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Your guide to French property taxes

From who has to pay to how the bill to how it is calculated and whether you can challenge it (via swimming pools) - here's everything you need to know about France's property taxes.

Published: 9 April 2024 12:38 CEST

French property taxes can be confusing for foreigners. Photo by GUILLAUME SOUVANT / AFP

If you’re buying property in France – whether you intend to live in it, use it as a second home or rent it out – then you will be entering the wonderful world of French property taxes. Here’s how it all works.

Overview

France’s property tax system has undergone a fairly major shake-up in recent years, so you need to make sure that you’re looking at up-to-date information.

There is now a new requirement – the property tax declaration or déclaration d’occupation (more on that later) – and a big change in who actually pays property tax.

Taxe foncière is the property-owners’ tax, paid by everyone who owns property in France, including those who live in another country. This system has not changed, but many people have seen big increases in their bills in recent years.

Taxe d’habitation used to be the householders’ tax, paid by whoever occupied the property. This meant that tenants paid only taxe d’habitation while people who owned their own home (plus second-home owners) paid both. However in a radical shakeup, taxe d’habitation has now been gradually phased out for everyone apart from second home owners.

This means that tenants now pay no property tax at all, owner-occupiers pay only taxe foncière while only second-home owners still pay both.

The redevance audiovisuelle or TV licence wasn’t actually a property tax, but it was traditionally sent out with property tax bills in the autumn. However it was scrapped for everyone in 2022.

Property tax declaration

This is a new requirement brought in in 2023 and requires everyone who owns property in France – including second-home owners who live in another country – to complete a form known as the déclaration d’occupation.

This form lists the details of your property such as size and number of rooms and what it is used for – a main residence, a second home or rented out as a long or short-term let.

This information is then used to calculate your property tax bills.

The form does not need to be completed every year, only when your situation changes – eg you have bought or sold a property or you have changed its use (eg your second home has become your main residence).

Find full details on how to fill out the form HERE.

Property tax bills

Bills for property tax arrive in the autumn, first taxe foncière (usually in September or October) and then – if applicable – taxe d’habitation, usually in November.

The calculations are based on the situation on January 1st of that year – so most people won’t pay property taxes for their first year of property ownership, but will receive a final bill after they have sold their property.

For most people the simplest way to deal with them is to declare and pay online via the government tax portal impots.gouv.fr. However it is possible to use the paper-based system if you either do not have access to the internet or do not feel confident using internet-based services.

How much are the bills?

This is one of those ‘how long is a piece of string’ questions because there are a lot of variables.

Taxe foncière is calculated according to a complicated formula based on the rentable value of your property, the national tax rate and the local tax rate. The national government can decide to increase property taxes, usually in line with inflation, but local authorities can also set their own tax rate and are given significant leeway in how much they charge.

This year the national government has decided to increase the rate by 3.9 percent while local authorities are voting on their own increases (or decreases in a couple of cases).

Because the bill is partly calculated according to the rentable value of your property, making significant changes that would increase the value – eg building an extension or adding a swimming pool – can also result in a higher bill.

Taxe d’habitation is also based on the rentable value of your property plus local and national tax rates – but the rates can be different to those applied for taxe foncière. If your property is in an area that has a housing shortage (and remember that taxe d’habitation is only charged on second homes), local authorities can impose a surcharge, and use that money to create more housing for local people.

Where in France imposes a surtax on second homes?

To give you a rough idea, here are the average bills for 2023.

Can you challenge your tax bill?

If you think your property tax bills are too high then you can challenge them, but only in specific areas.

Basically you cannot contest either the local or national tax rate, but you can contest the rentable value (valeur locative) assigned to your property, which is intended as an estimate of how much you would get if you rented out your property.

First check the details that are listed on your property tax declaration, since these are used to calculate your bill. A few square metres here or here in the size of the property won’t make much difference but anything significant – eg they think you have 25 bedrooms but actually you have two – you should correct and update on the declaration.

If the details are correct but you still think the rentable value is unrealistic based on the local market, you can challenge it – here’s how.

A few other odds and ends

Building tax – There are a couple of other tax-related things that you need to know, including the ‘building tax’ – if you are doing a significant building project such as adding an extension or outbuilding then you may be liable for the one-off taxe d’aménagement, sometimes known as the ‘garden shed tax’. Full details here.

Swimming pools – If you’re adding a swimming pool, or if your property already had a pool which is not listed on your property tax declaration, then you need to declare it to tax authorities. Many people try to get away with not declaring pools but the French tax man is now using aerial maps such as Google maps to spot undeclared pools – a recent sweep along the Côte d’Azur found 3,000 undeclared pools. Find full details here

Outbuildings – if your property has outbuildings such as an old barn, a shed or a swimming pool, these will be listed separately on your property tax declaration. This is normal.

