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TAXES

What are the penalties for filing a late tax return in France?

The deadline to file a French tax declaration, whether online or by post, has now passed. The sanctions for being late can be costly - but in some cases, can be avoided.

taxes
Read our guide on the penalties you face if you are late on your tax return in France. Photo: Towfiqu barbhuiya / Unsplash

The deadline to file your French tax declaration for 2021 has now passed for everyone living in the country. 

Depending on where you live and whether you send your tax return electronically or by post, the deadline was different. 

READ MORE The upcoming deadlines you need to know for tax declarations in France

Those filing electronically and living in départements 55 to 974/976 were given up until Wednesday, June 8th by 11:59pm – the most generous period of timeframe of any group in the country. 

But what happens if you are late to file your return? 

Penalties

If you are late to file your return, you will generally be sent a letter known as a mise en demeure, which has to be signed for upon delivery. This letter will instruct you to submit your tax return as soon as possible and state the potential penalties incurred, should you fail to do so. 

The amount varies according to how late you are. 

If you were late to file your tax return but didn’t receive/sign for a mise en demeure, you will need to pay an extra 10 percent on top of your final tax bill. 

If you file your tax return less than 30 days following the reception of a mise en demeure, you will need to pay an extra 20 percent on top of your final tax bill. 

If you file your tax return more than 30 days following the reception of a mise en demeure, you will need to pay an extra 40 percent on top of your final tax bill. 

Other penalties 

The service-public website advises that a 0.2 percent monthly interest rate can be applied in the case of late payment. 

There are also a range of penalties unrelated to late payment. 

If French tax authorities discover that you have failed to declare a revenue stream, you could have to pay an extra 80 percent on top of your normal tax bill. 

READ MORE What exactly do I need to tell the taxman about my assets outside France?

The maximum penalty for personal tax fraud in France is a €3m fine and seven years imprisonment. 

France has dual taxation agreements with countries including the UK and USA, so if you have already paid tax on income in another country you won’t need to pay more tax in France – but you still need to declare it. 

Another item that frequently catches out foreigners in France is overseas bank accounts.

If you have any non-French bank accounts, you need to list them on your tax declaration, even if they are dormant or only have a very small amount of money in them.

This also applies to any foreign investment schemes you have, such as life insurance policies. 

The penalty for not listing accounts is between €1,500 and €10,000 and that applies for each account you fail to declare. 

Exceptions 

If you had an inkling that you may have to declare your earnings in France, then chances are you probably do. 

You need to file a tax return if: 

  • You live in France (even if your income comes from another country, e.g. pensioners)
  • You work in France 
  • You live outside of France but earn income here, by renting out a property for example. 

READ MORE Tax warning for second-home owners with French carte de séjour

If one of these situations applies to you, but you have still not filed your return, it is best to reach out to the tax authorities before they reach out to you. You could plead that you forgot the deadline in “good faith” if you had a legitimate reason (serious illness, a death in the family etc.). If this is the first time that you have declared a late tax return, it is possible that the penalties won’t be enforced. 

If you declare your taxes online, you can use the messaging space available via impots.gouv.fr.

You can also call +33 8 09 40 14 01 to reach the government’s tax hotline Monday-Friday between 9h30 and 19h. 

Non-French speakers can try calling the following number: + 33 1 72 95 20 42.

Every town has a local tax office, where you can simply turn up without an appointment and ask for help.

What if I made a mistake on my declaration?

In 2018 France formally enshrined the ‘right to make mistakes’, in dealings with the authorities, giving people the right to go back and correct their declarations without attracting a penalty.

So if you realise you have missed something off or added the wrong information, you can either go back into your online declaration and correct it or, if you file on paper, visit your local tax office.

However the ‘right to make a mistake’ does not extend to late filing.

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PROPERTY

Why French homeowners face higher property taxes in 2023

As the 2022 deadline to pay property taxes in France approaches, homeowners will likely have to face higher property taxes in 2023.

