The May/June deadlines for filing your income tax return in France are fast approaching. Whether you are a veteran of French form-filling or just arrived at the paperwork party, it's time to start thinking about what you will need to declare.
We've compiled a few interesting facts about tax in France below to help you prepare (or at least provide some light entertainment in-between calculations). Don't forget you can also refer to our new Income Tax in France Help Guide 2021 where we have gathered the essential tax information for residents and property owners in France in one easy-to-read handbook.
1. Most people in France do not actually pay any income tax
Official figures released last year stated that more than half (56%) of households did not pay income tax, a figure which has been gradually rising in recent years. In fact, 2013 was the last time more households paid than did not - and even then it was only slightly more.
The far-left party La France Insoumise wants everyone to pay something however small, in proportion to their means, the idea being that everyone will then feel they are contributing.
2. French income tax is not une taxe but un impôt
Legally-speaking, an impôt raises funds towards central or local government expenses but is not linked to paying for any specific service and does not give rise to any specific benefits. Une taxe is levied in return for providing a service, such as la taxe sur l’enlèvement des ordures ménagères for removing rubbish, whether or not you actually use it. Confusingly, some levies called ‘taxe’ (eg. TVA, taxe foncière) are actually impôts…
3. Income tax in France is generally lower than in the UK
This is correct but France makes up for it with the social charges - additional levies that go towards funding its social security and welfare system. They are sometimes compared to the UK’s national insurance but are levied on many kinds of income, not just work, and in many cases provide no direct personal benefits.
4. French tax declarations are by household and not by the individual
Adult children can remain part of the foyer fiscal until age 25 if they are studying, while dependent disabled people can also be part of the household whatever their age. The more dependent people in your foyer the more your tax is reduced by a mechanism called the quotient familial.
5: At-source taxation is now in place but everyone still has to make an annual declaration in addition
The annual declaration – which most people now complete online – takes into account any due tax credits. It is used to check you have paid the right amount considering all worldwide incomes, and to reassess your tax-at-source rate.
6: Paying income tax is simpler than it used to be
If once you make your annual declaration you still have something to pay in addition to your at-source tax, officials just take a direct debit from your bank account. You can also pay an outstanding regulating tax, if less than €300, at a Tabac (this is known as a paiement de proximité).
7. A total of €72.7billion was raised for the state’s coffers from income tax in 2020
This was slightly less than that raised by VAT. The money goes generally to funding public spending in the central government’s budget in areas such as education, justice, health etc.
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Income Tax in France Help Guide 2021 - Available to pre-order now