French Taxes

Download tax forms on www.impots.gouv.fr.

General government helpline for tax questions: go to www.impots.gouv.fr. Choose "contacts", then "particuliers" in the first selection box on the page if you are in individual. Then choose the theme for the question. Answers are usually of good quality, whereas local tax offices don't always know all the answers.

Specialised tax helpline for non-residents and expats

The French tax office has a dedicated help desk for non-residents and expats. Their mission is to provide fiscal advice concerning all personal and business taxes. I have had reports that the telephone number is not working any more, yet this information still appears on a government site. If it doesn't work, use the ordinary helpline mentioned above.

Information sheet in English

1. You plan to return to or move to France

Direction Générale des Finances Publiques
Service d’accueil des non-résidents et expatriés (SANR)
Bureau des agréments et rescrits
Service juridique de la fiscalité
86-92 allée de Bercy
Télédoc 957
75574 Paris Cedex 12
Tel.: 01 53 18 19 46
e-mail: sanr@dgfip.finances.gouv.fr 

2. You are currently a non-resident or expatriate

Note, an expatriate in this context must be considered someone expatriated from France.

Service des Impôts des Particuliers non résidents
10, rue du Centre
TSA 10010
93465 Noisy Le Grand Cedex
Tel.: 01 57 33 83 00
e-mail: nonresidents@dgfip.finances.gouv.fr

Disclaimer: The French Tax Code (Code général des impôts, or just CGI) takes the space of two bricks and uses 2000 pages of small print to present nearly 4000 articles. In addition, a separate Book of Fiscal Procedures (Livre des procédures fiscales) outlines the rules for collecting the taxes. I cannot possibly present all that in a couple of chapters. This section aims to explain the very basics of the core of the French taxation of employed persons or married couples with or without minor children at their charge, all persons concerned living regularly in France the entire calendar year and those of them working being employed and paid only by a French employer. In these cases, the calculations below will give you a very precise idea of income tax due. Calculating and paying French income tax is your personal responsibility. This page is not a tax guide and it cannot replace a tax advisor, tax guides or the Tax Code. Different types of income are treated differently, and it is your responsibility to find out how they are taxed. The information below is not exhaustive. The following, non-exhaustive list shows a few examples of cases where you cannot directly use the information below or maybe not use it at all: Divorce, separation, same-sex couples, unmarried couples, couples having signed a partnership agreement (PACS), death, birth, family member living or working outside France, foreign income, persons working for international entities having special status (EU, CERN, ...), diplomats and other consular staff, capital income, retirement, self-employment, running your own business, small or large traders, authors, artists, nationals who may remain taxable in their own country despite living away from it (Americans and Frenchmen for example).

The French tax year follows the calendar year.

If you are resident in France, then you are taxable on your worldwide income in France to the extent that double taxation agreements with other countries don't give the right to taxation to another country. However, even if such an agreement stipulates that an income is not taxable in France, it must still in the majority of cases be declared in France, because even though it is not taxed, it can affect the tax calculation of your other income in France. This also goes for for example a spouse's income earned and taxed abroad, except if the spouse having the foreign income is living abroad and not in France.

There is no PAYE or other system in France to collect income tax at source. While social security contributions are deducted from your gross salary at source (unless you pay such contributions in another country under EU Regulation 1408/71 or a bilateral social security convention), no tax is deducted. You are personally responsible for saving enough money to pay your tax later. Tax is paid in arrears the year after the income was earned.

Tax calculation - the brief version

Official income tax simulator at www.impots.gouv.fr (in French).

The income tax depends on your personal situation. A number of parts is determined for the family. A single person is represented by one part. A married couple 2 parts. Add 0.5 part for each of the first two children; 1 part for each additional child. For example: Married couple with 2 children gets 3 parts. Single person with 3 children gets 3 parts (Article 194 of the Tax Code).

