A guide to taxes in France
Do you have to pay taxes in France? This guide to French taxes explains the French tax rates plus wealth, capital gains and property taxes in France, plus which tax refunds in France you can claim.
Once a resident in France, you are liable to pay taxes in France on your income worldwide and will need to file a French tax return as an expat. The French social security system is one of the most generous in the world but it’s paid for by high social charges and French taxes.
There are three main types of personal taxes in France: French income tax (impôt sur le revenu); social security contributions (charges sociales/cotisations sociales); and tax on goods and services (taxe sur la valeur ajoutée TVA, or VAT in France). You will also have to pay occupier’s tax (taxe d’habitation) or French property tax (taxe foncière), and if you’re selling land or property or have assets more than EUR 1.3 million, there may be capital gains tax in France and French wealth tax, too.
This guide on taxes in France sets out a basis only, and expert advice should be consulted for your individual tax situation.
Who has to pay taxes in France?
You’re liable to pay taxes in France if:
- France is your main place of residence or home – if your spouse and children live in France and you work abroad, you may still be considered a French tax resident.
- You are resident in France for more than 183 days in a calendar year – not necessarily consecutively.
- Your main occupation is in France.
- Your most substantial assets are in France.
France has tax treaties with a number of countries (see here) that enables certain residents to avoid dual taxation (ie. paying tax in France and their home country).
Calculating your taxes in France
Official residents pay French taxes on worldwide income, which includes earnings from employment, investments, dividends, bank interest, pensions and property.
While the higher income you earn the more income tax you pay, the amount of tax you pay is not based on your earnings as an individual, but on your earnings as a household. You have to add up the earnings from everyone in the household and then divide by the number of ‘parts’ or people in the family (parts familiales). Working adults count as one whole part; the first two children count as half parts and successive children count as one part. That sum is assessed against France's tax bands and then multiplied by the number of ‘parts’ in the family. A tax advantage for each child is limited to EUR 1,512.
This method of calculating French income tax means that couples who are married or in a civil partnership (PACS), and families with children usually pay less income tax than individuals. Parents who are not married nor in a PACS are taxed separately and only one parent can claim responsibility for the household and so enjoy the lower tax benefits explained above. It may also be that some couples choose not to marry or enter a PACS in order to be taxed in France separately.
Income tax in France is not deducted at source from an employee’s wage (although social security contributions are). This means that all resident taxpayers have to complete an annual tax return and have the money available to pay their tax bill.
French tax rates 2017
Starting in 2018, French taxes will be drawn from an employee’s wage in a pay-as-you-earn (PAYE) system. To avoid double taxation when the French tax system transitions, in 2017 French residents will have acess to income tax relief, meaning most residents won’t have to pay income tax for part of the year. However, they’ll still pay 2016 taxes as usual in their 2017 annual tax return.
The tax rates in France in 2017 (for income earned in 2016) are as follow:
- Up to 9,710: EUR 0 percent tax
- EUR 9,710 – EUR 26,818: 14 percent
- EUR 26,819 – EUR 71,898: 30 percent
- EUR 71,899 – EUR 152,260: 41 percent
- EUR 152,261+: 45 percent
French taxes for non-residents
Non-residents usually pay tax on their France-sourced income at a minimum French tax rate of 20 percent. Property tax in France for non-residents on the taxable gain of the sale of a French property is 19 percent for EU citizens and 33.33 percent for all others.
Filing your French tax return
If you are resident in France (or are a non-resident but have earnings from France) you have to complete an annual French tax return (déclaration de revenus) that determines the tax bill for the year. The French tax year is the same as the calendar year. Unmarried couples should complete separate French tax returns; married or PACS couples can choose to make joint or separate tax declarations (see above).
If you have previously submitted a tax return you will probably be sent a completed form automatically, for you to check, amend if necessary and return. If you don’t get one or if it’s your first time, you can get one from your local tax office (centre des impôts) or mairie, or online through www.impots.gouv.fr. It is your responsibility to make sure you complete and submit your French tax return, even if you think you will fall below the income threshold to pay any French tax.
