Reader Question: When searching for tax information as the annual rates are changed I have no problem finding income tax rate changes but I never seem to be able to find the deduction cap (ceiling) for the 10% pension reduction. Are you aware of any site in French or English that lists it?
Firstly, as usual, France’s income tax bands have changed for this year with inflation, and you can find out more about this in our article below:
Read more: Changing tax bands in France: How much could you save in 2023?
The amount of tax which is imposed on someone depends on factors such as which of the bands their income falls into and the number of people in their household but also on adjustments made before and after these are taken into account.
These include a 10% déduction forfaitaire (fixed-rate deduction) on salaries, for related expenses you are assumed to have incurred. This is not applicable if you opt to declare ‘real’ professional expenses and can present receipts for these if required.
The 10% deduction also applies to pensions, which are seen as a salary replacement. Any income declared as pensions can benefit, including pension income from abroad.
You do not need to ask for the deduction; it is applied automatically and it has maximum and minimum amounts.
These are different for workers and pensioners. Some information on the levels for workers can be found at this government website.
We agree that it is indeed not easy to find the information for pensioners. The maximum amount for pensioners is shown on this tax office site, though at present it has not been updated for 2022 income to be declared in spring 2023. It is still showing the amount for last year’s declarations for 2021 income.
As you can see, the ceiling was €3,912 per tax household for 2021 income (the minimum deduction was €400 per pensioner, unless the declared income was less than this).
However, the Bulletin Officiel des Finances Publiques - Impôts states that these levels are updated annually in proportion with the rise in the ceiling of the first income tax band, so we can work out the amount for 2022 based on that.
The ceiling of the first band was €10,225 for 2021 income and is €10,777 for 2022 income. If we divide 2022’s figure by 2021’s this shows the amount has been multiplied by 1.054.
A proportional increase gives a ceiling for the pension deduction of €4,123 per household and a minimum amount of €422 per pensioner.
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