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French tax declaration season opens: Here’s how it works

It's time to make that annual declaration of earnings to the French taxman. Here's some important information to remember.

French tax declaration season opens: Here's how it works
Photo: AFP
Tax season is here – but don't worry, French authorities are making it easier to declare your taxes. 
 
For now, most taxpayers can choose between filling out a traditional paper declaration or doing it online. And even though we all have to declare our income, it doesn't mean we will all have to pay taxes; in fact, a record low number of people in France will be paying income tax this year.  
 
The declaration deadline by paper forms is May 18th. BUT if you earn more than €40,000 and have an internet connection you can no longer put pen to paper and will have to declare your taxes online. If not you'll pay a fine as well as your taxes.
 
Declaring online
 
The online declaration portals open on Wednesday, April 13th across France for those who have to pay income tax.
 
The official site is accessible here. The website allows you to calculate exactly how much you'll have to pay (or how much you'll get back) immediately, rather than having to wait for months to find out. 
 
If you're going to leave it to the last minute, the internet declaration deadlines, which depend on which region of France you are in, are as follows (with map below): 
 
France's 101 départements have been divided into three groups, to ease congestion and the risk of crashes on the official government website – which tends to happen when deadline day approaches.
 
Départements 0-19 – May 24th 
Départements 20-49 – May 31st 
Départements 50 plus – June 7th
 
 
This year marks the first time online declarations will be mandatory (but only for those earning over €40,000 for the year). There will be a €15 penalty in place for who doesn't declare online for two years running (effectively meaning there is a one-year grace period as people adjust to the new system). 
 
Online declarations will be rolled out as mandatory for everyone earning above €28,000 from next year, and for those earning over €16,000 in 2019. Only those tax payers without an internet connection will be exempt.
 
A full 40 percent of tax payers used the online option last year.
 
How much tax will you pay?
 
Those earning less than €9,700 a year won't be taxed after the government ditched the lowest 5.5 percent tax bracket in 2014.
 
For revenues between €9,700 and €26,791 the tax rate is 14 percent, while for earnings between €26,791 and €71,826 it is 30 percent.
 
Anyone (lucky enough to be) earning between €71,826 and €152,108 will be taxed 41 percent on the earnings in that bracket and anyone earning more than €152,108 will pay 45 percent on that revenue.  
 
Important things to remember
 
This year, as usual, taxpayers have been warned to declare all their bank accounts that are held in foreign countries. This can be done on a separate piece of paper.
 
So if you have bank accounts and/or ISAs back in the UK, for example you are expected to include evidence of the interest you earned on these accounts, but thanks to an agreement between France and the UK, you won't have to pay taxes on the interest if you already have in the UK.
 
Foreign bank accounts and income
 
The same goes for pensions and rental income from properties you have in the UK. The French taxman wants to know your worldwide income.
 
“There are some people who will think that if their income is taxed in the UK, then they don’t have to declare it here in France, but it’s not true, you have to tell them about your world-wide income,” Siddalls regional manager David Hardy tells The Local.
 
But this year, with all the scandal over the Panama Papers, it's probably not wise to hide any foreign bank accounts from the French taxman.
 
Also, taxpayers have been reminded that they don't need to send in proof for costs such as charitable donations or money spent on house cleaners, which can result in a reduction in taxes, but that all evidence of payments must be kept for a minimum of three years in case the taxman decides to inspect you.

Remember it's household income:

Whereas in the UK you pay tax as an individual, in France you are taxed by household. So if you are a married couple or if you are “pacsed” (in a civil partnership) then you should make one joint declaration rather than two. If you got married half way through the year you can now declare one common declaration (instead of three, which was previously the case) for the whole year.

And if you have any children living with you that are earning then you’ll need to declare their earnings too.

Things will change
 
There will be more changes (and hopefully fewer headaches) when it comes to paying taxes in the future, with income taxes to be deducted at source from January 1st 2018.
 
That means workers will see the taxes deducted straight out of their wages at the end of each month in real time, similar to the Pay As You Earn system in the UK.
 
 
 
 

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TAXES

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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