Key points to know for your income tax declaration

The family quotient system

A key part of how your tax is worked out in France is a system called the quotient familial (family quotient). This uses a number called the ‘parts’ and the larger your family – you, your spouse/civil partner and dependents – the more ‘parts’ you are allocated and the greater the tax-reducing effect.

The aim is to make tax ‘fair’ since a given family income in reality would allow a single person to enjoy a more comfortable lifestyle than it would a family of six. The system assists those with dependents and applies to residents and non-residents.

You do not have to do the maths for this – the tax office does it for you. 

How does it work?

France uses bands to work out what tax you owe, with the first part of your income being tax-free, the next part taxable at 11% and so on. However, it is only for single people that the bands are applied in a simple way. For everyone else there is a benefit from the family quotient. 

The system works like this:

• Tax offices take a household’s net taxable income then divide it by the parts.

• The tax bands are applied to this new figure resulting in an amount of tax.

• This amount is then multiplied again by the number of parts.

The effect is that big families have the lower tax percentage bands applied to a larger proportion of their income than smaller families or single people. 

As stated, the tax office works out your parts – you do not need to. 

The basic principles are: 

• A single person has one part – so the family quotient has no effect (income, divided by one, stays the same).

• A couple (married or pacsed or in a civil partnership making a joint declaration) have two parts. 

• Dependents add extra half or whole parts. These include your children (under 18, or in full-time education and financially dependent on you). Dependents (related or not) with a carte mobilité inclusion ‘invalidité’ (disabled person’s card) at 80% disability level or more, who live with you, can also be included. First and second children are worth a half part each and from the third, children are worth a whole part each. Dependent adults are worth one full part each.

• Further adjustments are made increasing the parts for people with disabilities or single parent families and certain widow/ers. 

The family quotient has a cap on the maximum tax-reduction that can result from it, affecting high-income families that are assumed to need less protection than lower-income ones of the same size.

Social charges

‘Social charges’ are generally levied on all French-taxable income and capital gains of French tax residents (and some gains of non-residents) to help fund France’s social security and welfare system.

These charges are known as prélèvements sociaux (social levies) and France has introduced new forms of these over the years and some have had their rates gradually increased. 

They are levied in addition to income tax and generally do not benefit from allowances or reductions. 

Only two out of the main three charges are applied to French-assessable pensions although an extra one is also added to higher pension incomes. They do not give direct benefits to the person charged as do cotisations sociales paid by working people on their work income, for example for healthcare, family allowance and unemployment rights. 

This can be confusing as these work levies are also often referred to as ‘social charges’ by English-speakers – and to add to the confusion workers do pay prélèvements sociaux on work income, at specific rates, along with the cotisations.

The social charges we are concerned with here help fund the state generally but usually with regard to the social security or welfare system in some way. 

They can be levied, on the one hand on French-assessable work or pension income (the latter seen as a ‘replacement’) for the former, or on investment incomes, other than those that France treats as tax and social charges free (eg. Livret A).

There has been controversy over whether or not they are a ‘tax’ but France considers them to be equivalent to income tax when it comes to double tax treaties, unless the treaty in question states otherwise (see here).

The social charges are not referred to in the US-France treaty but in 2019 the IRS agreed to treat the social charges as equivalent to income tax, as France already did, so it now includes them in tax credits offsetting French tax against US liability.

Note that as a result of the provisions above, kinds of income not assessable for French income tax, such as US pensions and rental income also do not attract payment of the social charges. 

Liability to the social charges is shown in a specific part of the avis d'imposition income tax statement which is sent out in late summer with regard to income tax on the previous year’s income (it shows how much you have paid and if there is anything left to pay, following checking of the tax return you submitted in the spring). 

The most common social charges are: Contribution Sociale Généralisée (CSG), Contribution au Remboursement de la Dette Sociale (CRDS) and Prélèvement de Solidarité (PdS).

For example, on investment and capital income, these three are payable, at rates of 9.2%, 0.5% and 7.5%, a total of 17.2%. 

