Taxation in France & French Tax

French Tax, Income Tax, Taxe D'habitation, Double Taxation in France

It is not necessarily a 'dirty word' but tax issues do need to be dealt with early on to avoid overpaying. This page outlines the tax issues you should be familiar with for living in France.

Double Taxation Agreements

Double taxation agreements mean that if you pay taxes in one country,
you may use that as a tax credit in the other country.

France has double taxation agreements with the following countries:
EU members
Australia
Canada
China
India
Israel
Japan
Malaysia
New Zealand
Pakistan
Philipines
Singapore
Sri Lanka
Switzerland
USA
The system of double tax agreements is not all that complicated, however, in reality you need to be a little knowledgeable ofl the tax regulations and bureaucracy. This is why many foreigners opt for an offshore account to protects their assets. The USA is the only country that will tax you on income, no matter where the source of your income is. As an "overseas" tax filer there is a substantial deduction and there is a "double tax" agreement between France and the US.

Tax Liability In France
You are tax liable in France if one of the following applies:

You spend 183 days or more in France in one calendar year

Your permanent home or principal residence is in France

The source of your professional income is in France, unless it concerns a secondary source of income and is part of foreign business activities.

Your main source of investment, income or business is in France

Income tax is paid in arrears and, as an employee in France, it is your responsibility to declare your income to the tax inspector (Inspecteur des Impôts) or the tax office (Centre des Impôts) before the 1st March for the preceding calendar year (1st Jan – 31st Dec). Having made your declaration, you will then be asked to pay your income tax to the public Treasury (Trésor Public) or to your local Centre des Impôts.
You can obtain a tax declaration form from your local tax office and your employer will give you a form stating your taxable income (which is your income after all social security contributions) You may also be eligible for further reductions in your tax incidence (abattements) which will depend on your personal situation and profession.

Having made your first declaration, future forms will be sent to you automatically by the tax authorities.

Leaving France
When you leave the country you need a tax clearance statement (quitus fiscal). All taxes due, until the day you are leaving, must be paid. The tax inspector will estimate your tax liability based on income and deductibles and if the estimate turns out to be to high, you may ask for a refund. It is important to obtain this clearance statement - without it you will have trouble getting your belongings out of the country.

Tax d’habitation
This tax is similar to those of rates and is a local community tax calculated and paid on the apartment/house and occupants (it is similar to rates or the poll tax) In theory, the person who occupies the dwelling on the 1st of January is liable to pay this tax for the year. In practice this can change depending on the accommodation especially if renting for short periods. Short-term lets allow for the tax d’habitation in the rent or charges and it is the building manager or the owner who looks after its payment. It is worth discussing if you are moving in/out close to the beginning of the year.

As the tax d’habitation is calculated for the 1st of January, but not paid until later in the year, this can be a cause of concern for the tenant. On occasion, you will benefit from the prior tenant having paid the bill; on occasion, you will end up paying for the next tenant; other times, agreements can be reached. In any case by law it is the occupant on the 1st of January who is liable, thus such agreements are more of a bonus and not par for the course! Whatever the outcome, the tax d’habitation is not excessive.

Redevance Audio-Visuel
As in many countries there is a tax on television equipment known as the redevance. If you purchase a television or similar equipment, your shop is obliged to inform the authorities of the purchase and you will receive a bill in the post to this affect. Similarly, if you import a television, customs will inform the relevant authority.

Late Payments
If for any reason you have difficulty paying any taxes, you would do well to inform the appropriate authority immediately. The moment you pass the date limit for payment you will automatically receive another bill with a percentage increase (10-30%) on the original. This can therefore become very expensive! The tax authorities do not entertain excuses at all!