This guide contains information on the following taxes:
• Income Tax – Currently no PAYE system (due to be introduced in 2018)
• Social security contributions (which will be automatically deducted by employer from your wage)
• Inheritance tax
• Tax on Goods and Services (VAT)
• Capital gains taxAs a French resident you will have to pay tax on all your worldwide income whether it was earned in France or not.
You are considered a resident if you:
• Spend most of your time in France, specifically 183 days per year or more.
• Your main home or property is in France.
• Your main job or primary source of income is located in France.
• Most of your assets are in France.
As of 2017 if you earn less than 9,710 Euro per year, you do not pay any income tax.
The tax per income ratio for other salaries are listed below.
• If you earn between Eur 9,710 and Eur 26,818 you will pay 5.5% tax.
• If you earn between Eur 26,819 and 71,898 you will pay 14% tax.
• If you earn between 71,889 and 152,260 you will pay 41% tax.
• Anything over 152,261 will be taxed at 45%.
France does not have a PAYE system like the UK does. There are talks of this being introduced in 2018. The employer will pay the entire amount you earn (gross) to you, therefore it is important to ensure you save enough money to cover your tax bill. Heavy penalties apply for non payment.
Tax is calculated by the household not by the individual. To calculate the amount of tax owed by the household add the total earnings together and then divide this by the amount of people living there. Adults represent one whole part whereas the first two children count as half a part. Any child born after the first two is counted as a whole. If you live as an unmarried couple with no civil partnership you are each required to complete a tax return.
The self employed fall into two categories, both have different thresholds for tax. The first is the professional category (BNC) for qualified professionals such as lawyers, accountants, doctors and so on; the second is the commercial enterprise category (BNC).
Paying your income tax
If you are a resident in France you are obliged to submit a tax return form. Even if you earn below the minimum threshold (Eur 9,710) before you pay tax you still need to submit a tax return. If this is your first year paying income tax it is advised to contact your local tax office, or your local mairie (town hall) and ask for the paperwork as it will not be sent to you automatically. Alternatively you can visit the government's website to pay your French taxes. You can pay monthly on the 15th of each month using direct debit, or in three instalments on the 15th of February, May and September. Tax returns must be filed by the 31st May after the end of the tax year.
Note to UK citizens
If you are moving to France for the first time, fill out form 85 before leaving the UK. This informs the UK tax authority that you are moving to France and makes claiming any overpaid tax a lot simpler as you are already in the system. When you arrive in France fill out form FD5 which confirms to both the UK and French Tax authorities that you are a French tax resident.
Dual taxation treaties
If you are liable for tax in another country this could mean you pay double the tax on the same income. France has double taxation treaties in place with a lot of countries which means that you can legally avoid being taxed on the same income in both countries. The treaty is the regulations laid out by both countries. Here you can check the list of countries with tax treaties with France.
Tax for French residents
Occupiers’ tax, otherwise known as taxe d’habitation, is a form of council tax that has to be paid annually. It is important to note that whoever occupies the property on the 1st January by law is responsible for paying this residence tax. If this is your main residence then tax will be reduced 10-15% per child living there. Tax can vary and is dependent on where your property is located. To find out the exact amount go to your local town hall. The payment is due by the 15th of November.
French Property tax, otherwise known as foncière, is the tax the owners of the property have to pay (even if they rent it out). This tax is calculated by the annual rental value of the property multiplied by a percentage set by the commune. This amount varies between properties and factors include the size and condition of the property, as well as the area in which the property is situated. More information is available at the local town hall. The tax is billed annually in the last quarter of the year. Monthly payments by direct debit or a one off payment is possible.
Currently television tax is Eur 137 per year. This covers all TVs within the household. It is assumed all properties have a TV. If this is not the case you need to declare it on your tax return.
French inheritance tax is locally called droits de succession. If the deceased is deemed to be a resident of France they are liable to pay taxes and the worldwide estate of the deceased could be exposed to inheritance tax. If the deceased is a not a resident in France then only their property in France will be exposed to inheritance tax.
• Up to EUR 8,072: 5 percent
• EUR 8,072 to EUR 12,109: 10 percent
• EUR 12,109 to EUR 15,932: 15 percent
• EUR 15,932 to EUR 552,324: 20 percent
• EUR 552,324 to EUR 902,838: 30 percent
• EUR 902,838 to EUR 1,805,667: 40 percent
• EUR 1,805,667+: 45 percent
Tax for non-residents
Non French residents are required to make a French income tax declaration. You will usually pay a minimum of 20% tax on their French sourced income. Property tax for non-residents from the EU is 19% and for non EU citizens 33%.
Social security contributions
Social security contributions are collected by the state via employment deductions from an employee’s salary every month and help fund France’s welfare system. The welfare system includes health care, sickness cover, pension costs and family and unemployment benefits. You can expect to pay 20-25% of your gross earnings towards social security. This will be deducted by your employer who will also pay around 40-45%. If you are self employed expect to pay 40-45%.
Retired people of the legal retirement age who are covered by the S1/E121 health certificate are not liable for social security contributions and other charges on their pension income received from outside of France.
The social contributions a retired person pays are restricted to investment and rental income as well as capital gains. It isn’t uncommon for local French tax officials to misunderstand this law and as a result people are incorrectly charged on their pension income. If this is the case visit your local town hall.
VAT is a consumption tax paid on certain goods and services purchased in France and is included in the sale price of these goods and services.
There are four rates of VAT in France, as of 2016:
• Standard rate is 20%
• Restaurants, transport, renovation/improvement works and certain medical drugs pay 10%
• Food, water and non alcoholic beverages, books, special equipment for the disabled and school canteens pay 5.5%
• TV licences, the sale of live animals, press publications and certain entertainment events pay 2.1%
Capital Gains Tax
The current CGT is a fixed rate of 19% on real estate properties and moveable goods. There are also social charges of 15.5%. Expect surtaxes on property gains also. Shares are generally taxed at the scale rates of income tax. Non-resident individuals who own a property in France can expect to pay surtaxes on top of the 19% CGT.
If you are unsure about anything visit this online government service that will help calculate French tax.