Living in France - Taxes & Charges

PRINCIPLES

French taxes are not deducted at source. They are based on the principle of the declaration of income by employees (taxable households) who pay their taxes themselves to the tax authorities. Employers do not intervene in the handling and payment of taxes.

PROCESS

Every year in February the tax authorities send out to each taxable household (married or cohabiting couple or single person) an “Income Declaration” form. The income to be declared is that of the previous year (year N). The declaration must be duly filled in within the deadlines laid down by the tax authorities, otherwise sanctions are imposed.
Year N+1 (year of the declaration), French taxpayers pay their taxes either on a monthly basis (ten monthly payments plus balance in December), or by paying interim amounts in February and May and the balance in September (the interim amounts are calculated on the basis of the tax paid the previous year). 

Individuals can choose whether to pay monthly or on the basis of interim payments, in agreement with the tax authorities.

Taxes for the first fiscal year worked must be paid in a single amount around September of the following year.

BASIS OF CALCULATION

The calculation of income tax is based on the net salary earned by the employee or couple.
Taxpayers benefit from a number of rebates, deductions and limitations depending on the taxable household’s situation (personal charges, legacies, etc.).

Taxation is calculated according to the system of setting the dependants’ allowances against tax. It is based on the rate applicable to each one of the brackets making up the taxable income, the limits of which depend on the number of parts corresponding to the situation and to the taxpayer’s family charges. The maximum rate of taxation is 49.58% (Finance Law for 2003).

OTHER TAXES AND DEDUCTIONS

• The R.D.S. (Reimbursement of Social Debt);
• The C.S.G. (supplementary social security contribution in aid of the underprivileged).

These are contributions which help to lower the social security debt. They are owed by employees and are calculated on the basis of income and a coefficient established by the Government. Part of the C.S.G. + the C.R.D.S. are reincorporated into taxable income and subjected to income tax on individuals.

For your information, other taxes and levies include in particular:

• property taxes based on housing and the place of residence (paid by the owner);
• residence tax according to the place of residence (paid by the occupant of premises, whether he/she is the owner or tenant at 1 January);
• audiovisual licence (annual) if you have one or more television sets;
• VAT (Value Added Tax): there are three different rates depending on product type.

France has signed tax agreements with most countries in the European Economic Area enabling dual taxation problems to be avoided.

Source: European Union
© European Communities, 1995-2006
Reproduction is authorised.