Tax opportunities in family and childcare: an emerging market?
The Ministry of Public Accounts under scrutiny over potential reform of tax credit for personal services
In a recent meeting with the Finance Committee of the National Assembly, Amélie de Montchalin, the Minister of Public Accounts, did not rule out the possibility of revising the tax credit for personal services. This tax credit, which covers expenses for childcare, gardening, and housekeeping among others, has previously been deemed expensive by the Court of Auditors, who suggested a billion euros in savings could be achieved.
In light of the government's current goal to save 40 billion euros by 2026, the revision of this tax credit is being considered. Pierre Moscovici previously criticized the tax credit as too complex, costly, and ineffective, labeling targeted activities as "activities of comfort."
A Socialist deputy, Christine Pirès-Beaune, has suggested reviewing the tax credit, an idea that Amélie de Montchalin deemed "useful." According to the minister, the tax credit for personal services, as well as other tax credits, is subject to a review of evaluation.
The minister advocates for young parents and dependents to have "good access" to the tax credit. However, the rate or ceiling of the tax credit may be reduced for non-essential services to better allocate public resources. Currently, this tax loophole benefits five million taxpayers, allowing them to deduct half of their expenses from their taxes, up to €12,000 per year.
The government has proposed reducing the rate to 40% for non-essential services, with the exception of childcare and dependency fees. If the tax loophole were to be trimmed, the costs of housekeeping or gardening might be the most affected sectors.
The minister has also announced plans to eliminate certain tax loopholes that cost the state €85 billion each year, particularly those that benefit fewer than 100 taxpayers. The tax reduction for school fees valued at €433 million, as well as the reduction for donations to associations, are also under review.
Enrichment Data: The 2025 Finance Act introduces a new document-based audit procedure for tax credits, including those for personal services, strengthening oversight and prevention of fraudulent claims. There is no indication that the amount or rate of the personal services tax credit itself will be reduced; instead, improved compliance and reporting rules are becoming more stringent in 2025.
Amélie de Montchalin, the Minister of Public Accounts, expressed that the review of the tax credit for personal services, along with other tax credits, is a subject of evaluation due to the government's financial goal of saving 40 billion euros by 2026. In the proposed revisions, non-essential services could potentially see a reduction in their rate or ceiling to optimize public resources, although the amount or rate of the personal services tax credit itself may not be significantly reduced, as the 2025 Finance Act introduces more stringent compliance and reporting rules to prevent fraudulent claims.
