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TAXES

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

The sanctions for being late with your French tax declaration can be costly - but in some cases, can be avoided.

Published: 11 June 2022 13:21 CEST
Updated: 7 June 2023 09:50 CEST
What are the penalties for filing a late tax declaration in France?
Photo by DENIS CHARLET / AFP

The annual French income tax declaration must be completed by almost everyone living in France – even those who do not have income here.

The final deadline in 2023 is 11.59pm on Thursday, June 8th for people living in départements 55-96 and France’s overseas départements – deadlines for the rest of France and for people who file their declaration on paper have already passed.

Meanwhile, property owners must this year complete a new property tax declaration – the deadline for that is June 30th.

EXPLAINED How to file your French property tax declaration

Penalties

If you are late to file your income tax declaration (déclaration des impôts), 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.

Property tax declaration

The déclaration d’occupation for property owners is more straightforward – missing the June 30th deadline incurs a €135 fine.

The declaration is a one-off this year, you won’t need to complete it every year, but must make a new declaration if your circumstances change – ie if you buy a new property or if the occupation status changes – for example a second home becomes your main residence or if you begin letting out your second home on a long-term basis.

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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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