Who is responsible for paying income tax in France?
If you fulfil any one of the following four requirements, French law considers you to be a tax resident in France. These requirements are as follows:
● Your permanent residence, the place where you and/or your family live most of the time, is in France.
● France is where you spend most of your time, correct? (at least 183 days during a calendar year, or even less if you spend more time in France than in any other country).
● Your professional activity is in France.
● France serves as the focal point of your economic or financial concerns at this time.
Who in France is excluded from paying income tax and why?
Residents of France who are either old or handicapped are eligible for tax credits from the French government. In addition, if you have an annual income of less than €10,225, you shouldn't be required to pay income taxes. In addition to this, there are a plethora of tax credits that you are eligible to claim when you are submitting your tax return.
Earnings subject to income tax France
Taxes on income and salary in France
Everyone who is required to pay taxes in France is subject to taxation on income derived from sources inside France. This implies that you have to pay taxes on the following:
● Employed and self-employed income
● Investments
● Dividends
● Bank interest
● Pensions
● Property
● Pensions and annuities
● Some business income
Taxes on savings and investments
The income generated through savings and investments is subject to a single rate of tax equal to 30%, which is comprised of an income tax equal to 12.8% and social charges equal to 17.2%.
Taxes on rental income
If you rent out a property in France and make money from it, you are required to inform the French tax authorities about the specifics of this revenue in your annual tax return, and this income will also be subject to taxation under the PAYE system. The rates that apply to self-employment income also apply to income from employment.
How to file your tax return in France
You are required to submit your tax return electronically if you have an internet connection at home.
There are a few persons who do not have to pay their income taxes via the PAYE system, although this applies to the majority of taxpayers. These include income from assets (such as earnings from life insurance policies), capital gains from financial investments and real estate investments, and income from sources elsewhere than France.
Income tax deadlines in France
The French fiscal year runs from the 1st of January to the 31st of December, much like the calendar year. The dates for filing tax returns are subject to some minor adjustments each year and are typically made public in the late spring of the year in which taxes are required to be paid.
The dates for filing a French tax return online differ among the several departments of France to reduce the likelihood of internet congestion (101 regions in total). The following due dates will be observed in 2022:
● 19 May: deadline for postal returns
● 25 May: online submission cutoff time for residents of departments 1–19 and those who live outside of France.
● 31 May: online deadline for départements 20–54
● 7 June: online submissions must be sent by the specified time for departments 50–101 and residents in overseas France.
Income tax forms in France
There is not a single tax form that must be filled out for the French government; rather, you must fill out supplementary forms for each sort of income in addition to your main French tax return form (Form 2042). If you have previously paid taxes to France, you will normally get Form 2042 pre-filled. On this form, you will need to detail your most recent income and earnings from all over the globe.
Other tax forms used in France include as follows:
● 2042C: Micro-entrepreneurs, supplemental income, and tax credits are all available here, and it is also the place where you may balance taxes paid in other areas.
● Either Form 2013 (for furnished homes) or Form 2044 (for unfurnished properties) must be used to report rental revenue (unfurnished properties).
● 2047: to disclose any revenue made while traveling outside the country, which must also be mentioned on Form 2042.
● 2074: gains in the capital, often known as profits, are realized when any investments or assets are sold.
● 2035: BNC business earnings (régime réel).
● 2031: BIC business earnings (régime réel).
● 2047: to disclose any revenue made while traveling outside the country, which must also be mentioned on Form 2042.
● 3916: for any bank accounts that are kept in a foreign country.
Income tax rates in France
In France, the tax rates on income differ depending on whether a person is single, married, has children, and, if they do, how many children they have, as well as their level of income and whether or not they are self-employed. Keeping this information in mind, it makes perfect sense to consult with a tax specialist about your specific circumstances.
In 2022, the various tax brackets in France had a 1.4% rise. The following table details the general income tax rates that will be in effect in 2021 and 2022:
2021
French income tax bands
Rate of taxation in FranceUp to €10,0840%Up to €10,085–€25,71011%Up to €25,711–€73,51630%Up to €73,517–€158,22241%Up to €158,222 and above45%
2022
French income tax bands
French tax rate
Up to €10,2250%€10,226–€26,07011%€26,071–€74,54530%€74,546–€160,36641%€160,367 and above45%
If a single individual earning $24,000 per year, for instance, the first €10,225 of that person's income would be exempt from taxation, while the remaining €13,916 would be subject to taxation at a rate of 11%. A tax calculator is available on the website of the French government, and using it might assist you in determining the amount of tax that you are required to pay.
Income tax for non-residents in France
The French government requires non-residents to pay income tax at a fixed rate of 20% (for earnings up to €27,519) or 30% (for earnings beyond €27,519) (for earnings above this threshold).
