In France, personal income tax is called "impôt sur le revenu". You are liable to pay French income tax especially if you are a tax resident in France. For further details, please see the section "French Taxes."

Resident in France or Non-resident?

Resident

According to the French Constitution, international treaties and laws supersede national laws. Therefore, if there is any doubt as to your residency due to discrepancies between French law and international law, international law prevails.

If France is your base but you run a business and receive income in both France and another country (especially the UK), income is taxed in the country where you earn it, but social levies remain due in France to cover health insurance. Salaried income is taxed at 5.5%, whereas business income is taxed at 2.4% up to €34,822, and at 9.6% for income between €34,823 and €171,113 (2011 figures).

European Economic Area (EEA) rules state that, even when your family is a resident in France, your social security contributions must be paid where you conduct your professional activities, i.e. in the country of employment.

However, the EEA does not yet have specific tax treatment for cross-border workers.
All of these rules apply only if you are affiliated with the social security system in France.
Some guidance from the UK Customs and Excise Office was made available to those who live between the two countries.

Non-Resident

You may be considered a non-resident, but if you receive any kind of income in France, the terms of bilateral tax treaties between France and your home country govern your tax liability.Rental income is generally subject to taxation in the country where it is earned. However, you may be eligible for partial relief or exemption against taxes in your home country.

For UK nationals, the bilateral tax treaty provides forpartial relief on rental income provided that your UK income tax liability is certain. If you pay more tax in France than in the UK, no further taxes are due in the UK. On the other hand, if you pay more tax in the UK than in France, you may be entitled to a tax credit against income tax paid in France.

To declare your French income, contact:
Service des Impôts des Particuliers Non-RésidentsTSA10010
10 rue duCentre
93465 Noisy-le-Grand,Cedex.

To get a quick response, email the office fornon-residents: This email address is being protected from spambots. You need JavaScript enabled to view it.
You may also call (+33) 01 57 33 8300.

Where is your "Tax household"?

In France, your tax household is called your "foyer fiscal," a term that you will see in any tax-related document. Information about tax households is provided in the "French Taxes" section.

A household files only one tax return, although there are other options available for children 18 and under who earn money.

  • If your children receive an income, they may submit their own tax returns, separate from the "tax household." If this decision increases yourtax burden, you can always ask the tax authority to recalculate your liability.
  • When a pupil or a student under 26 receives wages for less than three months (approximately €4,236 in 2012), or when an apprentice earns the annual minimum wage (approximately €16,944 in 2012), he or she is exempt from income tax.
  • Couples united in a civil union (known as the Pacte Civil de Solidarité or PACS) and those united in marriage have very similar tax statuses, rights and obligations. However, if you live as an unmarried couple with no civil partnership, both parties must file a tax return.
  • If a marriage or a separation occurs during the year, you can choose to file one or two tax returns for the year in question.
  • Upon the death of one of the partners, two different tax declarations must be completed, one to cover the period before death and one for the period after.

What income is taxable in France?

Worldwide Income

As stated previously, if you choose to become a French resident, you are required to declare all worldwide income, whatever the source.

Therefore, your personal income tax declaration must reflect your monthly salary, pension for retired persons, rental income, investment income, interest on savings, and for some businesses, income from these activities, unless it is subject to French corporate income tax, called the "impôt sur les sociétés."

There are however some exceptions to this rule: some French social security payments, some French bank savings schemes and certain allowances reserved for students and apprentices (see below for details).

To calculate the income tax base, French authorities add French income to foreign income. If the latter is already taxed in the country where it is earned, you should be granted at least partial relief depending on your personal circumstances.

If you are considered a French resident but continue to receive business or salaried income in another country on top of your French earnings, payment of health insurance charges on the foreign income is mandatory, as explained in the "French income tax liability" section.

UK Pension Income

If you are a resident in France and receive a state pension, private sector pension or annuity from the UK, refer to the aforementioned HM Revenue & Customs guide. You can also contact the Centre for Non-Residents at 0044-151 210 2222 from outside the UK, or 0845 070 0040 from the UK.
Those receiving a government service pension from the UK have no choice in the matter, as the pension is taxed at the source in the UK.