All income of the persons concerned - the married couple and the children - is added together in one amount. If you pay your social security contributions in France, your employer should tell you which of them are deductible and which amount to declare. If you pay them abroad, you should deduct them from your gross income before applying the tax calculations below. Only declare the appropriate amount net of deductible contributions.

In case of marriage or PACS (civil union) during a tax year, the couple decides whether to file two separate tax returns for that year or one common tax return.

In case of divorce or dissolution of a PACS during a tax year, two separate tax returns must be filed for the year of divorce or dissolution.

I will illustrate the following calculations with an example of a married couple with three children, one parent earning €3,000 and the other €82,000 net after social security contributions.

A standard allowance for professional expenses of 10% of your salary is automatically deducted (code général des impôts article 82 3º for the legally interested). The maximum allowance for income earned in 2007 was €13,501 per household ; minimum €401 ; minimum €880 if you have been a registered jobseeker for more than a year. The minimum amounts apply per person, not household.

Standard allowance of salary 1 = 10% of €300; increased to minimum amount €401.
Standard allowance of salary 2 = 10% of €82,000 = €8,200.
Income after standard allowance: €3,000 + €82,000 - €401 - 8,200 € = €76,399.

You do not need to do anything to claim this allowance. Do not deduct it from the amount you declare yourself.

As an alternative to applying the default 10% allowance for professional expenses, you are entitled to deduct your actual expenses including car mileage. This may be more favourable if you drive to work and have a modest salary. For mileage, the tax office publishes an annual list of mileage allowance per vehicle class (see the fiscal mileage allowance rates applicable for the 2010 tax year - PDF, new window). You can deduct mileage for a distance of up to 2x40 km per day if you are driving to and from work, in some cases longer distances, and also mileage driven for professional purposes for your employer. If you have received refunds from your employer for use of your car for business purposes and you deduct actual mileage expenses, then you must declare the refunds as income. If the number of professional kilometres driven in a tax year is 5000 km or less, then the mileage rate is between €0.405 and €0.729, depending on vehicle class. If you have driven 2 x 10 km to work 200 days a year, then the deduction for the 4000 km in a saloon car in the 9 CV class would be 4000 x €0.635 = €2,540, for example. If your salary is near the minimum salary SMIC, for example a taxable income of €15,000, the default deduction of 10% would result in a deduction of €1,500, whereas deducting the actual expenses according to the mileage rates would result in a deduction of €2,540.

Divide the resulting amount by the number of parts:
Husband: 1 part
Wife: 1 part
1st child: 0.5 part
2nd child: 0.5 part
3rd child: 1 part
Total parts: 4

€76,399 / 4 = €19,100.

The personal allowance and progressive tax bands (barème) are then applied to the resulting amount. This results in the income tax per part.

For income earned in 2009 (tax payable in 2010), the following barème is applied:

This amount is multiplied by the number of parts to get the total tax:
€1,354 x 4 = €5,416
which is the total income tax due.

For income earned in 2010 (tax payable in 2011), the following barème is expected to apply (Article 197 I 1. of the Tax Code):

Official income tax simulator at www.impots.gouv.fr (in French).

There is a limit to the tax advantage one can get for each half-part for children (€2,336 for 2010 income; Article 197 I 2. of the Tax Code). In the example, this limit is not exceeded. To know if the limit has been exceeded, one makes two tax calculations: One that includes the parts and half-parts for the children and one that does not include these parts (that is, in our example one calculation using 2.5 parts and one calculation using 2 parts). If the difference between the two results exceeds €2,336 multiplied by the number of children's half-parts (one half-part in our example), then the tax is increased with the amount that exceeds the limit. In other words, the maximum tax advantage for each of the first two children is €2,336 and for each following child €4,672.

See below for income tax of interest.

If you employ personnel in your home (and declare it), you can get a tax credit of 50% of the salary and social charges paid, up to a €15,000 in 2009 or €20,000 in certain cases such as handicap. If the tax credit exceeds the tax otherwise due, the exceeding part is refunded.

