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Tax in France

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It is no secret that France has one of the highest taxation rates in the European Union, even though they do not reach the levels of Scandinavian countries. Before moving to France, it is important to acquaint yourself with the different taxation policies since tax requirements can be significantly different to those of your home country.

For example, it is compulsory for you to declare bank accounts held internationally as part of your tax declaration, and not doing so exposes you to significant fines. If you can afford it, it might be a good idea to book a session with a tax professional to understand how the system works.

Types of taxes

In general, taxpayers in France have to pay the following:

  • income tax
  • social security contributions which are deducted at source
  • value added tax (VAT) which is an indirect tax applying on the basic price of all products and services available in the country
  • housing tax (paid both by the owner and the tenant)
  • property tax (paid by land and property owners)
  • capital tax

Conditions

If you are based permanently in France, you will be required to pay your taxes in France. Things can get slightly complex if you move to France or leave the country in the middle of the fiscal year. If you are in this category, you might have to pay taxes in two countries during the straddling period. However, in general, you will pay tax in France if you:

  • have a permanent and habitual family residence in France;
  • are working in France (but it should not be an ancillary professional activity); or
  • have economic interests based in France.

 Important:

Make sure to check whether your home country has signed a non-double taxation agreement with France. This will exonerate you from payments in your home country and in France. If you have worked part of the year abroad and have paid taxes on your earnings, you will still be required to declare those revenues as the latter will be taken into account for the calculation of your overall taxation rate.

Income tax

All residents in France have to pay income tax, regardless of their source of income. However, the French tax system distinguishes between household income, families with or without children and the single taxpayer. In short, families pay less tax than single taxpayers.

Revenue generally refers to the following:

  • wages
  • investments
  • dividends
  • bank interests
  • all pensions
  • revenue on property

Note that your employer will generally communicate the value of your earnings to the tax authorities (for the years following your first tax declaration). Banks will also automatically communicate the value of the dividends or earnings made on your different accounts. In both cases however, it is your responsibility to ensure that the values communicated are correct and include all your earnings. The law changes relatively quickly with regards to taxes and it is highly advisable to consult the pages of the tax authorities before filing your taxes (see links below). For example, the tax laws were recently changed and it is now compulsory to declare any income you receive from renting out your property on AirBnB.

Tax rates

The rates for 2016 are as follows:

  • A maximum of 9,700 Euros per annum – 0 %
  • From 9,700 to 26,791 Euros per annum – 14 %
  • From 26,791 to 71,826 Euros per annum – 30 %
  • From 71,826 to 152,108 Euros per annum – 41 %
  • Beyond 152,108 Euros per annum – 45 %

First income tax declaration

Income tax is not deducted at the source in France. Therefore, each family has to submit its tax declaration to the tax authorities, either in person or online. You are required to submit your income tax declaration in person in the following cases if you have worked in France during the previous year or if you are more than 18 years old.

To file your taxes, you need to either download the form No. 2042 as from the beginning of May or request it at from the tax office in your arrondissement (Centre des Finances Publiques). Note that e-filing is encouraged and is possible if you are between 20 and 25 years old or you are in possession of an authorisation letter issued by the tax administration.

Fiscal calendar and additional information

Every year, the website of the French tax office publish a calendar which clearly sets out the deadlines for filing your taxes. You will also be provided with further information either on the paper forms which are mailed to you or on the online tax submission system.

Note that it is also possible for you to either call or visit your tax office. The tax office will be assigned to you based on where you reside, and the tax agents are very helpful in answering questions you might have, although it can be somewhat difficult if you do not speak French. Alternatively, you can book an appointment with one of the many English-speaking tax consultants in France. The forms and the filing process is breathtakingly simple, especially when compared to other countries of the world, so the appointment with the tax consultant can simply be a case of understanding how the forms are laid out and what are the general tax guidelines in the country.

 Useful links:

Services Publics – Income tax
Direction Générale des Finances Publiques – The French Tax System
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Known as the Pink City, Toulouse attracts not only tourists but also expatriates who wish to live and work in France.
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In addition to it's impressive scenery, Lyon is also one of France's major economic hubs, making it ideal for expat job-seekers.
Located in the Pas-de-Calais region, Lille is very welcoming towards expatriates. It provides various career prospects for highly-skilled job-seekers.

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