The standard rate for pensions is 0.5% of CRDS and 8.3% of CSG (a medium and low rate of CSG exist for lower pensions, as well as complete exemption for the lowest). Another one, called Casa, is paid on some retirement pensions (not the smallest ones) and it funds autonomy measures for the elderly. 

Part of the social charges levied on some income is claimable as a deduction from taxable income. This is usually pre-filled on the tax return. 

The US-France Totalization Agreement prevents Americans in France from having to pay US social security tax on income on which the French social charges have been levied. 

Note, however, that for workers, in some cases US social security tax rather than French social charges is payable, eg. on a US company assignment (US taxes can last for up to five years) or if you are self-employed with a US business and are in France temporarily. 

Currency conversions

If you receive foreign income this must be converted to euros for your French declaration, which raises the question of what rate to use.

The letter of the law states that you should use the rate on the day that you received the income into a bank account and the Banque de France’s rates are seen as the most authoritative.

The bank’s website is not very userfriendly, but you can find daily rates, starting with the most recent dates and working back, by cliclicking on Exchange rates (daily parities) at this link. 

That might work well if you received only a few one-off amounts in a foreign currency, however if, like many non-French nationals in France, you receive regular income in a foreign currency, such as US dollars, the use of an average rate for the calendar year is tolerated.

A note on certain kinds of income 

If you have French-sourced income, in general it will be assessable for French income tax and usually also the social charges. There are certain exceptions, such as income from a Livret A regulated savings account. 

For example, French pensions are generally taxable only in France, whereas most French investment income is taxable in France and US citizens must also report this income to the IRS, but double taxation can often be reduced through US foreign tax credits for French tax paid.

With regard to US income, this is declarable on the French income tax return, but in many cases is not actually assessed for tax or the social charges but merely ‘taken into account’ so the tax office has a picture of your overall incomes. Income not taxed by France can in some cases push other French-taxable income into higher tax bands, avoiding people benefitting from more than one country’s tax-free allowances. 

Income to be declared, but not taxed, such as from US rentals or pensions, has to be inserted in specific boxes in the French declaration so as to be recognised as such. 

Examples of common US income types:

• US pension, US rental income and most forms of US dividends and interest received by US citizens living in France: taxable only by US; no French tax or social charges, France takes it into account but annuls any theoretical French tax/charges with a tax credit equal to this French tax/charges

Note that under France’s ‘tax at source’ system, instalments are taken out of your bank account on a monthly or quarterly basis towards tax on known regular income streams from abroad that France can tax. However, as mentioned above, some common forms of US income do not fall into this category. 

For more detailed information on how to declare certain kinds of income see our dedicated annual help guide to French Income Tax. 

Declaring online

Most people should declare their income online rather than on paper forms, with the exception of first-time declarers or people who are incapable, for example, due to age or disability.

In theory a €15 fine can be levied per paper form sent in when you should have declared online, but only from the second offence. However, we have never heard of this being applied.

First-time declarers can still apply on paper if they so wish, but are also encouraged to get set up with an account at impots.gouv.fr as soon as possible and to request a French tax number (numéro fiscal).

Most tax offices have computers for public use and in some cases staff can help. You may also visit a branch of France Services, which offer free help with administrative tasks. 

The network has expanded in recent years and now includes ‘itinerant’ services, often on board buses, in more rural areas. In some towns there are also tax office partnerships with computer centres called espaces publics numériques that can help people understand online services.

Many tax offices also offer the chance to book ‘personalised’ help (service d’accueil personnalisé). 

The advantage of online declarations for the tax services is less paperwork to deal with and savings on postage as well as an environmental benefit. For those declaring, there is convenience and the deadlines are usually later than if declaring by paper form/s. 

It is also easier to make corrections to an online declaration if you realise you made a mistake or forgot something.

Online declaration is available to residents and non-residents and opens in around early to mid-April most years. 

Your online declaration can be found in your space on impots.gouv.fr. 

An impots.gouv app can be downloaded from Play Store or Apple Store for simple tax returns that do not require any annexe forms (overseas income, capital gains, foreign accounts...). You can also use a Contacts button on this to book to speak to a tax worker.