7 Things to Know About Tax if You're Moving to France
If you’re moving to France, you’ve got a lot to look forward to – beautiful beaches, world-class wines, picturesque views, and more. The taxes, however, might not put a smile on your face.
If you’re registered as a French resident for more than 183 days in a calendar year, your main occupation is in France, or your most substantial assets are in France, you’ll need to pay tax. And, given its status as the most taxed country in the EU, you might find yourself handing quite a lot to le fisc.
Below, we’ve listed all the key things you need to know about the French tax system before hopping on the plane.
The famous figure that personifies Paris, The Eiffel Tower, looking over the city
1. Tax rates might be higher than you’re used to
Moving to France will give you access to one of the most generous social security systems in the world, but it comes at a price – and a rather high one at that.
In 2019, the income tax rates in France were:
|Taxable income band||National income tax rates|
|€1 – €9,964 (0.86 – £8,572)||0%|
|€9,965 – €27,519 (£8,573 – £23,675)||14%|
|€27,520 – €73,779 (£23,676 – £63,473)||30%|
|€73,780 – €156,244 (£63,474 – £134,420)||41%|
|€156,245 + (£134,421)||45%|
Data from HSBC
If you're coming from the UK, these brackets might be a bit higher than what you’re used to.
Brits will be pleased to know that the UK and France have a double-taxation treaty in place, which is also being continued post-Brexit.
2. There are three main types of tax in France
You’ll mainly come across the following types of tax in France:
- Income tax (impôt sur le revenu) – This will vary, depending on how much money you earn
- Social security contributions (charges sociales/cotisations sociales) – Usually between 15-24% for employees and 35-47% for employers
- Tax on goods and services (taxe sur la valeur ajoutée/VAT) – The standard VAT rate in France is 20%
You’ll most probably have to register to pay VAT for:
- Organising events
- Selling goods to individuals/companies without a French VAT number
- Holding goods in stock for more than three months
- Selling goods to other European countries
- Distance sales to French individuals (when the number of sales exceeds the national threshold)
- Work on French buildings
3. Tax is added to a lot of random things
On top of the three main types that we’ve mentioned, there are a lot of additional forms of tax in France. We’ve listed some of the most bizarre examples below:
- Photocopier tax – An extra 3.25% is charged on top of VAT for the sale of photocopiers and printers. The funds raised go directly to the National Book Centre
- Public advertising tax – All billboards, posters, and signs come with a tax of between €15 and €30 per square meter
- Aeroplane ticket tax – Tickets are subject to a ‘solidarity tax’, which is an additional €1.13 for every seat on a flight within the EU and €4.51 for international flights. The funds raised go towards UNITAID – an international non-profit, dedicated to fighting pandemic diseases
- TV tax – A tax of €138 for having one or more televisions in your house, even if you only use it to watch DVDs. If you don’t have a TV, you have to declare this on your annual tax return to avoid getting taxed
4. Everyone has to file a tax return
If you’re from the UK and not self-employed, you probably won’t have very much experience with tax returns, since most employees have tax deducted from their payslip. In France, however, everyone needs to file a tax return each year, whether they have a form of income or not.
If you’re not familiar with the process, fear not – it’s not too complicated. The first time you file your income tax return, you just have to fill out form 2042 as a hard copy. In some circumstances, expats might need to fill out additional forms, so it’s worth checking with your local embassy to make sure you’re getting it right.
After that first tax return, you’ll be able to file all future taxes online – all you have to do is create a personal account on the government tax website.
5. Self-employed people have a few extra things to remember
If you’re self-employed in France, the level of your tax contributions will depend on the status of your business.
If you are a sole trader (entreprise individuelle), you are automatically taxed under the personal income tax system. You do, however, have the choice of being taxed either as a ‘micro-entreprise’, or through the rules of ‘regime réel’.
With a micro-entreprise business tax status, you’ll pay social security contributions as a percentage of your turnover, (usually between 12% and 23%.
If you operate on the basis of the régime réel, on the other hand, your social security contributions will be paid after the deduction of your costs – this will be at a level of around 45% of your net profits.
Luscious green vineyards stretching across rural France
6. Selling a property can get pretty pricey
Capital gains tax (impôt sur les plus-values) in France applies to the sale of buildings, land, and shares.
A single flat-rate tax of 30% is applied on savings and investment income, which ramps up to 36.2% for the sale of property.
In fact, just having a property in France can lead to more tax, let alone selling it. For starters, you’ll need to pay the French occupier's tax (taxe d'habitation) annually, which provides services for the local area. You’ll also need to pay French property tax (taxe foncière), which supports the local council.
The amount for both of these taxes depends on the size and location of the property.
7. Steer clear of tax fraud
Any individual or company that avoids paying taxes could be prosecuted for tax fraud in France.
As it stands, individuals carrying out tax fraud could face a penalty of up to €3 million, along with seven years of imprisonment. On top of this, companies convicted of tax fraud could be fined up to ﬁve times the amount for an individual – up to a maximum of €15 million.
Once you’ve got the French tax system sussed, it’s plain sailing. Of course, there are few other things you’ll need to sort out before you make the final leap and move to France.
Luckily for you, we can help with that too. Check out some of our popular pages on France to help get the ball rolling: