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‘No more tax rises’ – A French minister’s pledge

The French public breathed a communal sigh of relief on Wednesday when the country’s finance minister vowed there would be no more tax rises before the end of Hollande’s presidency in 2017. But will the promise be kept.

'No more tax rises' - A French minister's pledge
France won't be raising taxes until after 2017, the finance minister promised. Photo: AFP

Three years without any rises in taxes.

That’s what French finance minister Michel Sapin promised on Wednesday in a bid to try to restore the public’s faith in the French government.

In a press conference on Wednesday Sapin said: “The government will not propose any new measures to raise taxes, not in 2015, 2016 or 2017.

"From now on the only contributions that will rise will be linked to decisions already taken," said Sapin.

The government has been under pressure to ease the tax burden on struggling households and Sapin’s promise comes after the 2015 budget included tax cuts for millions of the worst off.

The promise, which many will doubt the government can keep, given the pressure France is under from Brussels to reduce its deficit, comes after it emerged more French households than ever were struggling to pay their tax bills.

France has seen an explosion in the number of households requesting a deferral or cancellation of part or all of their tax bill in recent years.

The country’s public finance body, the DGFiP, says there was a 22% rise in the number of such requests between 2011 and 2013, from around 177,000 to more than 216,000.

Over the same period, the number of reminders for payment sent out by the French government has soared from 4.5 million to nearly 10 million.

France has a global reputation for its high taxes. A recent study by liberal minded Brussels-based think tank the Molinari Economic Institute study found that the real tax rate for an average worker in France in 2014 stands at 57.17%, well above the EU average of 45.27%.

The French are also having to dedicate a larger portion of their earnings to paying off the taxes. The Molinari study found that the “day of fiscal liberation” for French workers – the day when they have earned enough to pay their tax bill for the year – fell on July 28th, two days later than the year before.

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Explained: France’s exit tax

Planning on leaving France? You may, depending on your circumstances, be charged the 'exit tax'.

Explained: France's exit tax

Like some other European countries, France does have an exit tax for those (French or foreign) who are leaving the country. It’s known by the English name l’Exit tax.

However, it won’t affect most people.

Only those who have been tax resident for a minimum six years of the 10 years immediately before they permanently move out of the country are liable to pay an exit tax – if, that is, they own property, titles or rights worth a minimum of €800,000, or that represent 50 percent of a company’s social profits.

If that affects you, the best advice is to seek expert individual financial advice before moving out of France for good. The relevant page on the French government’s impot.gouv.fr website says it is possible to defer payments, and some relief is available.

Because of the relatively high figures involved, this tax is irrelevant for most people. That said, however, you will still have to inform tax authorities that you are moving out of the country because you may still have income, property and capital gains taxes to pay.

Income tax

You must inform the tax office that you are moving and give them your new address so that your tax declarations can be transferred to your new address.

You are liable for tax on everything you earned in France prior to your departure as well as on any French earnings that are taxable in France under international tax treaties that you earned after your departure.

The year of your departure, you declare your previous year’s earnings as normal – declarations in spring 2024 are for earnings in 2023.

A year later, you will have to declare any earnings taxable in France from January 1st up to the date of your departure, and any French-sourced income taxable source until December 31st of the year of your departure.

If you continue to have any French-sourced income – such as from renting out a French property – you will have to declare that income annually, using the non-residents declaration form.

Property taxes

You will have property taxes to pay if you own a French property on January 1st of any given year – whether it is occupied or not. 

Property tax bills come out in the autumn, but they refer to the situation on January 1st of that year, so even if you sell your property you will usually have the pay a final property tax bill the following year.

Moreover, if you receive income from property in France or have rights related to that property (such as shared ownership or stock in property companies), as well as any additional revenue connected to the property, during the year you leave France, you will be required to pay taxes on these earnings.

If any property assets in France exceed €1.3 million on January 1st of a given year, you may also have to pay the wealth tax (IFI).

READ ALSO What is France’s wealth tax and who pays it?

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Capital gains tax 

If you sell your French property or share of a French property, you may be liable for capital gains tax at a rate of 19 percent. It will also be subject to social security contributions at the overall rate of 17.2 percent.

Capital gains tax varies depending on how long you have owned the property and whether it was a second home or your main residence.

READ ALSO How much capital gains tax will I have to pay if I sell my French property?

The good news is, if you move to another EU country, or any country that has a specific tax agreement with France, you may be exempt from capital gains tax for non-resident sellers on the sale of a property that was your principal residence in France.

If you move elsewhere, you may be able to claim exemption on capital gains tax up to €150,000. As always, you should seek expert financial advice.

Tell Social Security

Inform social security that you are leaving France permanently – and return your carte vitale if you have one. If you do not, you may be liable for any benefits you receive to which you are no longer entitled.

More mundane tasks involve informing utility and water companies, your internet provider, if you have one, the phone company, your insurance companies, banks – and La Poste, who will be able to forward your mail for up to 12 months, for a fee…

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