Expenses for child minding (for children up to school age) away from your home entitles you to a tax credit of 50% of the expenses paid, less any contributions received from the CAF or others. If the tax credit exceeds the tax otherwise due, the exceeding part is refunded.

Child support expenses are in most cases deducted from income before tax is calculated.

Child benefit, housing benefit, RSA (Revenu de Solidarité Active) and other benefits paid by the CAF are mostly not taxable and they should not be declared on the tax return.

Unemployment benefit and sick pay are taxable and must be declared.

The tax return is pre-filled with information already known, except if you declare for the first time. It is your responsibility to verify that the information is correct and to correct it if not.

Income for a given tax year should be declared if it has effectively been paid within that calender/tax year in France or abroad. For bank transfers, the date that counts is what appears on the bank statement (note, for a foreign bank account, it is the date the amount was credited to the foreign bank account that counts, not the date you may have transferred the money to a French bank account). For cash and cheques, the date that counts is the date you were given the cheque or cash. For example, if your December 2009 salary was paid in January 2010, it is not taxable in 2009 but in 2010. Many employers pay the December salary in January but incorrectly include it in the 2009 income they have to declare to the tax office. To do things correctly, you should correct the salary declared yourself and declare it next year. However, it can sometimes be advantageous not to let the December salary float into next year, for example if you expect next year's income to be higher. In that case, even if not strictly correct, it would be fairly safe to declare the numbers the employer has given to the tax office for December, even if paid in January.

It is important to declare how many hours you have worked, as low-income families may qualify for a working families' tax credit known as prime de l'emploi. If the amount of prime de l'emploi exceeds the amount of income tax due, the exceeding part is refunded in September. The prime de l'emploi also applies to self-employment.

If the calculated income tax due is a small amount, a calculation method known as décote sets in to fade out the tax due. For the smallest tax amounts, the décote will do away with the tax due so there is nothing to pay.

This is a very generalised information. Refer to the French Inland Revenue for more information. You can calculate your tax at that site. At newsagents, you can buy an annual tax guide. In case of any doubt, do not hesitate to take professional advice, or ask your local tax office (centre d'impôt).

This Expat Telegraph article by Finn Skovgaard focuses on income tax for UK cross-border workers living in France.

Note, this section only concerns French residents. Non-residents are nearly always paying tax of interest in their country of residence, according to the releveant double tax agreement.

In any given tax year, you can choose between the following two options:

Prélèvement libératoire: 24% income tax (it was 19% in 2011) and 13.5% social security contributions from the 1st October 2011 (it was 12.3% before) are deducted at source by banks in France if you choose this option. You don't pay any further income tax on the interest. For interest earned in foreign banks, you must file a 2778-SD form every time interest is credited and manually pay the 24% + 13.5%. Note: you can only use this option for foreign banks established in the European Union or an EEA member state if that EEA member state has an agreement with France about mutual assistance against money laundering. For other foreign banks, imposition réelle is the only option.

Imposition réelle: No tax is deducted at source. You declare the interest as income on your tax return. French banks withhold social security contributions at source at 13.5%. Declare the interest net of this contribution. If the interest is from a foreign bank and you have not already chosen the prélèvement libératoire option, declare the gross interest in the field for interest not having been subjected to social charges. You will later get a bill for the social charges. Except that you don't get the 10% allowance for professional expenses on interest earned, income tax is calculated as for salary.

The choice is quite simple: If any part of your income will be taxed in the 30% tax band, then choose prélèvement libératoire; otherwise not. Your choice must be communicated to your French bank before the end of the tax year. For EU banks, the choice must be made at the time the interest is credited.

Capital gains tax on real estate

Note, this section concerns residents and non-residents alike, but non-residents do not pay the social charges, only the tax.

The principles explained here are not exhaustive but only intended to give you a broad idea of how capital gains tax work. You will need further, concrete advice by competent sources to fully understand your particular situation.

