The exceptional contribution on high incomes (contribution exceptionnelle sur les hauts revenus, CEHR) is an additional contribution to income tax, assessed on the household’s reference taxable income (revenu fiscal de référence, RFR), at rates of 3% and 4% above thresholds set according to marital status, with a specific “quotient” mechanism designed to reduce the tax burden where the thresholds are exceeded as a result of income of an exceptional amount.

1) CEHR rates and tax base

• Rates and thresholds: 3% on the portion of the RFR between €250,000 and €500,000 (single/widowed/separated/divorced) or between €500,000 and €1,000,000 (married couples/civil partners (pacsés) filing jointly), and 4% above €500,000 or €1,000,000 respectively.
• Tax base: the RFR, including in particular certain exempt income and income subject to flat-rate final withholding (prélèvements libératoires) or withholding at source, without applying the income tax (impôt sur le revenu, IR) quotient for exceptional income, since the CEHR has its own smoothing mechanism

2) Principle of the “quotient” mechanism (smoothed base)

1. RFR for year N ≥ 1.5 × the average of the RFRs for years N−1 and N−2.
2. RFR for each of years N−1 and N−2 ≤ the liability threshold (€250,000 for a single person / €500,000 for a couple).
3. Being liable to income tax in France, for each of years N−1 and N−2, on more than half of one’s “worldwide RFR” (defined as the ordinary RFR increased by foreign-source income that would be included if it were French-source income). Purpose: to reduce the tax burden on taxpayers who cross the liability threshold because of exceptional income, by comparing the RFR for the year with the average level of the two preceding years.

• Calculation method:

• Step 1: calculate the average of the RFRs for the two preceding years (M)
• Step 2: calculate the excess E = RFR(N) − M.
• Step 3: smoothed base B = M + (E / 2).
• Step 4: apply the CEHR rates to base B (3% and 4% depending on the brackets and marital status) to obtain a “unit” contribution (C1)
• Step 5: final smoothed contribution = 2 × C1

3) Important nuances and changes in circumstances

• Change in marital status (year of marriage/civil partnership (Pacs) without opting for separate returns): the base is determined from the RFR of both spouses/partners; applicable threshold = €500,000 for the household
• Year of separation/divorce (or marriage/Pacs with the option for separate returns): the base is determined for each person from his or her own RFR, with a threshold of €250,000 for each household so constituted
• Year of death: the base is calculated for each of the periods before/after the death; thresholds of €500,000 and then €250,000
• Specific methods of reconstituting the RFR may be required, by way of a claim (réclamation), in the event of a change in marital status in year N or N−1/N−2 in order to access the quotient

4) Non-residents and the CEHR

• The CEHR also applies to persons domiciled for tax purposes outside France where they have French-source income included in the RFR and exceeding the thresholds, subject to tax treaties and within the limits of treaty caps where applicable.
• For non-residents, the RFR taken into account for the CEHR does not include foreign-source income excluded from income tax

5) Interaction in 2025: differential contribution on high incomes (CDHR)

• New rule applicable in 2025: a differential contribution (contribution différentielle sur les hauts revenus, CDHR) ensures, from 2025 income onwards (a scheme extended by the Finance Act for 2026 (loi de finances pour 2026), Law No. 2026-103), a minimum taxation of 20% calculated on an adjusted RFR, in addition to income tax and the CEHR, according to a formula specified in the administrative guidelines (doctrine), with a flat-rate increase depending on the composition of the household
• Point to watch: for the CDHR, the CEHR to be taken into account is determined without applying the CEHR quotient mechanism, which may lead to a specific interaction between the smoothed CEHR and the CDHR in the overall 2025 tax computation

6) Detailed numerical examples (step-by-step calculation)

Example A – Married couple, highly exceptional RFR (smoothing method)

• Data: RFR N = €4,000,000; RFR N−1 = €450,000; RFR N−2 = €350,000; average M = €400,000; couple taxed jointly.
• Conditions:

