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French taxman second greediest in world

Confirmation (if any was really needed) that the French taxman is one of the greediest in the world came this week from the OECD. However he wasn't as avaricious as the tax man of one other European country.

French taxman second greediest in world
Photo: AFP

France’s tax revenues rose once again in 2014, meaning the French face the second highest tax burden in the world.

The word tax has of course long been synonymous with France and confirmation of why became clear in the latest OECD study on countries' tax revenues.

The study, which looks at the tax burden of the each of the developed countries in the OECD, showed that France’s tax receipts had risen once again in 2014 by 0.2 percent.

Tax revenues in France now stand at 45.2 percent of the country’s GDP.

However that wasn’t enough to put France top of the table.

The title for the OECD country with highest tax burden in the world goes to Denmark, where tax revenues are worth 50.9 percent of GDP.

After France came Belgium where tax revenues were worth 44.7 percent of GDP in 2014. In Germany the percentage was 36.1 percent – down from 36.5 percent in 2013, the UK was 32.6 percent and the United States was just 26 percent – fourth from the bottom of the table.

The average for the OECD countries is 34.4 percent.

While Germany has a lower tax burden than France, it earns more through income tax and levies on consumption. However the French tax man pulls in more than his German counterpart through taxes on companies and welfare charges.

The study shows that after dips in tax revenues between 2007 and 2009 caused by the financial crisis, the percentage of tax burden has risen again to its highest level since 1965.

France's high tax rates have often been blamed for why so many French seek to head abroad.

A recent study from Les Echos newspaper revealed that in 2013 the number of French tax payers earning over €100,000 a year leaving for abroad rose by 40 percent, with 3,744 individuals heading for the departure gates.
 
That compares to 2,674 in 2012, the year President François Hollande was elected, and 1,330 in 2010.
 
And for the very, very rich who earn over €300,000 each year, the number of nationals quitting France rose by 46 percent from 451 in 2012 to 659 in 2013
 
Les Echos notes that while the exodus of high earners rose by 40 and 46 percent, the increase in the overall number of French going abroad rose by six percent.
 
Another recent study on the migration flows of the world's richest people by New World Health also spelled bad news for France. Over the period of 2000 to 2014 France was ranked third in the world for the number of millionaires (42,000) who left the country.
 
But most studies suggest the French are simply heading abroad for professional rather than tax reasons and that goes for the country's most wealthy too.
 
Speaking to The Local previously, Fabienne Petit director of international activities at French firm Humanis, which works with French expatriates in the area of health cover and insurance, explained it was a myth about wealthy French fleeing the tax man.
 
“It’s a real cliché to say that all French people are going abroad for only fiscal reasons. In fact only 17 percent of people leave for financial reasons, so we need to put an end to this myth,” he said.
 

 

 

 

 

 

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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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