thanks to the very high demand during the summer months," explains Angy, who earns an average of "a minimum wage per month" from her rental and manages reservations, customer reception and cleaning herself.

"If the tax system is changed, all this could fall through," she fears.

The budget presented on Thursday does not provide for an increase in taxes on rental income. On the other hand, a tax change, expected to bring in 200 million euros per year, should increase the amount of the capital gain if Angy decides to resell: the depreciation that she may have deducted from her income while renting the apartment will now be taken into account in the calculation of the real estate capital gain on her property.

To justify this new provision, the text highlights the risk that the advantage currently granted will favour the rental of furnished accommodation, particularly for tourism, to the detriment of the supply of traditional main residences.

"Succession problem"

The Thel family in Lille has owned the household appliance sales and repair company of the same name for five generations. Jean-Jacques, 74, the father, owns 75% of the shares in the SARL and his son Jean-Christophe 25%.

"We have a big succession problem," says this septuagenarian who has been retired for ten years, while still working, without paying himself a salary, for the company that a low margin prevents from passing on to Jean-Christophe.

A change to the Dutreil pact, which exempts family business successions from 75%, would be a disaster for them. Mentioned here and there because the law sometimes gives rise to abuses, the reform does not appear in the budget presented on Thursday. The government does not seem to be in favour of changing the system, but anything can happen during the parliamentary debate.

"A small craftsman should not pay inheritance tax at all," says Mr. Thel, who believes that there is "a misunderstanding of what a business is."

For the FFB, there are "steps forward and steps back"

The FFB is pleased to find confirmed in the draft finance bill for 2025 the return to a new PTZ throughout the territory. However, it is important that the expected government amendment to specify the extension be unveiled as soon as possible, to give visibility to the French, particularly regarding the reintegration of the individual house. Also good news is the clear direction towards a stabilization of MaPrimeRénov' in its current scope - which remains to be realized quickly - despite a regrettable drop in the budget to 2,5 billion euros. The FFB understands that we are aligning ourselves with what is actually consumed today, but hopes that an additional sum can be reinjected in the future, as soon as the market takes off.

On the other hand, four government decisions remain incomprehensible.

First of all, this draft budget confirms the abolition of the "Pinel" without an alternative, despite the recent report from the Court of Auditors which was quite favourable to the scheme. The FFB calls on parliamentarians to address this issue, while the private rental market is collapsing and plays a driving role in residential pathways.

The FFB then strongly contests the sudden increase from 5,5% to 20% of the VAT rate applicable to the installation of a gas boiler in the event of replacement of the heating system. Furthermore, the reduction in the FCTVA will inevitably impact investments by local authorities and construction markets in an already uncertain period.

Finally, the FFB deplores the increase in the cost of labor through a reduction in the reduction of charges at the level of the minimum wage, a transfer to companies of a portion of the daily Social Security allowances as well as a possible reduction in aid for the hiring of apprentices. All these measures will inevitably destroy jobs at a time when, on the contrary, it is necessary to promote purchasing power to reduce the country's public deficit.

For Olivier Salleron, president of the FFB: "This draft budget for 2025 shows that the government has begun to listen to the profession's demands regarding the PTZ and MaPrimeRénov'. However, the FFB deplores the net loss of Pinel, the reduction in the envelope of MaPrimeRénov'. Professionals fear the effects of the umpteenth modification of the reduced VAT, with the brutal exclusion of gas boilers, and the measures on charges that are counterproductive for employment. The housing and energy renovation policy deserves better than these jolts."

For the UNPI, "rental investment in danger"

Following the presentation of the draft finance bill for 2025, the National Union of Real Estate Owners (UNPI) has expressed very serious concerns regarding the tax treatment of rental investments, particularly with regard to non-professional furnished rentals (LMNP). The reintegration of deducted depreciation in the calculation of taxable capital gains is a very bad signal, in a context of unprecedented attrition in the rental market.

A harmful confusion between furnished rental and furnished tourist rental

The proposed tax reform (of article 150 VB of the general tax code) creates a regrettable confusion between long-term furnished rentals and tourist rentals. These two types of rentals respond, in fact, to different needs.

Although tourist rentals have developed in response to strong demand linked to the growth of tourism and a fundamental sociological change, they should not be confused with traditional furnished rentals, which play an essential role in the supply of accommodation for students, young workers and mobile employees.

A harmful impact on rental investment

It is crucial to maintain the current LMNP tax regime, which is one of the few attractive systems for landlords. Challenging this framework could destabilize a significant portion of the rental supply.

Any increase in the tax burden on furnished rentals, whether it be capital gains tax or accounting depreciation, would send a disastrous signal to investors, who are already seriously demotivated in the current context. These measures will continue to slow down investment in the rental sector, even though the housing market is already seriously lacking in supply.

Supporting rental investment by creating a private lessor status

The UNPI calls for vigilance. Thus, proposals aimed at bringing the tax frameworks of bare rental and furnished rental closer together must be oriented towards encouraging investment, and not the other way around. It is imperative to strengthen the mechanisms that work and avoid penalizing those who support the rental offer.

Also, in order to revive rental investment, the UNPI is calling for the creation of a private lessor status - using the depreciation mechanism - and which recognizes the entrepreneurial status of a landlord. The objective is to revive rental investment in both new and old buildings, replacing tax exemption laws and provided that the assets meet the rules of decency and the requirements of energy performance.