You have to return the tax declaration by 18 May for the previous year, or 24 May to 7 June if you complete your French tax return online; exact dates vary according to location). If you don’t meet the deadline you’ll incur a fine of 10 percent of your tax bill. Read more in our guide to filing a French tax return.
French tax refunds and credits
You may be able to reduce your tax bill with French tax refunds, allowances and concessions.
French tax refunds are granted for a range of expenses, including:
- la prime pour l’emploi or PPE if you are working in a professional capacity and you earn under a certain level;
- employee social security contributions
- any professional/employment-related expenses (up to EUR 12,183 in 2016)
- if you support a person in your home over the age of 75
- rental losses from unfurnished properties (up to EUR 10,700)
- losses from business or professional activity
- child support payments for minors not part of your fiscal household
- energy conservation works on your home;
- if you invest money in or contribute to an assurance vie investment policy;
- if you are on a low income you might be able to get relief from local French property taxes.
You can visit the local Caisse d’Allocations Familiales (known as ‘La Caf’) to find out what French tax refunds are available and how to apply.
If you are relocating permanently to France and have a private sector pension, an annuity or interest, contact the tax authority in your home country to see if you can obtain tax relief at source at that end.
Paying your French taxes
You can pay your French tax bill (les échéances) in instalments on 15 February, 15 May and 15 September, or monthly online at www.impots.gouv.fr by the 15th of each month by direct debit.
Mandatory French taxes for residents
'Occupiers' French property tax: Taxe d’habitation
Every household in France – whether it’s your main residence or second home, owned or rented – must pay an annual taxe d’habitation or ‘occupier’s tax’. Whoever is the occupier of a French property on 1 January is liable.
This French property tax is calculated by multiplying the average rental cost of houses in your area by a percentage set by the commune (ask for more information at your mairie/town hall). You can deduct 10 percent from the total for the first two children or elderly parents living in the house, and 15 percent for subsequent children/dependant relatives. Payment is due before 15 November but you can pay by monthly instalments starting 15 December.
TV licence tax
The redevance audiovisuelle (currently EUR 137) is a tax on any TV in your house, even if you only use it to watch DVDs, and appears on the same French tax bill. If you don’t have one, you have to declare this on your annual tax return in France.
French capital gains tax
Capital gains tax in France (impôt sur les plus values) is payable on the sale of buildings, land and shares.
Prior to 2015, non-residents of France had to pay much higher French capital gains tax than residents, however, the rate has been made the same for both groups: a 19 percent capital gains tax plus a 15.5 percent social charge, totalling 34.5 percent.
In addition, since 2013, there has been a supplementary tax on large gains, divided into five different French tax rates depending on the amount of profit:
- EUR 50,000 to EUR 100,000: 2 percent
- EUR 100,000 to EUR 150,000: 3 percent
- EUR 150,000 to EUR 200,000: 4 percent
- EUR 200,000 to EUR 250,000: 5 percent
- EUR 250,000+ : 6 percent.
The rate applies to each individual owner, so if an asset is split between two people at EUR 95,000 each, neither will have to pay a supplementary tax.
French wealth tax
Wealth tax in France (Impôt de solidarité sur la fortune) is payable on total worldwide assets over EUR 1.3 million after five years of residence in France.
As of 2017, the French wealth tax rates are as follows:
- EUR 800,000 to EUR 1.3 million: 0.50 percent
- EUR 1.3 million to EUR 2.57 million: 0.70 percent
- EUR 2.57 million to EUR 5 million: 1 percent
- EUR 5 million to EUR 10 million: 1.25 percent
- EUR 10 million+ : 1.5 percent
There is a small reduction on net wealth between 1.3 million and 1.4 million, calculated as: EUR 17,500–1.25 percent x net wealth. As a reminder, non-residents are only taxed on French assets, while residents are taxed on all assets worldwide.
