- Are you an Expat living in France that is looking to understand how the French Taxation System and Structure works?
- Do your know-how as an ex-pat your taxes will be calculated and more importantly how are you going to file them?
- Have you considered working with a french tax advisor that can help you steer clear of any major tax-related troubles?
First things first. It is not easy to understand the French Taxation System. The situation becomes even more complex and confusing for ex-pats that move to France for a better life, personally as well as professionally.
Every year, France sees thousands of individuals moving to the country after being drawn by its idyllic countryside, vineyards, and happening coastlines. However, navigating the tax structures, brackets and paperwork is no easy task.
In this resource article, we are going to help ex-pats with five important pieces of advice that they need to know about paying taxes in France. If you or someone you know is moving to France, then this article can help them.
The French Tax System: A General Overview
The kind of taxes you pay as an ex-pat is subject to several factors:
- Firstly, it depends on how long you have called France your permanent place of residence.
- Secondly, the type of income you are generating in France and what is the source of that income.
- Thirdly, whether or not your country is covered by the Double Taxation Treaty with France or not.
This means that as an ex-pat, you will be required to pay taxes in France from all your international and other worldwide incomes.
It also means that even if you are not a France resident, but are generating income from France, you will have to pay income tax on your French earnings. Nearly 120 countries of the world have a double tax treaty with France. This means that you cannot be doubly taxed by your home country as well as by French authorities.
List of 5 Important Tax Advice for Expats looking to move to France
1. The PAYE System of Taxes-
One of the most important changes that have come about in the income tax payment structure took place in 2019. Formerly, ex-pats could pay taxes on their prior year’s income. This was similar to income taxes paid in different countries.
In 2019, a system called PAYE, or Pay As You Earn came into being. Here, the taxes were deducted right at the source of when the income was made. In other words, you pay taxes, as soon as you earn an income.
2. Taxes on Income from French Sources-
If you are an ex-pat living in France and earning an income from one or the other source, you will have to pay a tax.
The following income sources are taxed- earnings from business activities, capital gains on the property (second home), pension and retirement benefits, investments in stocks, shares, and equity, employment salary are drawn, interest from bank interest rates on your savings or fixed deposits, and dividends from corporations.
3. You can Pay Taxes Online in France-
Many financial experts agree that with the introduction of the PAYE system, filing taxes for ex-pats has become much easier. With taxes being deducted at the source, there is lesser confusion and paperwork required.
If you have an internet connection, you can pay taxes online in France. The only exceptions to the same are if you have annual gains from investments, property sales, insurance, and income that has been generated from outside France’s borders.
4. Deadlines for Filing Income Taxes in France-
The tax year in France is calculated from 1st January to 31st December. There is no single deadline date and it varies from year to year. Due to COVID-19, the normal filing month of May was extended to June.
The French authorities have set up more than 101 departments to process online tax filings as the same would lead to congestion and delays earlier on. Failing to abide by the deadline can invite formal notices, fines, and even penalties for ex-pats.
5. Income Tax Slab Rate for Non-Residents in France-
The tax rate slab for residents varies between 0% to 45%. For non-residents, the tax slab has been fixed. This means that you do not have to pay any taxes if your annual income is less than 10, 084 Euros.
However, if it is more than that, then you are entitled to pay the additional income at a rate of 11%. You should work with a professional accountant to help understand this better as there are lots of variations involved in percentages.
The Final Takeaway
If you are a senior citizen or disabled, the government has put into place mechanisms that can help ease your tax burden. Additionally, there are many other benefits and advantages you can avail of if you are aware of where to look. If you would like us to assist you in filing your taxes as an ex-pat, please reach out to us in the comments below.