A Comprehensive Guide to Taxes in France
Taxes are due in France on all of your international income if you become a permanent resident of the country. However, while being a generous social security system, it is funded by significant social charges and taxes.
Trying to figure out how to pay taxes in France might be a difficult task. There’s a lot to keep track of when it comes to taxes, what with income taxes, social security payments, and other levies on goods and services. Fortunately, if you do your homework, use a france tax calculator and get professional guidance when required, you can avoid most of the big hazards.
Only a general overview of taxes in France is provided in this article, and you should consult a tax specialist for specific guidance on your circumstances.
The following are some of the topics covered in the guide:
the French tax system
France has a federal tax system.
In France, local taxes are levied.
VAT (Value Added Tax) in France
In France, who is responsible for taxes?
In France, foreign nationals are subject to a variety of taxes.
The French tax system
In France, there is a tax on property and wealth.
France has an inheritance tax.
France’s VAT and corporate tax rates
French tax advice
the French tax system
Personal taxes in France are divided into three categories:
taxation on one’s earnings in the French language
Contributions to social security (charges sociales/cotisations sociales) are required by law.
To put it simply, VAT is a French tax on goods and services (taxe sur la valeur ajoutée TVA).
In addition, you’ll have to pay French property tax (taxe foncière) or occupier’s tax (taxe d’habitation). Additionally, if you plan to sell off land or property that is valued at more than €1.3 million, you may be subject to capital gains tax.
The PAYE system
From January 1, 2019, PAYE (Pay As You Earn) has been implemented in France. Paying your taxes for the previous year by submitting an income tax return and making any payments due will be replaced by paying taxes in monthly installments received directly from the source of the income you earned during the preceding calendar year.
Pensions and annuities, applicable foreign income, leave for sickness or maternity, and rental income all fall within the PAYE umbrella.
France has a federal tax system.
In France, taxes are astronomical. If you live or work in France, you may be taxed on the following, as well as a host of other things:
Annual earnings of an individual
Investments
Income from a corporation
Inheritance
Property
Wealth
Amounts paid for products and solutions
Don’t be afraid to perform your own research if you don’t intend to hire an accountant to help you.
In France, local taxes are levied.
habitation tax is the local term for it.
On 1 January of each year, residents in France were required by law to pay the local residence tax, which is a local community tax that is paid upon anybody who is the occupier of the property.
On January 1, 2021, the tax on primary residences was repealed fully. Tax will be levied on the property that is not your primary residence if you own two homes in France.
French property taxes are based on the size and condition of the property as well as local commune rates.
In France, a taxe d’habitation package
Taxe d’habitation paperwork in French
There is a television licensing fee.
Regardless of how much time you spend watching DVDs on your television, the redevance audiovisuelle (€138 by 2022) is a tax that shows on your French tax statement if you own one or more TVs in your home (you only pay it once). Tax returns in France are required to include a declaration if you don’t have one.
VAT (Value Added Tax) in France
In France, a tax on the added value of some products and services is known as TVA (Value Added Tax). VAT (Value Added Tax) is 20% in France. In France, however, the TVA rates are decreased for some drugs, public transportation, hotels, and restaurants, as well as tickets to athletic and cultural events (10 percent), food and books (5.5 percent), as well as TV licensing and newspapers (7.5 percent) (2.1 percent ).
Is it possible to get a VAT refund?
A VAT refund may be available to non-EU citizens who purchase goods and services in the EU. You’ll need receipts for purchases totalling at least €100.01 (or more) and all purchases must have been made on the same day and from the same business to qualify for a refund.
You should ask for the Detaxe form before you leave the shop and find out whether there is a tax return counter where you may collect your VAT refund right away. Don’t worry if you don’t have the Detaxe and your receipts. You’ll be able to finish the procedure before you check your luggage and enter security.
In France, who is responsible for taxes?
If any of the following applies to you, you’ll have to pay taxes in France:
For the majority of your time, France is where you live and work. Even if you don’t live in France, but your husband and children do, you may be subject to French taxation even if you do.
