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Finance Minister Gilles Roth presented the 2025 state budget on Wednesday morning to lawmakers in the Chamber of Deputies.
Here is everything you need to know.
Deficit and public debt
In 2025, the deficit of the state, social security, and municipalities is projected to decrease to €563 million, a significant reduction from the €987 million deficit forecast in 2024's budget.
"This budget reflects a responsible and sustainable financial policy," stated Finance Minister Gilles Roth. He emphasised that, unlike in recent years, when expenses outpaced revenues (the so-called 'scissor effect'), the current trajectory shows a positive reversal. Revenue growth is now outstripping expenditure growth.
Next year, the deficit is expected to reach €1.29 billion, but public debt is anticipated to stabilise at 27.5% of GDP.
Excises
Excise duties on cigarettes will rise by 5.5% next year, generating additional revenue for the state. By 2025, a positive balancing effect is expected, as state expenditures are projected to increase by 4.5%, while revenues grow at a faster rate of 5.2%. It's worth noting that revenue growth has already outpaced expenditure growth in recent years, marking a continued trend of fiscal improvement.
Social measures
Starting from 1 January, the non-qualified minimum wage will be exempt from taxes. Roth described it as "a historic social advancement for our country," noting that it was a long-awaited step that many had advocated for. "This government has finally made it a reality," he added.
To ease the burden on single parents, the calculation method for Tax Class 1A will be revised, and the tax credit for single-parent families will be increased.
The cost-of-living subsidy will also see a 10% rise. Additionally, the residency requirement to qualify for this subsidy will be reduced from 12 months to just three months. Those receiving an inclusion allowance will automatically be eligible for the cost-of-living subsidy moving forward.
The energy premium will be tripled and based on social criteria to ensure broader access in order to benefit more individuals, stated the Finance Minister. He also confirmed that, as previously announced, the tax scale will be adjusted by 2.5 index points as of 1 January 2025
Housing
From 1 October, retroactively, until the end of June next year, registration fees on home purchases will be cut in half. Through this measure, the government hopes to stimulate the construction of new homes sold off-plan, also known as 'Vefa' homes. This new rule applies to all properties, whether newly built or existing, according to Roth. It is will be applicable both to people buying their own homes and to investors seeking to buy properties for rental purposes.
