The Differential Contribution on High Incomes (“DCHI”) was introduced by the 2025 Finance Act. The DCHI was initially intended to apply for one year only. However, the 2026 Finance Bill seeks to make this new tax permanent in a context of deteriorating public finances.
The DCHI applies to individuals receiving substantial income, notably from investment income, which benefits from a tax rate lower than the rate resulting from the progressive income tax scale.
Where the combined taxation relating to income tax and the Exceptional Contribution on High Incomes (“ECHI”) is below 20% of the household’s reference tax income (“RTI”), a DCHI is levied in order to reach this 20% threshold.
This contribution applies to tax households domiciled in France whose RTI exceeds €250,000 for single, widowed, separated or divorced taxpayers, and €500,000 for taxpayers subject to joint taxation.
One of the first difficulties raised by this tax lies in determining the RTI to be used. Article 224 of the French General Tax Code provides that the RTI taken into account is the RTI used for the calculation of the ECHI, adjusted by specific add-backs.
In addition, this new tax must be calculated and paid in two stages:
- A 95% advance payment must be calculated, reported and paid by 15 December 2025;
- The balance will be calculated and reported in May–June 2026.
In practice, this means that as early as December 2025, taxpayers must assess whether they are liable for this tax on their 2025 income, even though the tax year has not yet ended and additional income may still be distributed during the last two weeks of December 2025.
Penalties
- In the event of late filing or failure to file, a 20% surcharge applies to 95% of the DCHI due.
- If the advance payment is incorrect (i.e. the amount paid is more than 20% lower than 95% of the DCHI due), a 20% penalty will apply. The penalty base is also calculated by reference to 95% of the DCHI due.
Source:
Article 224 of the French General Tax Code
