Once a resident in France, you are liable to pay French taxes on your income world-wide and will need to file your French tax return as an expat.
If you're living long-term in France, you will likely need to file a French tax return. France has one of the most generous social security systems in the world but it’s paid for high social charges as well as by income tax.
There are three main types of personal taxation in France: income tax (impôt sur le revenu); social security contributions (charges sociales/cotisations sociales); and tax on goods and services (taxe sur la valeur ajoutéeTVA). You will also have to pay occupier’s tax (taxe d’habitation), you may have to pay property tax (taxe foncière), and if you’re selling land or property or have assets over EUR 1.3 million, there may be capital gains and wealth taxes, too.
This guide sets out a basis only, and expert advice should be consulted for your individual tax situation.
Who has to pay French taxes?
You’re liable to pay tax 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 some countries (see here to find out which) to avoid dual taxation (ie. paying tax in your home country and in France).
Paying French income tax
French residents pay income tax on worldwide income, which includes earnings from employment, investments, dividends, bank interest, pensions and property.
While it’s true that the higher the income 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 the tax bands and then multiplied by the number of ‘parts’ in the family.
This method of calculating 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 separately.
Income tax is not deducted at source from an employee’s wage (although social security contributions are). Everyone (unless they are not resident) has to complete an annual tax return and have the money available to pay their tax bill.
Income tax bands 2015
Up to 9,690: EUR 0 percent tax
EUR 9,691 – EUR 26,564: 14 percent
EUR 27,765 – EUR 71,754: 30 percent
EUR 71,755 – EUR 151,956: 41 percent
EUR 151,956+: 45 percent
Note: Non-residents usually pay tax on their French source income at a minimum of 20 percent.
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 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 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 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 return, even if you think you will fall below the income threshold to pay tax.
You have to return the tax declaration by 31 May for the previous year (June if you complete your 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.
Tax reductions and tax credits
You may be able to reduce your tax bill with tax credits, allowances and concessions. These include:
- la prime pour l’emploi or PPE if you are working in a professional capacity and you earn under a certain level;
- if you undertake energy conservation works on your home;
- if you invest money in an assurance vie investment policy; and
- if you are on a low income you might be able to get relief from the local property taxes.
Visit the local Caisse d’Allocations Familiales (known as ‘La Caf’) to find out what’s 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.
How to pay your French tax bill
You can pay your 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.
Social security contributions
Social security contributions (charges sociales or cotisations sociales) are collected by the state to fund France’s welfare system: health 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 30 percent and most employees paying around 18 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.
To find out more, read our guide to French social security.
Mandatory taxes for French residents
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 on 1 January is liable. The 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.
The redevance audiovisuelle (currently EUR 133) is a tax on any TV in the house, even if you only use it to watch DVDs, appears on the same bill. If you don’t have one, you have to declare this on your annual tax return.
Capital gains tax and wealth tax
Other taxes include capital gains tax (impôt sur les plus values), a tax payable on the sale of buildings, land, and shares, and wealth tax (Impôt de solidarité sur la fortune), a tax payable on total worldwide assets over EUR 1.3 million after five years of residence in France.
If you own a property in France, you will have to pay the taxe foncière or property tax, even if you’re renting it out. The bill 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.
Taxe sur la valeur ajoutée or TVA is a tax on certain goods and services, and it’s included in the sale price. The standard rate is 20 percent and there are reduced 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).
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 company taxation system (Impôts sur les Societiés, IS). If you are operating as a sole trader or freelance worker under the new micro-entreprise regime, everyone will have to pay tax and social charges based on turnover (income from your business) under the micro-fiscal simplifié system.
To find out more about taxation for businesses and the self-employed, see our guide to taxation and social charges when setting up business in France and taxation, social and other charges for the self-employed in France.
- 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.