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Taxes in France in 2019: All You Need To Know

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Moved to France and wondering how taxes work in France? It can seem a little complex, but it's essential to be aware of how the system works when you arrive. Find out all about the French taxing system, the calculation and declaration processes and more in the following article.

Do I have to pay taxes in France?

The first thing to find out is whether you are indeed eligible to paying taxes in France which depends on your status and situation.

Eligibility to tax payment in France

You are eligible to pay taxes in France if:

money

  • France is your prime country of residence. Note that you may still qualify as a French tax resident if you work abroad but your partner or children live in France.
  • If you live in France for more than 183 days per calendar year, or if you spend most of the calendar year in France more than in any other country.
  • You work in France.
  • The majority of your financial assets is in France.

Avoiding dual taxation

Depending on your country of origin, there may be a treaty between signed by France that means you can avoid being taxed in 2 countries.

You can find out which countries are part of an agreement to avoid dual taxation here.

The expatriate tax exemption scheme

If you have recently moved to France as an expatriate, or are preparing to move to France, you may want to be aware that you are applicable to the special expatriate tax regime.

This applies to you if you were not in France for tax purposes during the 5 years prior to having been recruited to a company based in France.

The PAYE system adopted in 2019

The French authorities have recently put in place a reform which will change how and by whom taxes are collected over time (but not the rates or the actual amount of taxes), which is known as PAYE.

What is the new PAYE tax system?

house-tax

A big change that was introduced in January 2019 is the introduction of the PAYE system or Pay As You Earn, or PAS in French. This was already in existence as an option until then, but it is now applied to everyone.

As a result taxes will no longer be paid twice a year, but on a monthly basis. This is done in order to avoid the one-year lag between when people receive their income and when taxes on these incomes are due. Payable tax will thus need to now be deducted at the source, which means you will pay taxes every month at the same time that you receive your income(s).

The way taxes will be collected will vary depending on your situation:

  • If you are employed, your employer will collect the tax
  • If you are a pensioner it will be taken charge of by your pension fund
  • If you are self-employed, you will pay taxes directly to the French fiscal administrations

Note that the French Authorities won't deduct PAYE on any incomes overseas (even though you should still declare these on your tax return).

The tax authorities ask that you register your bank account details in order for the monthly payments to be deducted via direct debit.

Types of incomes subject to PAYE

Below is a list of all the types of incomes that fall into the PAYE system in France:

  • Employment income and salaries
  • Retirement income, such as pensions
  • State benefits, such as for unemployment
  • Rental income
  • Business profits
  • Maintenance payments
  • Consultancy fees
  • Independent income
  • Non-French incomes that are taxable in France - for instance, UK pensions granted to a Brisith retiree living in France.

Note that the PAYE system does not exempt you from declaring the entirety of your revenues of the previous year to the fiscal administration.

Types of incomes excluded from PAYE

Keep in mind that the PAYE does not apply to the types of incomes listed below:

  • French property income, which will have to instead be declared on the Declaration de Revenus of the previous year.
  • Capital gains deriving from real estate property and financial investments (e.g. sale of stocks/shares)
  • Non-French income which is subject to French tax credit in accordance with a double tax treaty (UK rental income of a French resident falls into this category)

As for incomes from savings (interests, dividends, capital gains, gains from life insurance policies ...) they will be taxed as a 30% flat rate, and will be deducted from French banks at the source.

What if I'm not covered by the PAYE system?If as a French resident you are not currently covered by the PAYE system, you can pay your French tax bills (known as "les échéances") either in 3 installments on the 15th of the months of February, May and September, or every 15th of the month via the www.impots.gouv.fr website, via direct debit.

Calculating French taxes

calculating-tax

Tax rates are progressive in France, and they take into account all incomes summed up per household: incomes from employment, investments, dividends, bank interest, pensions, and property. All offical French residents are taxed in a progressive manner on these incomes earned both from France and abroad (as in the relevant overseas income).

