If you are planning to settle in France or simply own a property on French territory, it is crucial that you are aware of the main income tax rules in France.
As tax resident of France
You are considered a tax resident of France if you fullfil at least one of the following criteria :
– Your household (spouse/partner and children) remains in France. If you are living temporarily in another country for professional reasons, but your household remains in France, you are considered to be tax resident. If you are single, and living most of the time abroad, you are not considered a tax resident of France;
– You have a professional activity in France. If you receive income from France, it is mandatory to submit a French tax return;
– The center of your economic interests is in France. This means that France is the location of your main investments, business, professional activities, or the source of the majority of your income.
Since the French tax system is cumbersome, you are advised to seek assistance if your personal situation may lead to confusion.
If you are fiscally domiciled in France, you are required to declare your entire income, which means your French income, as well as your foreign income. In this case, international tax treaties are necessary to avoid double taxation (it is worth noting that France is one of the countries that have signed the most tax treaties in the world).
Warning: in the absence of a tax treaty, French law takes unconditional precedence, resulting in taxation in France of any income that has already been subject to taxation in another country.
Are considered as income of French origin, all income generated by an activity undertaken on French territory:
• Salary, including vacation work, paid vacations and tips ;
• Sickness insurance daily allowances (paid for sick leave or maternity leave for example) ;
• Benefits in kind offered by the employer (such as food, housing, sometimes computers…) ;
• Unemployment benefits ;
• Early retirement benefits ;
• Parliamentary allowances and allowances for local or regional representatives.
• Income from self-employed professions (merchants, arts and crafts and licensed professionals) is deemed to be of French origin when practiced in France ;
• Rental income ;
• Pensions and pension funds are of French origin when provided by an organism or a person residing in France ;
• Income from investments (interest, dividends, etc.) is considered to be of French origin when paid by an organism or a person resident in France ;
• Income from real estate (increases in value on resale of real estate) is treated as income of French origin when the real estate is located in France.
Progressive tax system applicable to income:
Progressive tax schedule applied
Tax rate applied to the corresponding bracket
Up to 10.084€
from 10.085€ to 25.710€
from 25.710€ to 73.516€
from 73.516€ to 158.122€
158.123€ and more
You are not a French tax resident
The fact that you are not a French tax resident does not mean that you do not have to declare anything in France: indeed, as mentioned above, you must declare all income of French origin.
Therefore, you must declare the following income:
- Wages from private work undertaken in France
- Income from self-employment
- Rental income, or gain from appreciation on resale of a property located in France
- Income from the disposal of shares or financial assets of companies located in France with more than 50% real estate assets
- Dividends distributed by a French company
Warning: Non-resident taxpayers are not subject to the progressive income tax, but are taxed at a minimum rate of 20%.
In any case, it is worth noting that filing an income tax return in France is mandatory if you earn income in France, whether you are a French resident or not.
If you fail to do so, you may be faced with a flat tax, penalties or surcharges and default interest.
You can of course count on us when it comes to tax challenges in France. If you would like to use our services, you can submit your personal tax return here.