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How to pay your taxes in France

Residents or non-residents are not subject to the same tax rules. Here are some elements of understanding the current tax regulations.

Determining your tax residency

This is not a question of choice but depends upon reciprocal agreements and treaties signed between France and your country or region of origin.

French tax residents are taxed in France on their income all over the world, while non-residents are only taxed in France on income earned in France. Whatever your nationality, you will be considered as a tax resident of France (subject to global tax regulations) if you meet one of the following criteria:

  • you have your home or main place of residence in France. As a general rule, you are a resident of France if you spend more than 183 days a year in France
  • you are engaged in a professional activity in France, whether salaried or not, unless you can justify that this activity is carried out on an ancillary basis
  • you have the focus of your economic interests, for example major investments, in France

In any event, the bank is prohibited from providing tax advice and, in this context, is prohibited from determining the place of your tax residence. If you have any questions on this subject, we invite you to contact an independent tax advisor or the tax office in your place of residence.

Income tax

Your reference taxable income is the sum of the income below less any deductions for which you are eligible:

  • salary (less the fixed allowance of 10%, capped at €12,502)
  • industrial and commercial profits
  • non-commercial profits
  • property income (less taxes, maintenance costs and mortgage interest)
  • agricultural income
  • revenue from mobile capital assets

Income tax rate in 2018

2018 Income tax rate Taxable income per individual
0%

Up to €9,807

14%

€9,807 - €27,086

30%

€27,086 - €72,617

41%

€72,617 - €153,783

45%

Over €153,783

Income tax rate in 2018

2018 Income tax rate 0%
Taxable income per individual

Up to €9,807

2018 Income tax rate 14%
Taxable income per individual

€9,807 - €27,086

2018 Income tax rate 30%
Taxable income per individual

€27,086 - €72,617

2018 Income tax rate 41%
Taxable income per individual

€72,617 - €153,783

2018 Income tax rate 45%
Taxable income per individual

Over €153,783

These rates do not take into account the exceptional contribution on high incomes at the rate of 3% or 4%, which may apply.

Your tax rate also depends on the number of people in your household. Each adult represents one person (share), and each child one half share or one additional share depending on your marital and family situation.

Since 1 January 2019, the French government has introduced 'pay as you earn' income tax. From now on, the system is similar to that of the United Kingdom: the tax on your wages and salaries is deducted directly from your salary by your employer according to your tax rate established by the tax authorities or, where applicable, established by default.

Once you have completed your tax return for the previous year, any outstanding balance will be collected or refunded at the end of the financial year.

Tax on personal real estate assets

Subject to international tax treaties, if you become a French tax resident, you may be subject to property wealth tax (IFI) on the value of your real estate assets, held directly or indirectly, whether located in France or outside France, if their total value exceeds the tax threshold on January 1 (threshold of €1.3M for 2019).

In addition, individuals who transfer their tax domicile to France after having been domiciled abroad for tax purposes during the previous five calendar years are temporarily taxable for IFI on their French real estate assets only. This system is applicable for each year during which the taxpayer maintains their tax domicile in France until 31 December of the fifth year their establishment in France.

In the event you keep your tax domicile abroad, you may be liable for IFI on the value of your real estate assets located in France, whether held directly or indirectly, subject to international tax treaties.

Your principal residence is part of your taxable estate under the IFI. However, a 30% discount applies.

What is the IFI’s treshold for liability?

You are subject to the IFI for net taxable real estate assets in excess of €1.3 million, but the calculation of the tax is made from €800,000.

IFI rates in 2018
Net taxable real estate assets
Rates

Up to €800,000

0%

€800,000 - €1,300,000

0.5%

€1,300,000 € - €2,570,000

0.7%

€2,570,000 - €5,000,000

1%

€5,000,000 - €10,000,000

1.25%

Over €10,000,000

1.5%

IFI rates in 2018
Net taxable real estate assets

Up to €800,000

Rates

0%

Net taxable real estate assets

€800,000 - €1,300,000

Rates

0.5%

Net taxable real estate assets

€1,300,000 € - €2,570,000

Rates

0.7%

Net taxable real estate assets

€2,570,000 - €5,000,000

Rates

1%

Net taxable real estate assets

€5,000,000 - €10,000,000

Rates

1.25%

Net taxable real estate assets

Over €10,000,000

Rates

1.5%

For reporting obligations regarding IFI, please visit www.impots.gouv.fr. IFI is payable to the Trésor Public (public treasury) before 16th September 2019, whatever the taxable amount.

For all information concerning your tax situation in France, go to your secure space at www.impots.gouv.fr, where you will also find your tax number.

This document is in accordance with the regulations in force on 1st June, 2019.

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