Residents of France who spend more than 183 days a year in the country are eligible for tax benefits.
In France, you have a primary source of income.
In France, you have the most significant financial assets.
Refunds and credits for French taxpayers
In France, tax rebates, allowances, and concessions may help you lower your tax burden. Some examples are as follows:
To qualify for PPE, you must be working in a professional position and making less than a particular amount of money.
Employees’ contributions to social security.
Up to €12,305 in professional/work-related expenditures may be reimbursed.
If you live with a 75-year-old or older relative, you may be eligible for financial assistance.
rental property losses (up to €10,700) due to unfurnished properties
Business and professional activity-related losses
Non-financial household members must pay child support for minors.
Your home’s energy efficiency improves.
If you put money into or contribute to an insurance or investment policy, you’ll get the peace of mind that comes with it.
Low-income residents of France may be eligible for exemptions from paying municipal property taxes.
taxation rules for non-French citizens in France
In France, non-residents who earn money from sources in France are taxed on such income. Taxes will be levied on your income regardless of whether you work for a French firm or not. Despite this, France has tax treaties with a number of nations, allowing citizens of those countries to avoid paying taxes twice on their income.
This initiative, known as the Automatic Exchange of Information (AEOI), requires financial intermediaries to provide information on their customers’ tax residency in countries that have signed on to it, including France.
The French tax system
If you’re single or married, have children (and how many), and are self-employed, you’ll be taxed at a different rate depending on your income and whether or not you’re self-employed.
In France, a form for income tax purposes
A common income tax form for France.
Tax rates for citizens of the state
Taxes are levied on a person’s global income, which includes earnings from job as well as dividends and interest on bank accounts, pensions, and property. Rates for France’s income tax in 2021 and 2022:
2021
Income tax brackets in France
In France, taxes are levied at a rate of
€10,084 to €10,084
11% of €10,085–€25,710
30 percent of €25,711 to €73,516.
41 percent of the €73,517–€158,222
€158,222, or more than 45 percent of the population
2022
Income tax brackets in France
In France, taxes are levied at a rate of
0% up to a maximum of €10,225
11% of €10,226–€26,070
30 percent of €26,071–€74,545
41 percent of the €74,546–€160,366 range
More than 45 percent of €160,367
Non-residents’ personal income tax rates
In France, non-residents pay a minimum 20% tax rate on their French-sourced income of up to €27,519, and a 30% tax rate on income over this level.
In France, how do you submit your tax return?
Because of the PAYE system, you may pay your income tax on the spot for each monthly wage you get.
Non-French income, investment income, and capital gains on financial assets and real estate are all exceptions to the PAYE system.
For more information on how to submit a French tax return, see our in-depth guide.
Tax returns for the general population
Assuming you have already filed a tax return, you may be provided a completed form to review, correct, and return if required. It is possible to get one through your local tax office (centre des impôts) or mairie, as well as from France’s Ministry of Economy and Finance (Ministry of Finance and Economy).
To avoid paying any French tax, even if you believe you will fall below the threshold, you must file and submit your French tax return.
Deadlines
In 2022, the following are the French tax return due dates:
The postal return date is 19 May.
For individuals residing outside of France and in the first 19 départements, the online deadline is May 25th.
Departments 20–54 have till the 31st of May to submit their online applications.
Departments 50–101 and French expatriates abroad have until 7 June to submit their applications online.
A penalty of 10% of your tax bill will be assessed if you miss the deadline.
France’s tax on self-employed individuals
French micro-entrepreneurs benefit from tax status that considerably reduces their tax and accounting obligations, such as a freelancer or small business owner. As a result, you will be taxed at the usual personal progressive rates for income tax purposes.
While micro-entrepreneurs may file their taxes using the regime réel, if you run a bigger firm that doesn’t qualify, you must use the conventional regime réel, where your income tax and social security payments are based on earnings and appropriate business expenditures are subtracted.