Why French homeowners face higher property taxes in 2023

If you are a homeowner in France, you may want to consider putting some money aside as property taxes could increase significantly next year. 

The taxe foncière – a property ownership tax levied at local level – is a tax paid by all property owners in France. It is separate to the taxe d’habitation, which is paid by whoever occupies the property (whether they are an owner or a tenant) and applies to anyone who owns a building or land. The latter is being progressively phased out.

Why the possible increases?

A large reason property ownership taxes may increase in 2023 is due to the fact that property values are reevaluated each year in November according to inflation and other factors that have changed the value of the property such as home extensions or new swimming pools. 

In general, the rate of taxe foncière has increased in France in recent years is due to gradual scrapping of another property tax, taxe d’habitation that left local authorities short of cash.

Why did my bill go up for 2022 and what’s the deal for 2023?

For 2022, property tax payments are due on October 15th or 20th, depending on payment method. Many French homeowners were already met with an unpleasant surprise when they received their tax notices this year.

The revaluation to reflect inflation allowed for a 3.4 percent increase in 2022, which increased the property tax on all homeowners. Additionally, municipalities voted to increase local taxes. In Marseille, rates went up by 13.1 percent, for Tours it was 11.6 percent and Pau saw a rise of 10 percent. 

In 2023, these values could be even higher.

Theoretically, property values across France ought to be reevaluated to reflect skyrocketing inflation, which would lead to an increase of 7 percent (in comparison to the 3.4 percent rise that was seen in 2022). In June, the French Finance Minister Bruno Le Maire assured property-owners that this issue had been identified and that the government was considering capping the rate.

However, according to reporting by French daily Le Parisien, several senior officials have indicated that “no capped rate for the taxe foncière will be included in the finance bill to be presented in late September.”

READ MORE: Reader question: How can I challenge my French tax bill?

In effect, this means that the 2023 budget would allocate for an increase of property taxes by approximately 6.5 to 7 percent – a rise that would impact at least 30 million homeowners in France.

Various suggestions have been put forward aimed at keeping the taxe foncière bills down, such as capping increases to 3.5 percent or linking the the level of government assistance to local authorities to inflation (meaning local authorities would be less inclined to raise taxes).

Nevertheless, as of September 23rd, these solutions had not yet been put into place.

Second home owners to be harder hit

Second-home owners in France have to worry about the taxe d’habitation (residence tax) on top of the taxe foncière.

Even though the former is in the process of being phased out for most French residents – apart from the highest earners, those with second homes are still required to pay it.

And for many of those that do, the rates are going up.

In 2022, more towns have voted to increase it, while others gained the ability to add a surcharge for second-home owners, with French daily Le Parisien reporting that the taxe d’habitation “continues to soar.” 

Municipalities in zones tendues (areas with a housing shortage) have the ability to choose to increase taxe d’habitation by up to 60 percent for second home owners.

READ MORE: Tax hikes of up to 60% for French second home owners

From 2023, several new areas – including Nantes – will join the list of zones tendues, meaning they will be able to vote to increase taxes for second-home owners.

In 2022, large cities such as Bordeaux, Lyon, Biarritz, Arles and Saint-Jean-de-Luz saw their city councils vote to increase the tax at the maximum 60 percent.

How is taxe foncière calculated generally?

The formula is complicated, and it is calculated each year for you by your local authority (though under the auspices of a formula set by the French finance ministry). Basically, it has to do with the rentable value of your property divided by two and then multiplied by the tax level set by your local authority.

READ ALSO: Taxe foncière: What is the French property tax and do I have to pay it?

The local authority’s tax rate varies hugely from place to place, which is why two people with similar sized homes in different areas can end up with wildly different bills.

In fact to make it more complicated it’s actually three local authorities – the commune, the département and the région – which all set their own tax rates then divide up your tax to pay for local services.

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