52% of households pay no income tax

Proportion paying tax fell significantly last year - and will drop again this year - but takings increased by €2.9bn

LESS than half of households paid income tax last year, new figures show.

Only 47.5% of households paid tax as opposed to 2013 when 52.3% paid.

This is linked to a declining number of paying households overall despite numbers of actual households in France going up – 17.6million households paid income tax, down 1.6m in a year.

This is due to the tax reduction for lower income families put in place by Prime Minister Manuel Valls last summer – and the effect is likely to be increased this year with the removal of the first band of income tax.

It is estimated only around 44% will pay this year, one of the lowest proportions over the last decade (in recent years it has varied from 56.8% in 2006 to 43.4% in 2009).

Despite the lower proportion of taxpayers in 2014, actual takings from income tax increased by €2.9bn to €75.4bn and were up €10bn (15%) over just two years.

A total of 223,000 households made a demande gracieuse relating to income tax - a request for help with paying (by spreading out payments, or being let off all or part of the tax), slightly up on the previous year.

Takings from the ISF wealth tax were also up in 2014 to a record €5.2bn (from €4.4billion) – mainly due to a crackdown on wealth held abroad, especially in Swiss accounts. The number of ISF payers increased by 6% to 331,000.

As usual, however, the takings from both were dwarfed by those from VAT – which everyone pays – at €178bn.

The figures were from the annual activity report for 2014, published by the Direction Générale des Finances Publiques.

• Do not forget that even if you are likely not to have any income tax to pay due to the level of your income, you still need to make a declaration of your worldwide income if you are a resident of France, which this year must be by next Tuesday (May 19) if declaring by paper or by dates from May 26 to June 9 if declaring by internet (depending on where you live). You should also make a declaration if you are non-resident but have declarable French income such as from rents. Connexion publishes a guide to completing the French tax forms, priced €9.50 (plus p&p for a printed version) available here.