• 4,000,000 ≥ 1.5 × 400,000 = 600,000 → yes.
• 450,000 ≤ 500,000 and 350,000 ≤ 500,000 → yes.
• Liable to income tax in France on > 50% of the worldwide RFR in years N−1 and N−2 → assumption met.
• Calculation of the smoothed base:

• E = 4,000,000 − 400,000 = 3,600,000.
• B = 400,000 + (3,600,000 / 2) = 2,200,000.
• Application of the CEHR rates to B (couple):

• Bracket 500,000 → 1,000,000 at 3%: (1,000,000 − 500,000) × 3% = 15,000
• Bracket > 1,000,000 at 4%: (2,200,000 − 1,000,000) × 4% = 48,000
• Unit contribution C1 = 15,000 + 48,000 = 63,000

• Final smoothed contribution: 2 × 63,000 = €126,000
• Comparison with the ordinary rules (without smoothing): [(1,000,000 − 500,000) × 3%] + [(4,000,000 − 1,000,000) × 4%] = €135,000 → smoothing saves €9,000

Example B – Single person close to the thresholds: smoothing not applicable

• Data: single; RFR N = €520,000; RFR N−1 = €260,000; RFR N−2 = €245,000; M = €252,500
• Testing the conditions:

• 520,000 ≥ 1.5 × 252,500 = 378,750 → yes
• RFR N−1 = €260,000 > €250,000 → condition 2 fails → smoothing not applicable
• Calculation of the CEHR under the ordinary rules:

• Bracket 250,000 → 500,000 at 3%: 250,000 × 3% = 7,500
• Bracket > 500,000 at 4%: 20,000 × 4% = 800
• CEHR due = €8,300

Example C – Single person, highly exceptional income: smoothing applicable

• Data: single; RFR N = €1,200,000; RFR N−1 = €180,000; RFR N−2 = €220,000; M = €200,000
• Conditions:

• 1,200,000 ≥ 1.5 × 200,000 = 300,000 → yes
• 180,000 ≤ 250,000 and 220,000 ≤ 250,000 → yes
• More than 50% of the worldwide RFR taxable in France in years N−1 and N−2 → assumption accepted
• Calculation of the smoothed base:

• E = 1,200,000 − 200,000 = 1,000,000
• B = 200,000 + 500,000 = 700,000
• Application of the CEHR rates (single person):

• 250,000 → 500,000 at 3%: 250,000 × 3% = 7,500
• Bracket > 500,000 at 4%: (700,000 − 500,000) × 4% = 8,000
• C1 = 15,500

• Smoothed contribution = 2 × 15,500 = €31,000
• Ordinary rules (without smoothing): 250,000 × 3% + (1,200,000 − 500,000) × 4% = 7,500 + 28,000 = €35,500 → saving of €4,500

Example D – 2024 case (recent): same method as Example A

• Data: married; RFR 2024 = €4,000,000; RFR 2023 = €450,000; RFR 2022 = €350,000; average M = €400,000
• Calculation of the 2024 smoothed base: B = €2,200,000; C1 = €63,000; smoothed CEHR = €126,000; CEHR under the ordinary rules = €135,000

Example E – Non-resident, smoothing possible where there is French-source income

• Data: non-resident couple whose only income included in the RFR is French-source income; if conditions 1/2/3 are met with regard to the reference years taxable in France, the smoothing method applies as it does for residents, subject to tax treaties and treaty caps
• Note: the non-resident’s RFR does not include foreign-source income

7) Summary table – Examples and results

8) Practical points to watch

• Supporting evidence for the 3rd condition: be able to demonstrate that, for N−1 and N−2, income liable to income tax in France exceeded 50% of the worldwide RFR
• Box 8TD (form 2042 C) to be ticked if condition 3 is not met: the CEHR will then be computed without smoothing
• Changes in marital status in N, N−1, N−2: reconstitution of the RFR by period/household and applicable threshold by period; where necessary, file a claim (réclamation) to have the quotient applied correctly
• Distinction between CEHR and income tax: the CEHR is legally distinct from income tax (RFR base, assessed per couple, without the family quotient (quotient familial)), which has been noted in litigation

Estimated reading time: 8 minutes