It is important to note that the amount of PAYE you will be deducted every month in 2019 will actually be based on your earnings from the year 2017. You will have normally declared your income of 2017 before May of 2018. After that, all the extra outstanding taxes or refunds will have to be dealt with before the end of the year.

Rates for income taxes - 2018 tax return
Bracket of income
Total annual income
Rate of taxation
1 €0 to €9,964 0%
2 €9,965 to €27,519 14%
3 €27,520 to €73,779 30%
4 €73,780 to €156,244 41%
5 over €156,245 45%

What about non-residents?

For French non-residents, taxes will usually be taken on France-sourced incomes at a 30% tax rate. For property tax on the earnings from the sale of properties in France, rates are set to 19% for all EU citizens and 33.33% otherwise.

How to file a tax return in France

When it comes to completing a French tax return, the process depends on how whether it is your first time or not.

If you have been living in France for over a year and that it isn't the first time you are filing a tax return, you should be automatically sent a form, already completed, that you will be asked to check, modify if needed and then return.

If you do not receive this form, or if you have just recently moved to France and you are filing a French tax return for the first time, then you will need to obtain one yourself, either at your local townhall (mairie), at your local tax office (centre des impôts) or simply online via the French Finance Ministry website.

It is up to you to make sure you complete and send back your tax returns, whether or not you think you will fall under the threshold of tax payment. Failure to do so will incur extra amounts to pay.

The tax declaration must be returned by the 18th of May or a given year, for the previous year. In the case of a filing done online, you usually have until the 6th June, though the exact dates can vary from one French area to another. Failure to comply or delayed completion will result in a fine, amounting to 10% of your total tax bill.

Tax refunds, allowances and successions in France

In some cases, you may be may be eligible to tax refunds, allowances or concessions, which will reduce your tax bills. Such refunds in the following cases:

  • If you work in a professional capacity and your earnings are limited, you may be eligible to the Prime Pour l’Emploi (PPE)
  • For all Employee Social Security contributions
  • For any professional/employment-related expenses, up to €12,305
  • For people taking care at home of another person over 75 years old
  • In the case of rental losses from unfurnished properties, up to €10,700
  • In the case of losses from a professional activity
  • For childers in your house that aren't part of your fiscal household,(refunded as child support payments)
  • For works done on a home for energy conservation purposes
  • For investments an Assurance Vie policy
  • For people with low incomes, it may be possible to get refunds from local French property taxes.

In order to find out in more detail to which French tax refunds you may be eligible to, and to find out how to apply to these, you can go to your local Caisse d'Allocations Familiales (more commonly named "Caf" by French people).

The different types of taxes in France

papers-tax

Here is a list of the other types of taxes you may have to pay while in France:

  • The French property tax for house occupiers (taxe d’habitation)
  • Taxes for house owners (taxe foncière)
  • The TV licence tax (redevance audiovisuelle)
  • The French capital gains tax (impôt sur les plue values)
  • The French inheritance tax (droits de succession)
  • The French corporate tax (impôts sur les sociétés)
  • Social Security taxes in France (contribution sociale généralisée)
  • VAT in France (TVA)

Resources about the French tax authorities

If you need assistance with you taxes in France or have to get in contact with the French authorities regarding these, below are some resources you may find useful.

How to contact the French tax services

You can get more information about the tax system by calling "Impôts Service" by phone at 0 810 467 687 (Monday to Friday from 8am to 10pm and on Saturday from 9am to 7pm).

Links to file taxes in France

Here are a few links from the Official French Public Service website, that you will find handy when sorting out your taxes

Useful French translations of tax-related terms

Here are a few French terms and their translations, that can come in use when completing your tax returns.

Glossary of tax-related terms
French Term English Definition
Abattement Deduction
Avis de non-imposition Certificate of non-taxable income
Contribuable Taxpayer
Foyer fiscal Tax household
Prélèvement à la source (PAS) Pay as you earn (PAYE)
Revenu à déclarer Gross income
Revenu imposable Taxable income (once the deduction and credits have been calculated)
Revenu foncier Rental income
TVA (Taxe sur la Valeur Ajoutée) VAT (Value-Added Tax)