Primary residence

There is no tax or social charges on capital gains when selling the primary residence. If you have more than one property, it is not an option to decide which one you want to call primary. Which property is primary is determined by where you live most of the time, work, file your tax return, where your children go to school etc. The criteria for being the primary residence are evaluated at the date of the sale. You don't have to occupy or own the property for a minimal duration for the exoneration to apply, but you must be capable of proving, if necessary, that it really was your primary residence.

In practice, in many cases, you may already have moved out of the property when it is sold. In that case, it is no longer the primary residence. However, the tax office tolerates that up to one year passes before the property is sold, without your losing the tax exoneration. However, during that time, you cannot rent or lend out the property to anyone, even parents, or you risk losing the tax exoneration.

Accessory buildings sold at the same time as the main property are also exonerated. In case of a garage, it is exonerated if situation less than one kilometre from the main property and sold at the same time.

Secondary residence, property let out, vacant property, constructible site

The property tax on non-residents having property in France that was debated in 2011 did not become law.

Properties sold for no more than €15,000 are exonerated. In case of a married couple, the limit is €30,000.

1. Capital gains tax rules for property sold no later than 30 September 2011

The capital gains tax rate is 19%. A further 12.3% social security contributions are due if you are resident in France. In cases of doubt, you need to consult the double tax agreement between France and the other country concerned so as to determine in which country you are considered resident for tax purposes.

Reference: Code général des impôts Article 150 VC

2. Capital gains tax rules for property sold on or after 1 October 2011 and no later than 31 January 2012

The capital gains tax rate is 19%. A further 13.5% social security contributions are due if you are resident in France. In cases of doubt, you need to consult the double tax agreement between France and the other country concerned so as to determine in which country you are considered resident for tax purposes.

Reference: Code général des impôts Article 150 VC

3. Capital gains tax rules for property sold on or after 1 February 2012

The capital gains tax rate is 19%. A further 13.5% social security contributions are due if you are resident in France. In cases of doubt, you need to consult the double tax agreement between France and the other country concerned so as to determine in which country you are considered resident for tax purposes.

Reference:
Code général des impôts Article 150 VC
Loi n° 2011-1117 du 19 septembre 2011 de finances rectificative pour 2011 (1)

The current VAT (sales tax - TVA in French) rate is 19.6%. 5.5% for some items and services, notably food, passenger transport and home improvements.

Businesses need to note that the VAT on petrol (gasoline) cannot be recovered, and that only 80% of the VAT on diesel (gazole, gasoil) can be recovered, except for special cases.

There is a copyright tax on writeable CDs and external computer harddisks and certain other storage devices useable for film and music to compensate artists for private copies (and at the same time, the media industry is making private copies more and more difficult to make, so it is beginning to look like a racket that you must pay a tax for something you can't do). It may or may not be cheaper to buy such devices outside France. According to the 2006 judgement from the European Court of Justice, excise duty on drinks bought by distance is payable in the country of delivery, and if the same principle is applied to storage devices, customs could thus collect the excise duty on arrival - if they find the devices in the post. In practice, the risk must be very limited. If you bring the devices across the border yourself, no taxes can be collected.

is automatically collected by the insurance company.

is automatically collected by the insurance company, so in principle, you don't need to know about it. However, as the State rakes in €1 billion per year on this recent tax, you can guess who has to pay this health tax indirectly. It is in fact a tax on the medical bills you have to pay. A way to avoid this tax is to not take out a complementary medical insurance, but it has to be weighed against the risk of being left with medical bills that exceed the cost of insurance. Another way to avoid this may be to take out medical complementary insurance from a foreign insurance company if possible and competitive. As a result of this tax, the cost of complementary medical insurance is predicted to increase by 4% in 2009.

are automatically included in the price at the pump for vehicles and heating.

Taxe d'habitation, taxe foncière and contribution économique territoriale are known as local taxes.