Nevertheless, as errors are frequently made, declare the gross income on your French income tax return to get advice on how to complete the form.

You will receive your normal UK personal tax allowance against your government service pension. Therefore, if you are retired, you receive both the state retirement pension from the UK and the allowances granted in France on this pension.
Until 2011, lump sums paid on retirement to expatriates living in France were liable to French income taxes, although subject to particular rules.

Thanks to fiscal legislation passed in 2010 and 2011, the following four options are now available to all residents of France who receive a lump-sum retirement pension that is taxable in France:

  • Tax bands - No particular provision is paid. The rates and bands used for the tax are those applicable when the pension is received. The associated tax is payable over five years.
  • Installments - Under the installment system ("système de l'étalement"), the lump sum is considered as an "exceptional payment" and divided into four equal parts. A quarter is added to your other income every year for four years.
  • Quotient - If you opt for the quotient system ("système du quotient"), the net taxable lump sum is divided into four equal parts as in the installment system. One part is added to your other net taxable income, and the resulting additional tax is multiplied by four.
  • Fixed-rate – The final possibility, taxation at source ("prélèvement forfaitaire libératoire"), applies a fixed rate of 7.5% to the entire lump-sum pension.

Eligibility for the fixed-rate option depends on two specific rules:

a. The lump sum must be received one-off to avoid deferred payment (flexible drawdown).
b. The option must be expressly requested, and once agreed up, is irrevocable.

Whichever option you pick, the pension is subject to a 10% pre-tax allowance. The major disadvantage of this method is the lack of precision in regulations on these two options.

While normally the 10% allowance is subject to a cap, for lump-sum pension payments it has no upper limit. Social security charges are calculated on the gross sum, i.e. before the 10% allowance.

Only occupational, stakeholder and personal pensions where tax relief has been granted against contributions are eligible to be taxed as pension income. Unregistered pension schemes that grant no tax relief in your home country are taxed as investment income.

Private lump-sum payments are subject to social security charges at a rate of 7.1%, although deductible against income tax at a rate of 4.2%.

Local offices often have their own understanding of these abstract regulations. It's best to seek the advice of a professional for all tax matters. In addition, take some time to read the bilateral tax treaties in force between France and the country where you earn your income.

Foreign Rental Income

In general, rental income is taxed by local authorities. When you receive rental income from a property in the UK, it is taxed by UK authorities.

For more details, see "French Taxes" above.
To air on the safe side, make sure to declare all income in France as well as in your home country.

Foreign Savings Income

In France, all foreign savings and investment income are taxable, despite the relief you may be entitled to against tax paid in another country. British or other overseas bank are generally willing to pay your foreign savings income gross.

As the French tax return requires you to declare gross interest rather than the net amount, choosing to be taxed entirely in France is easier. You could avoid having to request reimbursement of the tax you may have already paid on interest earned from another country.

Do not try to omit your foreign savings interest. French authorities receive a report on the amount of interest incurred in bank accounts based in the EEA (outside France). This is due to the European Tax Directive agreement between EEA Member States, which allows countries to exchange information on bank customers expatriated to one country but earning interest in another.

Important You must therefore declare all foreign interest income, even if it will not be taxed in France. This obligation also applies to accounts in "tax havens," where you run an even greater risk of being caught for undeclared income in the event of a tax audit.

French Rental Income

As usual, any rental income earned in France must be included in your tax declaration. However, taxation will vary depending on the type of rental income – whether furnished or unfurnished.

French Business Income

The chapter above on French Taxes explains the relevant rules on the taxation of business income. However, if you have the legal status of a self-employed worker ("auto-entrepreneur") or run a micro-enterprise, your business turnover andprofits are to be included on your personal income tax return.

If, however, your business is a limited liability company, you must separate your company tax return from the your personal income filing.

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