[France] The implications of CDHR for cross-border workers

France’s contribution différentielle sur les hauts revenus (CDHR) is a new tax, introduced under Article 10 of the 2025 Finance Act, designed to ensure a minimum 20 per cent tax on 2025 income, RSM reports.

Although CDHR was initially intended to be a temporary measure, it is already being considered for renewal in 2026 and so could be in effect for longer than initially planned.

According to RSM, the application of the CDHR raises particular questions for cross-border workers residing in France but employed in a neighbouring country. Particularly when their income is generally taxable in the neighbouring country rather than in France (as is the case for some Swiss cantons).

The CDHR, an additional contribution, reportedly applies when taxable income exceeds certain thresholds. Its calculation is based on the revenu fiscal de référence (RFR), which includes all household income, even if earned abroad and already taxed locally.

If the CDHR is due, it must be paid between December 1 and 15, 2025. 

Only taxpayers who are fiscally domiciled in France and whose adjusted RFR exceeds certain thresholds are subject to the tax:

• €250,000 for single, widowed, separated, or divorced taxpayers;

• €500,000 for married or PACS taxpayers filing jointly.

The tax authority goes on to perform a comparison:

• 20 per cent of the adjusted reference salary,

• minus the French tax, recalculated as if the tax credit had actually been applied in France.

This method is reportedly intended to ensure that the tax credit, which was granted to neutralise double taxation, doesn’t artificially reduce French tax to zero for the purposes of CDHR calculation.

If the difference between these two amounts is positive, it constitutes the CDHR payable. 

Impact on cross-border workers

Foreign income, even if taxed abroad, is included in the RFR calculation. Despite the tax credit neutralising French tax on these incomes, it is still factored into the comparison to determine if any additional amount is payable.

In practice, for cross-border workers taxed at source in the country of employment, the adjusted French tax is often sufficient to eliminate any potential difference, meaning that in most cases, no CDHR is due.

RSM advises that particular attention should be given to investment income subject to the flat tax. These incomes increase the RFR but are taxed at a reduced income tax rate of 12.8 per cent, potentially making CDHR applicable. 

The French tax administration has yet to publish detailed guidance regarding cross-border workers receiving income taxed in neighbouring countries.

The official simulator does not handle complex scenarios properly (foreign income, averaging, cross-border variations).

Taxpayers must therefore calculate CDHR themselves based on estimated 2025 income (noting that some investment income is only known via the annual tax statement provided by financial institutions).

Source: RSM

France’s contribution différentielle sur les hauts revenus (CDHR) is a new tax, introduced under Article 10 of the 2025 Finance Act, designed to ensure a minimum 20 per cent tax on 2025 income, RSM reports.

Although CDHR was initially intended to be a temporary measure, it is already being considered for renewal in 2026 and so could be in effect for longer than initially planned.

According to RSM, the application of the CDHR raises particular questions for cross-border workers residing in France but employed in a neighbouring country. Particularly when their income is generally taxable in the neighbouring country rather than in France (as is the case for some Swiss cantons).

The CDHR, an additional contribution, reportedly applies when taxable income exceeds certain thresholds. Its calculation is based on the revenu fiscal de référence (RFR), which includes all household income, even if earned abroad and already taxed locally.

If the CDHR is due, it must be paid between December 1 and 15, 2025. 

Only taxpayers who are fiscally domiciled in France and whose adjusted RFR exceeds certain thresholds are subject to the tax:

• €250,000 for single, widowed, separated, or divorced taxpayers;

• €500,000 for married or PACS taxpayers filing jointly.

The tax authority goes on to perform a comparison:

• 20 per cent of the adjusted reference salary,

• minus the French tax, recalculated as if the tax credit had actually been applied in France.

This method is reportedly intended to ensure that the tax credit, which was granted to neutralise double taxation, doesn’t artificially reduce French tax to zero for the purposes of CDHR calculation.

If the difference between these two amounts is positive, it constitutes the CDHR payable. 

Impact on cross-border workers

Foreign income, even if taxed abroad, is included in the RFR calculation. Despite the tax credit neutralising French tax on these incomes, it is still factored into the comparison to determine if any additional amount is payable.

In practice, for cross-border workers taxed at source in the country of employment, the adjusted French tax is often sufficient to eliminate any potential difference, meaning that in most cases, no CDHR is due.

RSM advises that particular attention should be given to investment income subject to the flat tax. These incomes increase the RFR but are taxed at a reduced income tax rate of 12.8 per cent, potentially making CDHR applicable. 

The French tax administration has yet to publish detailed guidance regarding cross-border workers receiving income taxed in neighbouring countries.

The official simulator does not handle complex scenarios properly (foreign income, averaging, cross-border variations).

Taxpayers must therefore calculate CDHR themselves based on estimated 2025 income (noting that some investment income is only known via the annual tax statement provided by financial institutions).

Source: RSM