How often should I pay tax-at-source with French rental income?

The system of paying income tax and social charges in France recently changed and tax on the income of any one year is now taken in two bites

13 May 2021

The French tax authorities give you the option of altering the monthly amounts that you pay via your personal space on their website Pic: Maria Orlova / Pexels

Reader question: We are UK residents but have a French second home which we let out in the summer. In the tax year 2020, we paid income tax, as we have always done, under direct debits from our French bank account. The only difference from previous years was that a sum was taken monthly, rather than three times a year.

However, from September 2020, two sums were taken monthly, so in total the 2020 total was around twice the usual figure, which was alarming. Was this a one-off linked to the new “at source” tax system? Also, in 2020 our rental income was much lower (only around €3,000) due to Covid. Can we assume we will only pay tax on that, not on past figures?

The system of paying income tax and social charges changed in 2019. Tax on the income of any one year is now taken in two bites: first, during the year in which the income is earned, as an on-account payment of the expected tax and social charges, and secondly, as a top-up if there was a shortfall in dues paid (or a refund if too much has been paid).

To break this down:

  • In August 2019, the assessment on 2018 income is issued. Estimated tax per month for the next 12 months is 1/12 of total tax and social charges due;
  • September to December 2019, any shortfall between what is due per the assessment and what has been paid during the 2018 calendar year is collected in a maximum of four instalments;
  • August 2020, the assessment on 2019 income is issued, and the cycle repeats itself.

In September 2020, two things should have happened: first, the collection of the remainder of any tax due on 2019 income in four instalments, usually on the 25th of the month.

Secondly, the regular monthly amount is adjusted in light of this tax assessment to now be 1/12th of the dues under this 2020 assessment on 2019 income. This is usually taken on the 15th of the month.

The French tax authorities give you the option of altering the monthly amounts that you pay via your personal space on their website. This means you can vary these in light of changes in income.

If you think that your income in 2021 will be below that of 2019, then do feel free to reduce your monthly payment. The worst that can happen if you are wrong in your estimate of 2021 income and social charges due is that you will have higher amounts to pay than would otherwise have been the case in the months of September to December in 2022 when the assessment is issued on 2021 income in August 2022.

This information is of a general nature. You should not act or refrain from acting on it without taking professional advice on the specific facts of your case. No liability is accepted in respect of these articles. These articles are intended only as a general guide. Nothing herein constitutes actual financial advice.

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