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TAXES

EXPLAINED: Who has to do a tax declaration in France?

If you're looking at coverage of the French tax declaration and thinking 'I wonder if that applies to me' - then chances are, it probably does. Here's a look at who has to do the annual declaration and who is exempt.

Published: 15 February 2021 13:39 CET
Updated: 12 April 2024 09:42 CEST
EXPLAINED: Who has to do a tax declaration in France?
Photo: AFP

It’s no-one’s favourite job – a lengthy and complicated form covering your finances for the previous year – but for most people the annual income tax declaration – déclaration des revenues – remains compulsory.

Since 2023, property owners in France have had to also complete the déclaration d’occupation – property tax declaration. However, this is a one-off task not an annual event like the income tax declaration. 

Taking a look at the income tax declaration first, here’s who has to complete it and who is exempt;

Residents in France

If France is your full-time residence then you will most likely need to fill in the declaration. The French tax office starts to consider you a resident if you spend at least six months of the year here, so this may also apply to some second-home owners who pay lengthy visits. 

Explained: The rules on tax residency in France

Many people assume that if you have no income in France then you don’t have to make a declaration, but in fact this is not the case.

France has dual-taxation arrangements in place with a large number of countries including the UK, USA, Canada and Australia so you likely won’t be taxed on income that is already taxed in your home country, but you still have to fill out the declaration.

If you’re feeling daunted by the task, check out our section-by-section guide to filling in the form.

People who are salaried employees and have their income tax deducted at source also sometimes assume that they don’t need to fill in the declaration, but for most people this is not the case. If your only income in France is your salary and your taxes have already been deducted then you won’t have to pay any extra, but you still need to fill in the form.

If you think this sounds totally crazy, it’s because France is in the middle of a major reorganisation of its tax system and income tax only began being deducted at source in 2019 – before that employees only had social charges deducted from their salary and then got an annual bill for income tax.

The new system is known as prélèvement à la source, which is sometimes confusingly translated as ‘withholding tax’ but it means pay-as-you-earn.

READ ALSO How to understand your French payslip

The eventual plan is that declarations for employees will be scrapped, but at present most people still need to fill one in.

Exemptions – as mentioned, France is in the middle of a major shift in tax declarations and from 2020 some employees whose only income is their salary have been moved on to ‘automatic declarations’ where you simply declare that all the information you supplied last year is still correct. 

This was extended to more employees in 2023 – if you are eligible you will receive an email from the tax office or a message via your online tax portal, if you are not contacted, assume you need to complete the declaration as normal.

Recent arrivals – the spring 2024 tax declaration covers the 2023 tax year (January 1st to December 31st 2023). So if you arrived in France after January 1st and had no income in France in 2023, then you will not need to complete the declaration until next year.

Rebates – for some people filling in a tax declaration might result in the French government giving you money, rather than the other way round.

There are a lot of tax rebates available in France, from specific professions who are exempt from income tax on a proportion of their salaries due to historic union agreements to deductions available for parents on costs like childcare and domestic help.

READ ALSO The French tax breaks you don’t want to miss out on

Second-home owners

For most second-home owners who keep their main residence in another country, an income tax declaration will not be necessary in France, but if you rent out your French home and therefore have income in France you may need to fill in the declaration. Find out more at the French government’s international taxpayers section HERE (in English).

If you own property in France you will be liable for two types of property tax – the property owners’ tax taxe foncière and the householders tax taxe d’habitation – but these are billed separately from the annual declaration which is concerned with income.

Working in France

If you are working in France but not living here you may also have to make a declaration, depending on your status.

Cross border workers – people who live in another country but cross the border daily to work in France are mostly covered by treaties.

France has signed treaties with Germany, Belgium, Spain and Italy that states that salaries are taxable in the worker’s country of residence, even if the wages are earned elsewhere. Eight Swiss cantons have similar agreements with France, but not the Canton of Geneva (although the great majority of cross border-workers there are working in Switzerland and living in France rather than the other way round). Find out more HERE.

French employer – if you live outside France but have done paid work in France for a French company you may need to fill in a French tax declaration, even if your salary has had tax deducted at source. Find out more HERE.

Income/business interests in France

If you live outside France but have business interests/investments here, or any income here, then you will also need to declare.

The French tax office considers you a tax resident if you either have income in France or have the ‘centre of your economic activities’ in France.

This category has a slightly vague definition, concerns people who don’t live or work in France, but have their ‘main investments’ in France or the business from which they administer their main investments is based in France.

Income in France includes any income from renting out a property – so for example if you’re thinking of renting out your second home on Airbnb for a few weeks of the year, you would need to declare that income.

Make the declaration

Declarations for 2024 opened on April 11th and cover the time period January 1st 2023 to December 31st 2023.

If you live in France you need to declare all your income, wherever it comes from (although if you have already been taxed on it in another country you likely won’t pay more tax in France). This includes income from renting out a property in another country, pension income and income from shares and dividends.

You also need to declare all non-French bank accounts on your declaration – even if they are dormant and empty.

If this is your first year declaring tax in France you need to register first and you may need to make the declaration on paper – everyone else can declare online.

The deadline to have your declaration completed is late May/early June depending on where you live and whether you are filing on paper or online – full details here.

The 2024 French tax declaration Guide

Member comments

  1. It says the declaration is “due in April” but that’s not the case. The online declaration forms will become available starting on April 14. The due dates vary depending on department, and whether you are filing electronically or with paper. They range from May 18 to June 2.

  3. If I didn’t move to France until August of 2021, do I file the declaration for 2021 or do I wait until I’ve been in country for the full tax year?

  4. I imagine this year there will be a number of new “residents” in France, with those British individuals who have received their carte de séjour as a result of the Brexit Withdrawal Agreement. If they’ve retained their UK home and do not reside in France for all 365 days a year, even though they may well own a second home in France, I wonder where would that leave them with regard to making a declaration.

  5. I imagine there will be many new “residents” in France this year, with those who have completed the application for a carte de séjour under the Brexit Withdrawal Agreement. It’s possible that not all of these are living full-time, 365 days a year, in France. Many may still have a U.K. home that is considered their main residence. I wonder where that leaves such people with regard to filling out a tax form, especially if they have a home in France.

  6. If you own a property in France and are resident there, even though you may also own a dwelling in the UK, state this on the tax form and you will not have to pay taxe d’habitation. Only taxe fonçiere will have to be paid.

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For members

AMERICANS IN FRANCE

Americans in France: Will my tax situation change if I get French citizenship?

If you're thinking of applying for French citizenship, then you might be curious whether there will be any tax ramifications to becoming a dual national.

Published: 2 May 2024 16:44 CEST
Americans in France: Will my tax situation change if I get French citizenship?

Gaining French citizenship can have plenty of benefits for Americans living in France, from the right to vote in French elections to freedom of movement in the EU – as well as a more intangible sense of belonging in the country you now call home. 

However, Americans living abroad always have to contend with the United States’ system of citizenship-based taxation, which requires US nationals to report their global income to the IRS yearly, however long they have been out of the country.

This may result in making two tax declarations every year if they move to a country – like France – which requires yearly declarations from all residents.

As a result, Americans have to think about possible tax consequences before making decisions to move, invest, or perhaps take on a second nationality.

To help answer the question of whether there are special tax ramifications for French-American dual nationals living in France, The Local spoke with tax expert Jonathan Hadida from HadTax.

Hadida said: “There is really no impact. You still have yearly reporting requirements to both countries, and from the French side you will still continue to give you the benefits of the tax treaty”.

Key items, such as your US-based pension, would continue to be taxed in the US and not France regardless of whether or not you take on French nationality too.

READ MORE: Ask the expert: What Americans in France need to know about 401(k) and other pensions

Unfortunately, many of the limitations Americans in France experience would also remain in place. French investment options, such as the Assurance Vie, would still unwise for dual nationals, as the IRS sees them as PFICs (Passive Foreign Investment Company).

While the Assurance Vie is a great tool for being tax efficient for non-Americans, and can offer alternatives to the regimented, traditional French inheritance process, for Americans living in France (including those with dual nationality) it can lead to lengthy and complicated dealings with the IRS. 

“To the US tax authorities, you are still American first, second, third and fourth place. They don’t really care that you are also French,” Hadida said.

“The only real change to your tax situation would be giving up your American citizenship, but keeping your US citizenship in addition to French citizenship does not really change anything.”

What happens tax-wise if I renounce my American citizenship?

Renouncing US citizenship is not as simple as scheduling an appointment at a US embassy or consulate, paying the applicable fee, and declaring that one does not want to be American.

There are several factors to consider, and depending on your situation, in the long-run it might be more advantageous to hold onto your US citizenship to continue benefiting from certain parts of the US-France dual taxation treaty (PDF).

For others, keeping US citizenship might be onerous with its yearly reporting requirements, as well as the difficulty it can pose with putting money into French investment vehicles due to citizenship-based taxation and FATCA (US legislation that passed in 2010 to track money laundering). 

While renouncing your American citizenship undoubtedly pushes you further out of the reach of the IRS, you should consider that you might owe an exit tax, if you are deemed a ‘covered expatriate’. Usually, this is only required of high-net worth individuals (worth more than $2 million).

According to the US expat tax site 1040 Abroad, this also includes people who failed to comply with tax obligations in the five years preceding their renouncement, as well as people who had “an average annual net income tax liability exceeding a specified threshold” (as of 2022, this number was set to $178,000).

People renouncing US citizenship can also be subject to a special inheritance tax on gifts made to US citizens or residents, following their renunciation. 

READ MORE: How to renounce American citizenship in France – and why you might want to

You should also think about your US-based investments.

“You would no longer benefit from the tax treaty in the same way if you give up your US citizenship. For example, Article 24 of the treaty covers investment income, making it taxable in the US and giving you a deemed credit in France.

You would lose this benefit if you renounce, and this could make a big difference if the taxation level is lower in the US, as it often is with dividends or capital gains.

“Your IRA and pension plans will continue to be taxed in the US because this is based on where the pension is earned, not nationality, but you might have to start filing a non-resident tax return to the US after renouncing citizenship,” Hadida said.

The tax expert said that renouncing citizenship should be decided on a case by case basis.

“Every situation is different, and for some people it might not make sense to give up certain benefits from the US-France tax treaty. You should speak with a financial advisor before deciding”, he said.

READ MORE: Divorce, stress and fines: How citizenship-based taxation affects Americans in France

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