Personal tax allowance and deductions in France
When figuring out how much you owe in taxes to the French government, you have the option of claiming any number of tax credits. The following are some examples of these:
Outside-the-home child care for children under the age of six, with a maximum credit of €1,150 per kid and a maximum contribution of 50% of the cost, up to €2,300 per child.
having dependent children who are of school age (€61 per kid for collège, €153 for lycée, or €183 for university)
Installation of energy-saving technology in the house (a chaudière à condensation or chaudière à basse temperature)
Employing a domestic worker (also known as "frais d'emploi d'un salarié à domicile") allows you to deduct up to fifty percent of the worker's pay, with a credit cap of six thousand euros.
When you donate to a charitable organization, you may be eligible for a tax deduction of either 66% (up to €537) or 75% (up to €537) of the amount that you gift, subject to further limits that vary from charity to charity.
Child support costs as a result of a divorce judgment
Union fees
Self-employed income tax allowances in France
You will be required to pay income tax at the usual rates if you are self-employed and operate as a single trader.
If your company falls within the category of commercial sales, you will be eligible for a fixed cost credit against 71% of sales if you file your taxes using the tax matrix included in the Micro Bénéfices Industriales et Commerciaux program (Micro-BIC).
You will also be taxed via Micro-BIC if your firm is focused on providing a service, however, you will have a 50% allowance.
Finally, if you operate a company in a professional sector (such being a lawyer, for example), you will be subject to taxation based on a separate matrix known as the Micro Bénéfices Non-Commerciaux (Micro-BNC), and your allowance will be 34% of your income.
Income tax in France for foreigners
You are required to pay taxes on any income that comes from a French source even if you do not live in France as long as that income comes from a French corporation or another French source.
Be careful to conduct your study on the tax regulations of both your home country and France so that you may take advantage of the tax treaties that France has signed with several other nations to avoid double taxation. Our instructions on taxes for expats contain information on filing taxes in the United States, Canada, and the United Kingdom while living outside of those countries.
You should talk to a tax professional if you want advice that is precise and particular for your current financial circumstances.
Tax refunds in France
In contrast to the other tax regimes, the common, annual expectation is not to get a sizable tax return. On the other hand, if you have already overpaid in taxes by the ninth month of PAYE, you will be eligible for a tax refund when the notification of your tax liability is sent out.
You have two years from the date you received your return to file a claim if you feel there was a mistake with your taxes or with your refund. More information is made available by the government (in French).
Tax fines in France
If you fail to submit your taxes online for two years in a row, you will be subject to a fine of fifteen euros (essentially allowing a one-year grace period to adapt). If, on the other hand, you submit your taxes after the deadline, you run the danger of being subject to a 10% penalty (majoration).
Income tax advice in France
It is of the utmost importance to seek the guidance of tax professionals while living, working, and paying taxes in a nation that is not your own.
This is especially important to keep in mind if you have a complex tax position, such as being self-employed or owning property, for example. Therefore, you should not go into the tax season unprepared; instead, you should get the right financial guidance to prevent complications or fines.
You may identify member organizations with the use of websites like the one run by the International Federation of Accountants. When searching for a financial counselor in French, you may also consult our company directory.
Useful French tax terms
● Abattement: the standard deduction
● Avis de non-imposition: certificate of income that is not subject to taxation (you will receive this if your total income is under the taxable income threshold)
● Barème fiscal: tax-rate table (sets out the amount of tax for a given amount of income)
● Un contribuable: a taxpayer
● A tax credit, sometimes known as a tax rebate, is a decrease in the amount of tax owed as a result of one of many different tax avoidance strategies.
● Un expert comptable: accountant
● Conseillers fiscaux: tax advisors
● Fiscal foyer: also known as household tax (everything in the home is broken down into bits and parts. The first and second children each account for half of a portion, while the third kid accounts for the whole part. A home is considered to have 2.5 parts when it consists of a married couple with one kid, and it has four parts when it consists of a married couple with three children. Under some circumstances, even your children who are married and your grandkids might be counted as part of your tax family.
● Impôts sur le revenu: income taxes (as opposed to property taxes or sales taxes)
● Impôt de solidarité sur la fortune: wealth tax. In October 2017, France reduced its wealth tax, which was paid on those with incomes of more than €1,300,000, and replaced it with a property fee that ranged from 0.5% to 1.5% on the value of assets. This was done to encourage economic growth and encourage investment.
● Prélèvements obligatoires: all social costs; in some cases, this may also include taxes on income that are collected at the source
● TVA (taxe sur la valeur ajoutée): tax on the value added to goods and services, often known as sales tax (it presently stands at 20% on all products and services except those that are explicitly exempted)
● Le revenu à déclarer: gross income
● Revenu imposable: income subject to taxation after the application of all allowable deductions and credits
● Revenu foncier: rental income
Useful resources
● The website for the French civil service is referred to as Service-Public. It includes comprehensive data on all elements of personal and commercial taxes as well as social costs.
● The entity responsible for the collection of income tax in France is the Ministry of Economy and Finance.
● Online return of taxes for France
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