I know, I know, thinking about taxes gives you heartburn. In fact, you’re probably having palpitations just thinking about filing them. In a foreign country. In another language. Still, it must be done, and now that you’re here and you’ve delved into the fun stuff in Paris, it’s time to learn how to pay your taxes.
Please note: This French Income Tax guide is published for informational purposes only. Contact a consultant or visit your nearest agency in your arrondissement for detailed help with filing your taxes.
It is said in Article 13 of the Declaration of the Rights of Man and of the Citizen of August 26th, 1789: “For the maintenance of the public force, and for administrative expenses, a general tax is indispensable,” and “it must be equally distributed among all citizens, in proportion to their ability to pay.” Article 14 of that same Declaration states that “All citizens have the right to ascertain, by themselves or through their representatives, the need for a public tax, to consent to it freely, to watch over its use, and to determine its proportion, basis, collection and duration.”
Until 1789, taxes were collected by the state, the church and nobility in France. An example of some of the old taxes: aides (for beverages), banalités (for the use of mills, ovens and wine presses), casuel and dîme (collected by the church), cens (for the use of lord’s land), champart (an amount of the crops of grains), gabelle (for the consumption of salt), minage (for the sales of grains at fairs and markets). After the French revolution, wealth and income were taxed. There were debates for the creation of an income tax in the 1800s which was finally instituted in the 1900s. The current tax system was refined during the twentieth century. All taxes created under the French Revolution were abolished, and now the goal of taxation is having efficient public services and a fair distribution of wealth and income.
Types of taxes in France
● income tax
● local taxes (property tax, occupant tax)
● value-added tax
● registration tax including inheritance and donations
● wealth tax
We will focus on the French income tax, which is imposed on the total income of an individual during a given year.
These categories of income are subject to tax:
● profits from business
● professional earnings
● agricultural revenue
● real property income
● wages, salaries, pensions and annuities
● transferable securities income
● capital gains
You are subject to French income tax if you live in France and are a resident of the country. You are considered a resident if:
● your home or main abode is in France
● you work in France
● your economic (financial) interest lies in France (investments, etc)
● you have French assets, whether or not you live in France
What to declare?
Whether or not you’re French, if you’re a resident in any shape or form, you must declare all income, whether or not it’s from France. That includes items like pension lump sums, tax exempt investments, dividends from foreign shares, premium bonds and offshore bank interest.
There are many, but the most frequently used are:
- Form 2042: this is the main tax form, which should include all income, everywhere.
- Form 2042 C (complementary): this is an additional form, needed in certain cases, especially if you earn income from a furnished rental (amount of tax charged differs between furnished and unfurnished), for example or paid taxes in another country that need to be offset against French tax.
- Form 2047: If you receive income from abroad as a resident in France, you must fill out this form as well.
- Form 3916: use to declare foreign bank accounts, even though you’ve already done so on From 2042.
You can find these forms here (in French).
How does the French tax system work?
Regarding the household, tax is assessed on every member of said household, whether married or in a civil partnership, with children, and/or other dependents. If any of these children/dependents work and they live with you, that’s part of your household income as well.
There are five tax rates and bands on net taxable income.
Income Share Tax Rate
Up to €9,700 0%
Between €9,701 - €26,791 14%
Between €26,792 - €71,826 30%
Between €71,827 - €152,108 41%
Above €151,108 45%
The rates are applied on a ‘sliced’ basis so that each household 'part’ of the income is charged on a progressive basis. So, if a couple have net income of €30,000 in the year, there are two 'parts' of €15,000, with each part taxed using the scale rates.
Example: A household with two adults on a joint net taxable income of €40,000. Their income is first sliced into two parts of €20,000. Each part is then taxed on a fractional basis using the tax bands. The first €9,700 of each part is zero-rated, and the remainder for each part then charged at 14%. The tax payable by each is then multiplied by two to give the total tax payable.
If you are a single person household, you are charged as one 'part' on your income. So, a single person with taxable income of €30,000 would be charged at the rate of 14% on €20,300 (€30,000 - €9,700).
There is a cap on the tax benefit granted for dependants because of the ‘parts.’ As a general rule it’s €1,510 (2016 for 2015 income) for each half part. So for two children the maximum reduction is €3,020. The ceiling level is much higher for single-parent households.
The following table shows the maximum net taxable income below which a couple living on their own and with a varying number of dependents in the household would not be taxed. The figures are for 2016, for 2015 income.
As can be seen, a couple living with no dependents would not pay any income tax in 2016 if their net taxable income was no greater than €27,483.
Number of Parts Nil Imposition
2 Parts €27,483
2.5 Parts €32,333
3 Parts €37,183
3.5 Parts €42,033
4 Parts €46,883
The following table shows the same analysis for a single person, who would pay no income tax living on their own with an income no greater than €14,704.
Number of Parts Nil Imposition
1 Part €14,704
1.5 Parts €19,554
2 Parts €24,404
2.5 Parts €29,254
3 Parts €34,104
3.5 Parts €38,954
4 Parts €43,804
Figures from the French Tax Authority.
How and when to submit it.
French income tax is assessed in arrears. Your tax filing in 2016, for example, will cover your earnings for all of 2015. The closing date each year by which the time declaration needs to be submitted to the French tax authority varies by department. Submission of the return is normally required by the end of May or early June. If you file online, you have a little bit more time, depending on where you live in France.
For 2016 (income earned in 2015) the dates for online returns are as follows:
● Departments 1 to 19 (zone 1) Tuesday May 24th
● Departments 20 to 49 (zone 2) Tuesday May 31st
● Departments 50 onwards (zone 3) Tuesday June 7th
● Non-Residents Tuesday June 7th
Remember to file on time, or there could be a 10% penalty. You must file online in 2016 if your net taxable income in the previous year was greater than €40,000. Tax returns submitted over the Internet receive confirmation of submission.
If this is your first time filing a return, it must be done on paper since an online account won’t be created for you until after your first filing. This return should be sent to your local tax office whose address will be on your tax documents.
Hand-deliver your return or send it via the postal service in a manner guaranteed for it to get there on time. You do not send payment in when you file. You will be advised of the outcome of your tax declaration within five months, though if you filed online, you could see a tax notice beginning in April or May. This tax notice is called l’avis des impots sur le revenu.
If you owe taxes, the notice is called un avis d’imposition; if you owe nothing, you will receive un avis de non imposition.
It was a significant challenge to find this information and summarize it in a manner that would be helpful to a reader. Much of the data in this article was found on these extremely helpful and well-researched websites: French Property, Expatica, French Tax Online.
Watch this space in a few days for the Second part of this French Income Tax Return.
As you have seen, the French Income tax system can be very complex. Take your time, seek the help of a professional or expat friends experienced with filing in France, and all will be well.
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