Property Related Tax
Tax on capital income
Determination of residence
The taxpayer is deemed to be tax resident in France if any one of the following tests is satisfied.
They spend 183 days or more each year in France.
Their principal business activity in France.
Their habitual residence is in France.
Their "centre of economic interests" is in France. This would be the case if the taxpayer has their principal investments in France, manages their business from France or the majority of their income is from French sources.
If the taxpayer is also resident in another country, their residence is decided in reference to the relevant Double Tax Treaty, if one exists between the two countries.
Consequences of being tax resident in France
As a French tax resident, the taxpayer is liable to:
French income tax on their worldwide income and capital gains. Where the taxpayer is also taxed in another country on this income, double tax relief is taken.
French Wealth Tax on their worldwide net assets.
French Inheritance Tax on assets that they bequeath on death or gift during their lifetime. Where the taxpayer is also domiciled in another country for the purposes of this tax, double tax relief is taken.
Personal income tax rates in France
Impôt sur le
Revenu des Personnes Physique. Tax Year 2015 (income to be
declared in 2016).
|Taxable income (Euros)||Tax Rate %|
|Up to 9,700||0|
|9,700 to 26,791||14.0|
|26,791 to 71,826||30.0|
| 71,826 to 152,108
Income tax is calculated
according to the total income of the household, which is
deemed as being equally distributed between each member of the
household (called a part). The total income is divided
by the number of parts before applying the above
rates. The resulting figure is then multiplied by the number
of parts to give the total tax due.
Each child counts as half a
part. The tax advantage obtained for each child is limited to
1,510 Euros (known as plafonnement), or 3,562
Euros for one-parent families.
Income tax deductions and allowancesAllowances against employment income
Filing deadlines for French income tax returns
The French tax year is equal to
the calendar year. Filing dates for the annual income
tax return, for both residents and non-residents, can be found
in our 2016 tax information
Payments on account are due by the following dates:
There is no Pay As you Earn tax
system for employees in France. All employees must therefore
submit annual returns and pay the tax due on receipt of the
final tax assessment.
Wealth Tax in France
ISF (Impôt de solidarité sur la fortune). Taxation of taxpayer's net wealth as at 1st January 2016.
|Net wealth of taxpayer (million Euros)||Tax rate %|
|0.8 - 1.30
|1.30 - 2.57
|2.57 - 5.00
|5.00 - 10.00
The taxpayer is exempt from submitting a Wealth Tax declaration if their assets are below 1.3 million Euros.
Basis of taxation:
French company tax rates
IS Impôt sur les sociétés. 2016 rates: tax on 2015 profits.
Currently there is a flat tax
rate of 33.33% on profits on large companies. In addition, there are Social Contributions of 3.33%.
For qualifying small-medium
companies (turnover less than 7.63 million), there is a
reduced tax of 15% on the first 38,120 Euros of profit. In
order to qualify, the share capital of the company should be
fully paid up and at least 75% of this share capital should
belong to physical persons.
There is also a supplementary
tax contribution (surtaxe) that applies to companies
with turnover above 250 million Euros.
French company tax is payable on account with payments due on a quarterly basis.
VAT (TVA- Taxe sur la Valeur Ajoutée)
The current standard rate of VAT in France is 20%. This is the general rate applying to the supply of goods and services.
There is a reduced rate of 5.5% or 10% which applies to certain goods and services, including:
Finally, there is a special rate of 2.1%, which applies to a limited scope of goods and services.
Gains Tax on the sale of French property (plus-values
The sale of a resident's main residence is exempt from Capital Gains Tax.
In other cases, the deductible cost is calculated as follows:
The taxable gain (plus-value
brute) is reduced according to the period that the
property has been owned, and reaches zero after 22 years of
ownership. This is for income tax purposes; Social Charges are
reduced to zero after 30 years of ownership.
There are also
surcharges for capital gains over 50,000 Euros on the sale
of property, as follows:
|Capital gain €||Additional tax €|
|50.000 - 60.000||2% less marginal deduction
|60.000 - 100.000
|100.000 - 110.000
||3% less marginal deduction|
|110.000 - 150.000||3%|
|150.000 - 160.000
||4% less marginal deduction|
|160.000 - 200.000||4%|
|200.000 - 210.000
||5% less marginal deduction|
|210.000 - 250.000||5%|
|250.000 - 260.000
||6% less marginal deduction|
For residents of France, there is currently 19% tax on the resulting gain; and Social Charges which are currently 15.5%.
For non-residents, the following percentage of the taxable gain is withheld at source on sale of the property.
Taxe d'Habitation and Taxe Foncière
These are French local property taxes.
The Taxe d'Habitation is payable by the occupier of the property, and the Taxe Foncière is payable by the owner. Both taxes are payable on an annual basis.
Owner / occupiers of property pay both of these taxes.
Income tax on capital income- interest, dividends and capital gains on investments.
Up to 2012, the taxpayer could opt for French savings income
to be subject to taxation at source, with no further income
tax payable in their annual tax return. This is known as a prélèvement forfaitaire
libératoire (PFL). This option was abolished as of 1st January 2013, with the exception of taxpayers with income of less that 2,000 Euros per annum.
Capital income is also subject to Social Contributions (Contributions Sociales) of 15.5%.
© Copyright France Accountants 2016
The information on this page is for guidance purposes only and should not be used as a substitute for proper professional advice.
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