Taxe d'habitation

is a tax on the dwellings you occupy on the 1 January in a given year. The tax does not depend on how long time you live in the property. If you move out on the 2 January, you must still pay the full tax for the year. The tax is payable in November the same year. The tax depends on the value of the property and your personal situation: More family members, less tax. The tax is also reduced if your income is below a certain level. A typical tax would be between € 300 and 1500 a year.

TV licence. €121 per year in 2010 - €123 in 2011. It is mandatory for anyone disposing over a TV set on the 1st of January in a given year. If you move to France on the 2nd of January or later with a TV set, then the tax is not due for that year. It is automatically collected with the taxe d'habitation, unless you tick a field on your income tax return to declare that you had no TV set on the 1st of January. Watching TV on a computer or listening to radio only is not taxed. One licence covers the entire household, no matter how many TV sets you have. For businesses using TV sets, you may have to pay per TV set.

Individuals which are real estate owners pay taxe foncière, a real estate tax. It is roughly at the same level as the taxe d'habitation. It includes certain service charges, such as refuse collection. A property owner living in his own house and paying taxe foncière still pays taxe d'habitation, as these two taxes are distinct.

Businesses and self-employed persons pay the contribution économique territoriale (CET), which is in fact a common name for two different taxes: Cotisation foncière des entreprises (CFE) and Cotisation sur la valeur ajoutée des entreprises (CVAE) (links to Wikipedia). These taxes replace the taxe professionnelle which has been scrapped from the 1st January 2010. 
The CFE is based on real estate rental value, whether you own or rent business premises. There is an annual minimum tax between €200 and €2,000, the minimum tax being defined locally. The minimum tax is due even if you earn less. However, after this problem was exposed on TV in 2010, the government was forced to do something. The changes will be known in 2011. Auto-entrepreneurs are automatically exonerated from the CFE in the calendar year of business creation and the two following calendar years if they or their spouses have not exercised a similar activity the last three years.
The CVAE concerns businesses with a turnover exceeding €152,500 and is based on the valeur ajoutée, a not straightforward concept. The total amount of CET due cannot exceed 3% of the valeur ajoutée. Simulator for estimating the CET.

The planned "Google Tax", a 1% tax is due on the purchase of online commercials, was scrapped before its entry into force.

ISF is a wealth tax paid on assets above €750,000. Tax bands for 2006:

The sum of the income tax, social charges on capital gains (interest etc.) including CSG and CRDS, taxe d'habitation *), taxe foncière *) and impôt de solidarité sur la fortune (ISF) cannot exceed 50% of your income. For the taxes due in 2008, the revenue in 2007 are used as the base to calculate the 50%. If a tax refund is due, you must claim it yourself.

*) due for the primary residence.

is a death tax that assures that inheritants don't have too many worries about finding the best placement for inherited fortunes.

Considering that only a marginal number of non-Danish expats are concerned by this, this paragraph is in Danish. If any non-Danish speakers need a translation, please do let me know.

Overenskomsten mellem Danmark og Frankrig til undgåelse af dobbeltbeskatning m.v. af 8. februar 1957, som bekendtgjort af Bekendtgørelse nr. 36 af 27. juni 1958, er opsagt af Danmark den 10. juni 2008 med virkning fra 1. januar 2009, så pensioner udbetalt fra Danmark derefter kan blive beskattet i Danmark. Opsigelsen får indvirkning på alle skatteforhold, hvor både Frankrig og Danmark berøres, herunder løn, virksomhed, pension, fast ejendom, lejeindtægt, ejendomsværdiskat, fortjeneste ved salg af fast ejendom, formueskat, kapitalindkomst og andet. Diverse websteder informerer om virkningerne, fx:

Notat fra SKAT
www.skat.dk/SKAT.aspx?oID=1760519
KPMG
www.ambparis.um.dk/da/menu/Borgerservice/FastOphold/Skatteforhold/
www.martinsen.dk/faglig-viden/skat/vis/frankrig-og-spanien/

© Copyright Finn Skovgaard 2001, 2011. All rights reserved.