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TAXES

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.

Published: 4 December 2015 09:27 CET
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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TAXES

Should I include my grown-up child in my French tax declaration?

Young adult children are often still financially dependent on their parents, and under some situations you can continue to claim them on your French tax declaration.

Published: 13 May 2024 13:16 CEST
Should I include my grown-up child in my French tax declaration?

As soon as a child reaches the age of majority – 18 in France – they are, in principle, subject to personal income tax and should file their own tax returns, even if they do not receive any income. 

But at this age many children still live in the family home, or are studying at university and are likely still financially dependent on their parents.

The good news is that, if a child is still dependent on their parents’ financial support, they can be included in the tax household, which leads to a number of tax benefits, depending on your situation.

This includes adult children away at university, who – for tax purposes – may still be considered to be dependent and ‘living at home’, even if they are away studying at the other end of the country.

If you are not sure whether you need to add an adult child to your tax return, officials at your local tax office will be able to help you.

READ ALSO Tax benefits of having children in France

When can you include your adult child on your French tax return?

A child over the 18 may be attached to their parents’ 2023 tax return (declarable in 2024) in the following cases:

  • your child was under 21 on January 1st, 2023;
  • your child was under 25 years of age on January 1st, 2023, and in full-time education either on January 1st, 2023 or December 31st, 2023.
  • Disabled children over the age of majority can be included on their parents’ tax declaration regardless of age.

If your adult child lives with you and is attached to your tax household, you can deduct a lump sum of €3,968 from your income on your declaration for 2023 earnings. According to the tax authorities, this amounts to the cost of board and lodging.

READ ALSO Explained: How to fill out the French tax declaration

“When the child’s accommodation covers only a fraction of the year, this sum must be reduced in proportion to the number of months concerned (…) Even if it is a lump sum, the amount deducted must be declared by the beneficiary”, the tax authorities’ website states.

Be aware, however, in situations where the parents are taxed separately (for example, if they have divorced), an adult child who is still financially dependent can only be attached to one or other tax household, not both.

How do I add an adult child to my tax declaration?

Since the introduction of the prélèvement à la source (withholding tax), you can add your child to your tax household online in your personal space on the impots.gouv.fr website by clicking on Actualiser suite à une hausse ou une baisse de revenus in the Gestion mon prélèvement à la source section.

READ ALSO: How to file your 2023 French income tax declaration

You also need to report it on the annual tax return, in the box provided for this purpose, section D on page 2.

If you prefer, you can also visit your nearest tax office, where officials will help you.

What you need to declare

If your adult child is attached to your tax household, parents must declare on their tax return any income that child received for the entire year (that’s income from 2023 on tax returns filed in Spring 2024).

READ ALSO EXPLAINED: How to get a ‘numéro fiscal’ and create a French tax account

The following incomes are exempt from income tax:

  • internship allowances and apprentices’ salaries, provided they do not exceed the annual minimum wage (€20,815 for income earned in 2023). Any amount earned over this is taxable;
  • Salaries of students aged 25 or under working student jobs, up to an annual limit of three times the monthly SMIC (€5,204 for income earned in 2023). Any amount earned over this is taxable.

What about student grants or scholarships – should we declare those?

That depends on the type of grant or scholarship. 

Specific research scholarships, for example, should be declared, but bourses allowing children from lower-income families to attend further education establishments should not. 

READ ALSO 10 tax breaks you could benefit from in France

If you are unsure whether you should declare a grant or scholarship, you can find out more according to your specific situations here, or visit your local tax office.

Financial aid for children on low income

Even if your child lives on their own and files their own returns, parents who provide monthly financial assistance to adult children up to the age of 25 can declare the sums paid up to a limit of €6,368 per year. This aid is fully deductible, but must be declared on your adult child’s tax return.

“You must keep all receipts for expenses, as they may be requested by tax authorities. If the parents are taxed separately, each parent can deduct expenses up to this limit,” the tax office website says.

Try it out

You can simulate calculations for your 2024 tax return, with and without any adult children added, using the tax office simulator.

READ ALSO How much tax can you expect to pay in France in 2024?

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