Tax in France

I once read that one can avoid everything but death and taxes. Not a cheery thought if like me you get overwhelmed with numbers and financial advice. Taxes are always a tricky subject, but when you have to deal with taxes in a different country and even worse in a different language, taxes can be more than daunting.

I will start telling you that I am not a tax advisor and the following lines are just based on my readings and experience as a foreigner living in France. Here, the tax laws are complex and tend to change from year to year, so it is often necessary to consult a tax advisor. Fortunately enough, you can get free advice at your local tax office and at your local town hall.

French taxes are higher than American taxes and are among the highest worldwide. However, this is compensated by the fact that the French government offers more services in the areas of retirement benefits, child care and health care.

If you are a French resident (you spend more than 183 days a year living in France) Tax is also collected on income earned worldwide

To understand the French tax system you need to know that there are two main bodies involved in the French taxation process:

• The tax inspectors – Centre d’Impots, who determine your tax liability
• The Tax collectors – Tresorerie.

These can be confusing sometimes as these two administrations work separately. Thankfully, in my town they are in the same building so I can be “ping-ponged” from one to the other without too much frustration, every time I have a tax issue.

In France there are four main taxes that you will be concerned with:

1. Income tax known as Impôt sur le revenue, which constitutes the primary tax burden in France
2. The "Taxe d'Habitation"
3. The "Taxe Foncière"
4. Tax the redevance audiovisual

The short answer is EVERYONE. Everyone over 18 years old, who is resident in France (French or foreigner) or is working in France, has to submit an income tax return form. People who are not earning enough to pay income tax are also obliged and advised to submit and income tax form as this will allow them to benefit from certain advantages such as a reduced tax d’habitation, taxe fonciere and several social aids.

On becoming French resident it is your responsibility to make yourself known to the tax authorities and to declare fully your income, capital gains and wealth. For your first year of charge, your French income tax demand will be sent out and payable in late August/early September. But if you are living in France and you have not received yet an income tax return form I would recommend that you visit your nearest tax office and request one.

The French tax authorities can be rather friendly once you get to know them and they are a good free source of advice.

Your tax in France

French individual income tax is calculated on aggregate household income, meaning that it includes the incomes of husband, wife and dependent children.

The actual calculation is beyond my capabilities, taxes are determined by adding net figures from each category of income and subtracting all deductions and then dividing the result in units which are separately taxed. 

You can declare your income tax online and benefit from extended dates for declaration and payment, online advice, automatic tax calculators and different ways of payment according to your budget. 

Income tax in France is paid in arrears, meaning that every year you need to put aside some of your income for paying the taxman the following year.  You can choose to pay annually, every three month or on a monthly basis.  However, those whose tax bill is no higher than €337 are required to make one single payment by the due date.

For an average income you can count on about one month’s salary in income taxes. 

This is a media/audiovisual royalty’s tax paid by every household with a television set.  The redevance audiovisual goes to fund public programming. Each household pays the same amount regardless of how many televisions are owned at the property.

If you are on a low income it is worth informing yourself at your local tax office as you can get relief from the local property taxes.

In France, very soon you can end up in serious debt if you delay your tax payments as you are punished with a10% penalty, as well as an interest charge of 0.40% per month (4.80% per year) on the outstanding sum. 

To avoid falling into endless debt, if you find yourself in financial difficulty and cannot pay your tax bill, you are strongly advised to contact your tax office and negotiate a delay in payment or payment in small instalments.  Do not hesitate to write to your tax office and propose to them according to your budget a realistic time to pay your whole bill.  If you have written proof that your income has declined by at least 30% over the proceeding three months, it is your right to be allowed a longer period of time to pay your tax bills.

If by any chance you are already late paying your taxes and you are punished with the “10% majoration” you can write to your tax office to explain the cause of your delay in payment asking for relief from the penalty. 

Personal income tax : Impôt sur le revenu.

Tax inspectors: Centre d’Impots

Tax collectors:  Tresorerie

Property tax: tax fonciere.  An annual tax based on the value of land and housing.

Sales tax:  TVA (tax sur la valeur ajoutée)

Professional tax : Taxe professionnelle, a tax paid for the right to conduct business.  

Certified Public accountant: Expert comptable

Bookkeeper: Comptable

Turnover: Chiffre de affairs

Audit: controle des comptes

This article is for general information purposes only and does not constitute legal, financial or other professional advice. We advise you to seek professional advice before acting on this information.