Taxes in France

One of the essential things to keep in mind when living in France is the payment of taxes. If and when you become a resident in France, you will undoubtedly have to pay income tax or at least declare your income in an annual tax return. Taxes can be defined as an obligatory monetary contribution to the state levied by the government on people according to their capacities for the purpose of public expenditure, and to achieve economic social goals set by the Government. 

Income tax in France - image of money

The difference between general taxes and income tax in France

In France, you will be paid your salary minus obligatory deductions of social security charges such as CRDS (social security repayment contribution) and CSG (general social security contributions). Some part of the obligatory deduction CSG goes towards, for example; funding healthcare in France. Obligatory deductions will count for about 20 to 25 % of your gross salary. These obligatory contributions are not seen by the government as taxes perse, although, most people see it as general taxes.

In France, you are required to pay taxes annually, after you have been paid your salary. You have to declare your income at the end of each calendar year. There are different types of Taxes, but the one that will be explained here is the personal income tax. 

Income tax and déclaration de revenus

While working in France, you have to complete an annual tax return (déclaration de revenus) that determines the tax bill of the previous year. Income taxes for residents are payable in the year after the income is earned. You can pay your tax bill (les échéances) in instalments either in three instalments or 12 monthly payments.

For your first time, you may need to get the income declaration form(s) from your local tax office (centre des impôts) or the town hall (mairie). You could also get it online through here. Whether you are reminded to declare your income or not by the state, it is your responsibility to complete and submit the form(s). You have to declare your income even if you fall below the income threshold of 9,700 euros to pay tax. The forms you have to complete, differs depending on the source of your income. The main income return form is form 2042.

Progressive Tax scale

Income tax in France is calculated using a progressive rate scale. Here below you will see a table of this scale. You cannot take this scale at face value, simply because the calculations are a bit more complicated than what it may seem at first glance.

Tax rates for 2015 payable in 2016

Taxable income in eurosTax rate in percentage
Up to € 9.7000%
Between € 9.701 – € 26.79114%
Between € 26.792 – € 71.82630%
Between € 71.827 – € 151.10841%
Above € 151.10845%

For example, the amount of tax you will pay depends on how big your household is as well as any reductions you may be entitled to. During the calculations, the net income of your household will be divided by the number of parts (based on household members. One part equals one person) before the rates shown in the table above are applied.

The number of parts or the family quotient is one unit for a single adult person, two units for a married couple and half a unit each for the first two children. It is an additional one unit for each child from the third. This means that it is possible that a single person earning a certain amount of money may have to pay the same amount of income tax as a couple with children earning perhaps more, since the income is spread over the whole family. However, The tax advantage obtained for each child is limited to 1,510 Euros and 3,562 Euros for one-parent families.

Exceptions for High income earners

High income earners with income exceeding € 250,000 for a single taxpayer and €500,000 for a married taxpayer, have to make an exceptional contribution of 3% or 4% extra on their income tax. This is applicable as of 2011 income. This extra tax payment will be repealed when the government has reached the deficit target of 3 percent.

Important for UK nationals

It is essential that UK nationals who are about to leave the country claim tax relief or any tax refund owed. Furthermore, inform HM Revenue and customs (HMRC) about any income you continue to get. This can also be done in the first year after leaving the UK. You can complete the HM revenue form here. You should also complete the form France individual, if, you are an individual resident of France receiving a UK State Pension or Incapacity Benefit. This form should also be completed, if, you receive pensions, purchased annuities, interest or royalties arising in the UK.

Key things to remember

  • Deadlines for filling the Tax returns are around May, however, the deadline varies each year so keep yourself informed.
  • You need to declare your worldwide income not only income from France
  • Declare your bank accounts.
  • Your income declaration involves your whole household (registered partner, spouse, dependents and children), not only your individual income.
  • For your first declaration there is no shame in asking for help at your local town hall. The Paperwork is complicated enough, an extra pair of experienced eyes will help make things easier.