Uninhabitable – if you have bought your property as a renovation project and it needs a lot of work, you may be able to declare it inhabitable (uninhabitable), which gives you a tax holiday. This isn’t just for properties that need a bit of redecoration but if your place has no running water, electricity, bathroom facilities or it is structurally unsound then you can declare it uninhabitable for up to two years while you renovate it. This results in paying either a lower rate of tax or no tax at all, depending on your commune’s rules.

Renting – if you want to rent out your property, you need to be aware of the rules in place for doing so. Whether you’re renting it out on a long-term lease of renting it as a holiday let (for example on Airbnb) you may need to register with local authorities and you’ll certainly need to declare the rental income to French tax authorities – full details here.

Get help

If you’re confused about the system, there are places you can go to get help.

The first is your local tax office, which you can go to on a walk-in basis and ask to speak to someone who can help you. Be aware that some smaller offices don’t deal with property tax queries, so they may refer you to the nearest big town – full details on how and when to contact your local office here.

There is also a telephone helpline – full details HERE.

If you’re still stuck, you might consider getting professional help – here’s how to find English-speaking accountants in France.

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6 pension questions British people should ask before retiring to France

Retiring to France is a dream for many, but before turning that dream into reality there are some serious financial questions that you need to ask yourself to ensure that your retirement is a financially comfortable one.

For most retirees, their main or only income will be a UK pension, so it’s important that you understand how your pension will work once you make the move.

There are some specific rules and restrictions on taking pensions out of the UK, while there is also the question of how UK pensions interact with the French tax system.

Financial adviser, Maeve Hoffman, from Spectrum IFA Group, emphasised that people should not take these decisions lightly, telling The Local: “Figuring out what to do with your pension should be part of your wider financial plans for your life.

“This may be your most important asset, besides your home, and the best answer for what to do with your pension is highly individual. There are no sweeping generalisations when it comes to advice on private pensions. Everyone’s situation is different,” she said.

This article is intended as an overview of how the system works for UK pensioners and is not intended as a substitute for individual financial advice. The article is aimed at people who have worked most or all of their career in the UK and then intend to retire in France – the situation is slightly different for people who work in France and then retire here.

You can find an overview on French tax rules for pensions HERE.

Long-term or short-term

The first thing you need to carefully consider is whether or not your move to France will be for the long-term or short-term.

When it comes to your UK pension, there are some options that may be advantageous for French residents looking to stay here permanently, but they could make your life very complicated if you end up returning to the UK in the future.

Do not be afraid to ask yourself the tough questions – is there any chance you will have grandchildren in the future that you will want to be geographically close to? Have you ever spent a significant time in France, aside from short holidays? Do you have roots in France, such as friends, family or a home? If your health deteriorates, will you want to be cared for in France or the UK?

If are unsure about the answers to these questions, then take some time to really think about them. There are alternatives to permanently moving to France if you are unsure – for example, you could spend a few months a year here on a short-term visitor’s visa.

Understanding the different tax rules

British retirees should be aware that the UK and France have very different tax systems.

Once you become a tax resident in France, you have to file a yearly declaration, including your global income. The country that gets to tax that income is determined based on the tax treaty between the UK and France, which seeks to eliminate double-taxation.

As for your UK-based pension, the treaty states that if you have a UK government or civil service pension (eg a state school teachers’ pension), then this will remain taxable only in the UK. Some old NHS pensions were considered ‘government pensions’, but modern ones might not be. You can check if your pension is classified as ‘government’ here.

You still have to declare this income to the French tax authorities, but you will not be subject to tax in France on it. That being said, it will count towards your total household income, and could end up pushing you into a higher tax bracket which is something you should carefully consider, particularly if you want to take a large sum at once.

The same is not true of private pensions: these are taxed in France, not the UK, as soon as you become a tax resident here. Confusingly, the UK state pension is also considered a private pension, even though it is paid by the government.

You can find a complete guide to how UK pensions are taxed in France HERE.

As a result, you will want to think about whether your previous plans for your private pension were only advantageous to you as a UK resident. Once you become a French tax resident, they could have unforeseen implications.

You can find more information about tax rates in our tax guide.

Get reliable, expert financial advice before doing anything

If you have decided you want to be in France permanently, then you will need some expert tax and pension advice – but you need to be careful who you take advice from, this is a highly specialist area and it’s unlikely that high street financial advisers will have the knowledge that you need.

