FRENCH TAX SUMMARY 2014


Click here for information on the 2013-2014 French income tax returns                                                                                           Back to home page

 

Tax residence

Determination of residence                

Consequences of being tax resident in France

Income Tax

Personal income tax rates

Deductions and allowances

Filing deadlines and tax administration

Company Tax

Company tax rates



 

VAT (TVA)

VAT rates in France

 

 

Property Related Tax

Capital gains tax on the sale of French property

Taxe d'Habitation and Taxe Foncière

 

Tax

Wealth tax rates

 

 

Tax on capital income

Income tax on capital gains on sale of investments, interest and dividends received

         

 

Determination of residence

The taxpayer is deemed to be tax resident in France if any one of the following tests is satisfied.

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.

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Consequences of being tax resident in France

As a French tax resident, the taxpayer is liable to:

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Personal income tax rates in France

Impôt sur le Revenu des Personnes Physique. Tax Year 2013 (income to be declared in 2014).
 

Taxable income (Euros) Tax Rate %
Up to 6,011 0
6,011 to 11,991 5.5
11,991 to 26,631 14.0
26,631 to 71,397 30.0
71,397 to 151,200
41.0
151,200 +
45.0

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 1,500 Euros (known as plafonnement), or 3,540 Euros for one-parent families.

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Income tax deductions and allowances

Allowances against employment income


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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 are as follows:

In 2014, the annual filing deadline for French residents is 31st May,

Payments on account are due by the following dates:

The filing deadlines for non residents are as follows:

Extensions of up to approximately 3 weeks are automatically granted to taxpayers who file their returns online.

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.

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Wealth Tax in France

ISF (Impôt de solidarité sur la fortune). Taxation of taxpayer's net wealth as at 1st January 2014. 

Net wealth of taxpayer (million Euros) Tax rate %
0.8 - 1.30
0.50
1.30 - 2.57
0.70
2.57 - 5.00
1.00
5.00 - 10.00
1.25
10.00 +
1.50


The taxpayer is exempt from submitting a Wealth Tax declaration if their assets are below 1.3 million Euros.

Basis of taxation:

Filing deadlines:

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French company tax rates

IS Impôt sur les sociétés. 2014 rates tax on 2013 profits.

Currently there is a flat tax rate of 33.33% on profits on companies.This includes the Social Contribution for companies.

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.

As of 1st January 2012, there is 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.

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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.

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Capital Gains Tax on the sale of French property (plus-values immobilières)

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 is also an 25% reduction in the taxable gain for property that is sold before 31st August 2014.

From 1st January 2014, onwards, there are also surcharges for capital gains over 50,000 Euros on the sale of property, as follows:

 Capital gain  Additional tax
50.000 - 100.000€ 2%
100.000 - 150.000€ 3%
150.000 - 200.000€ 4%
200.000 - 250.000€ 5%
250.000€ + 
6%

 

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.


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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.

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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.

There will, however, still be tax withheld at source on this income.

Capital income is
to be declared in the annual tax return and taxable according to the normal income tax scale, with a deduction for any tax withheld at source.

Dividends are subject to
a general deduction of 40% to compensate for the company tax already paid on the profits being distributed. The fixed allowance from previous years has also been abolished.

Capital income is also subject to Social Contributions (Contributions Sociales) of 15.5%.

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© Copyright France Accountants 2014

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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