French tax returns sent to the IRS
The IRS requires all US citizens and Green Card holders to submit a tax return, even if they are residing outside of the United States. However, many expatriates do not. Many aren’t aware of their responsibilities because they mistakenly believe that they are exempt from paying or filing taxes in the US since they are living abroad. You are, after all! See our guide on paying US taxes from abroad for further information on how to do so from France, as well as other countries.
In France, there is a tax on property and wealth.
Taxe fonciere: French property tax
The taxe foncière (property tax) must be paid by everyone who owns property in France, even if they are renting it out. This year’s final tax bill comes in the fourth quarter of the year, and it’s based on the expected yearly rental value multiplied by a percentage that the commune has established (ask for more information at your local mairie). The tax may be paid in monthly installments or in one lump sum up front through a pre-authorized debit.
In Lyon, a garbage truck
The taxe foncière rate for a main residence is around 1%, while the rate for a secondary residence is about 3%. The taxe d’habitation, like the taxe d’habitation, contains the additional taxes for a higher base and for second homes, but there is no tax relief for children. In France, you’ll also need to get yourself covered by a travel insurance policy.
Assortment of trash
One way that municipalities charge for garbage pickup is via a fee called the Taxe d’Enlèvement des Ordures Ménagères (TEOM). The general budget may pay this service in certain places, but many towns prefer to charge their inhabitants instead.
The French tax on profit
The sale of real estate, land, and stock is subject to French capital gains tax (impôt sur les plus values).
Savings and investment income and profits are taxed at a flat rate of 30 percent, which includes income tax of 12.8 percent and social charges of 17.2 percent.
The 36.2 percent tax on capital gains is made up of 19 percent income tax and 17.2 percent social charges.
Wealth tax in France
Wealth tax on financial assets was eliminated in France in 2018, and IFI (Impôt sur la Fortune Immobilière) was introduced to replace it. IFI is exclusively applied to real estate. Tax on wealth is divided into three stages, as follows:
One-hundredth of one percent
0.70 percent of €1.3 million to €2.57 million
From €2,575,000 to €5,050,000: 1%
1.25 percent of €5 million to €10 million:
1% of €10 million or more
Residents are taxed on all their international assets whilst non-residents just have to worry about French taxes. Residents of France are subject to a wealth tax ceiling, meaning that their overall tax burden cannot exceed 75 percent of their income.
France has an inheritance tax.
It is well-known that French inheritance tax laws are convoluted. Those who died in France are liable to French inheritance tax on all of their international assets, even if the recipient is not a French resident.
Non-residents are free from French taxation on global assets under a number of bilateral tax treaties with France.
Parents, children and grandchildren inherit at the following rates after any appropriate deductions or exclusions, plus any gifts provided from the dead during the preceding 15 years:
Allowance exempt from taxes: €100,000.
5 percent: €8,072 and under
10% of €8,072–12,109
15% of €12,109–€15,932
From €15,932 to €552,324: 20%
Euros 552 – €902,838: 30% of that
40%: €902,838–€1,805,667
More than €1,805,667: 45 percent of the total
After a French tax refund of €15,932, the siblings of the dead are taxed at 35 percent and 45 percent, respectively, on payments up to €24,430. Depending on the nature of the connection, the tax rate may range from 55% to 60%. Our inheritance tax guide in France has further information.
France’s VAT and corporate tax rates
The French personal income tax system (Impôts sur le Revenu, IR) or the French corporation tax system (Impôts sur les Societiés, IS) may apply to you if you manage your own business. You pay tax and social charges depending on your business’s turnover under the micro-fiscal simplifié system if you operate as a single trader or freelancer.
French corporate tax rates have been steadily decreasing, with most firms currently paying a rate of 25%, regardless of their income. Learn more about French corporation taxes and how to establish a company or work as a freelancer in France in our comprehensive guide.
French tax advice
If you’re self-employed or have inherited money and this is your first tax cycle in France, or if you have to manage numerous tax rules, it’d be sensible to hire an accountant. They can assist you in making wise financial decisions and avoiding costly blunders.
