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!
