Entrepreneurs, investors, business leaders, and executives — here are the major changes introduced by the 2025 Finance Act regarding personal taxation.
- If your taxable income exceeds €250,000 (single) or €500,000 (couple)
The 2025 Finance Act introduces a new measure called the Differential Contribution on High Incomes (CDHR), which sets a minimum effective tax rate of 20%.
How does this new tax work?
For high-income earners (≥ €250,000), the household must pay at least 20% in total taxes, combining:
- Income Tax (IR)
- the Exceptional Contribution on High Incomes (CEHR), with a rate ranging from 3% to 4%.
If the combined amount of these two taxes does not reach 20%, the difference will be subject to an additional levy — the CDHR.
Example:A taxpayer earns €300,000 in 2025 and pays €50,000 in income tax + CEHR.Their effective tax rate is approximately 16.7%.They will therefore have to pay an additional €10,000 under the CDHR to reach the required 20%.
Key feature of this new tax
Taxpayers concerned must pay a 95% advance payment by December 2025, even before filing their final 2025 income declaration.
Failure to do so will result in a 20% penalty on the CDHR amount, in addition to the initial payment due.
Which types of income are affected?
This new tax primarily increases the taxation of capital income, especially dividends.
Previously, the flat tax of 30% included:
- 12.8% income tax, and
- 17.2% social contributions.
From now on, depending on the situation, the adjusted flat tax could reach:
- 33% to 34% (with CEHR), or
- 37.2% (with CDHR — 20% income tax and 17.2% social contributions).
In summary
This reform significantly increases the tax burden on high incomes and will have a direct impact on both your personal income and your company’s cash flow.
We can assist you now in addressing these changes by helping you develop a comprehensive tax strategy and optimize the structure of your income.
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