French property taxes: owners and renters
If you own a property in France, you will have to pay the taxe foncière or French property tax, even if you’re renting it out.
If you a renting somewhere in France, you will also have to pay taxe d’habitation (local residence tax).
The taxe d’habitation is billed annually to the occupier of a property if they were resident there on 1 January that year. If the property is your principal residence, a tax relief of 10 to 15 percent per each child is granted (as mentioned above). As of 2014, holiday homes located in regions of housing shortage can be subject to pay a taxe d'habitation of up to 20 percent.
The amount of this French property tax depends on the size and condition of the property, as well as the rates set by the local communes. High-value homes are also subject to an extra prélèvements pour base élevée et sur les maison secondaires of 0.2 percent for primary homes, if the rateable value exceeds EUR 4,573; 1.2 percent for secondary homes if the rateable value is from EUR 4,573 to EUR 7,622; and 1.7 percent for values above EUR 7,622.
The bill for the taxe foncière arrives in the last quarter of the year and the amount is based on the estimated annual rental value of the property multiplied by a percentage set by the commune (ask for more information at your mairie). You can pay the tax in instalments or in advance by monthly direct debit. The taxe foncière rate for a primary home is around 1 percent, and 3 percent for secondary homes. Similar to the taxe d’habitation, it also includes the extra prélèvements pour base élevée et sur les maison secondaire tax but no tax relief is offered for children.
Inheritance tax in France
Inheritance tax in France is notoriously complicated. For deceased residents of France all worldwide assets are subject to French inheritance tax, while all French-based estates are subject to tax even if the beneficiary isn’t a resident in France. For non-residents, many bilateral tax treaties with France provide exemptions for paying French tax on worldwide assets.
In general, after any applicable deductions and exemptions, plus after adding back any gifts given from the deceased within the prior 15 years, the inheritance rates in 2016 for parents and children were:
- 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
Siblings of the deceased are taxed at 35 percent for amounts up to EUR 24,430 and 45 percent for more, after a French tax refund of EUR 15,932. Others will be taxed at 55 or 60 percent depending on their relationship. More information can be found in our guide to French inheritance tax.
VAT in France
Taxe sur la valeur ajoutée or TVA, or VAT in France, is a tax on certain goods and services, which is included in the sale price:
- The standard VAT rate in France is 20 percent
- there are reduced French VAT rates for certain pharmaceuticals, public transport, hotels and restaurants and tickets to sporting/cultural events (10 percent); food and books (5.5 percent); and newspapers (2.1 percent).
Corporate tax in France
When you are running your own company in France, you may be taxed under the personal income tax system (Impôts sur le Revenu, IR) or French corporate tax system (Impôts sur les Societiés, IS). If you are operating as a sole trader or freelance worker under the new micro-entreprise regime, you will pay tax and social charges based on turnover (income from your business) under the micro-fiscal simplifié system.
This is a basic guide to taxes in France and expert advice should always be consulted for your individual tax situation.
Social security taxes in France
Social security contributions (charges sociales or cotisations sociales) are collected by the state to fund France’s welfare system: French healthcare and sickness cover, family benefits, pension, unemployment benefit and workplace accident cover.
The charges are split between the employer and the employee, with employers paying around 40–45 percent and most employees paying around 20–25 percent of gross earnings. The employer deducts the money from the salary every month. The self-employed pay around 40 percent of their earnings in social charges once their businesses are up and running.
Read more in our guide to French social security.
French tax authority
- Service-Public is the website of the French civil service and has detailed information on all aspects of personal and business taxation and social charges.
- www.impots.gouv.fr is the website of the French Ministry of Economy and Finance, the body that collects income tax.
Click to the top of our guide to taxes in France.
Need advice? Post your question on Expatica's free Ask the Expert service to see if we can help.
Comment here on the article, or if you have a suggestion to improve this article, please click here.