Brexit has also made getting financial advice more complicated, with fewer experts available.

Maeve told us: “Because of Brexit, you cannot use a UK-based financial adviser anymore – you have to use an EU-registered one. This has made things more complicated. When picking an adviser, seek out someone who has expertise on the local taxation rules in France. They should also be regulated with the financial regulator where you live and where they work.”

It can be especially complicated to parse out who you can and cannot take advice from – for example, some UK-based advisers have continued to give advice to EU-based clients, even though this can be particularly risky if the investments they recommend do not follow EU regulations.

There are also expat-oriented financial advice services that are located outside of France, but seek to offer tax advice to people in France.

She added: “Be smart and sensible. If you choose an adviser in Dubai or Spain for example, you will now be adding another regulatory organisation into the mix, plus another language.

“There are free, government-based services in the UK that can help you understand your private pension – Pension Wise and Money Helper. Before doing anything, you should consult the free services. Any financial adviser worth their salt would recommend this too.

“These services have begun to have longer wait times, so be sure to book well in advance of when you plan to draw from your pension.”

Deciding whether to transfer your pension

Another question that is important for Brits to think about is whether or not to transfer their pension into either a UK-based SIPP for non-residents, or a QROPS (Qualifying Recognised Overseas Pension Schemes).

The SIPP will keep your pension in the UK, while the QROPS moves it out of the UK, to Malta specifically.

These options can be helpful for French residents, but you need to familiarise yourself with their benefits and drawbacks.

“The QROPS is not for someone who is unsure of their future in France, as if you return to the UK within five years of the pension transfer HMRC will seek their tax back as if it was a full encashment,” Maeve said.

In France, a QROPS is considered a trust, you may also have additional reporting requirements to fill out along with your annual declaration (more info here).

You should beware of scams on this subject, as the post-Brexit period saw many scammers seeking to persuade Brits that it was now mandatory to transfer their UK pension – always be wary of any cold-calling or unsolicited financial advice.

Determining how you will want to draw from your pension

The next question is how you want to receive your pension – either as regular income or as a lump sum. The option that you chose will have tax implications in France.

If you receive it as a regular income, when doing your yearly French tax declaration, you will add up your pension income for that year and you will be taxed at the normal marginal rates for income (the barème). These rates go up to 45 percent (for the highest earners only) plus social charges if they apply (more on this below).

Pension income can also benefit from a 10 percent tax deduction, as long as it does not exceed €4,123 or fall below €422 per household.

Lump-sums are more complicated. Technically, French tax authorities would allow a return of once off pension capital to be taxed at a flat rate of 7.5 percent.

But in reality, Hoffman explained that anyone seeking to do this would need the express, written confirmation from French tax authorities that this rate will be applied.

She also explained that the type of private pension matters when seeking to get the lump-sum flat rate.

“There are plenty of different types of private pensions in the UK, but the old ‘defined benefit schemes’ have been the gold-plated standard. These are the types of pensions that give you a portion of your salary for the rest of your life.

“In principle, you should be able to take out lump-sum of 25 percent of your ‘defined benefit scheme’ pension and be taxed at the 7.5 percent flat-rate. That being said, some people get refused, so you cannot make any assumptions and you need clarification from the French tax office.

“As for all of the other types of private pensions in the UK, like the money purchase or personal pension schemes, these are considered to be ‘funds’. If you want to benefit from the lump-sum then you would have to take out the entire pension. You would not be able to just take out 25 percent and get the lump-sum rate.

“For anyone considering taking their whole pension and seeking to use the 7.5 percent rate there are conditions to be met, so I advise people to write to their French tax office and explain their own situation in detail. Be sure to clarify the tax rate you are seeking to have applied and ask what documents they would need from your UK pension company to confirm that the contributions to this pension have been tax deductible.”

Healthcare and social charges

Deductions in France come in two types – impôts (income taxes) and prélèvements sociaux (social charges).

People who retire to France (and have never worked in France) and have already reached the state pension age can apply for the S1 – this means that the UK continues to pay for their healthcare costs and they would not be charged prélèvements sociaux. Non-working spouses of an S1 holder can also benefit from this.

People who take early retirement and make the move before they reach state pension age may have to pay social charges in addition to taxes until they reach the state pension age and can apply for their S1. However, there are several exemptions to social charges, so even if you expect a bill, you may not end up being charged. More information in our guide.

Social charges help pay for a lot of services from the French government, including access to healthcare. In France, you can access the state healthcare system (and get a carte vitale) after three months of residency.

READ MORE: Why you might get an unexpected French health bill

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