IT’S TAX TIME AGAIN IN FRANCE! Do you need to file?
Yep – Springtime in France brings warm, sunny weather, green gardens – and taxes! We take this occasion every year to remind our community that if: 1) you are a French resident, or 2) you receive French income (eg, rental), you must file a French income tax declaration.
Do I need to file a French tax declaration?
How do you know whether you’re a French resident for tax purposes? You are considered to be ‘fiscally resident’ in France if you spent at least 183 days in the country during the calendar year (Jan-Dec). Even if that is not the case, you could still be considered a fiscal resident if any of the following conditions apply, according to Article 4B of the Code Général des Impôts (CGI):
- Your main home is in France
- You spent more time in France than any other country during the calendar year
- Your spouse and children live in France (even if you work abroad)
- You are working in France, either as an employee or for yourself
- Your main economic interests are in France.
What income do I need to declare?
If you are considered fiscally resident in France, you will need to declare your global income, regardless of where it was earned or whether you’ve already paid tax on it in another country*. You may very well end up owing zero income tax in France, but you are required to file the declaration on time. If you are not a fiscal resident but still have French income, you would only declare income earned in France on your French declaration.
Types of revenue are subject to income tax:
- Wages, earnings, salaries
- Unemployment benefits
- Business or rental income
- Non-commercial or agricultural profits
- Capital gains, investment income, savings interest
- Pensions and annuities
- Income from stocks, shares and dividends
But I already pay tax in my original home country on some or all of these. Will I pay tax twice?
France has ‘double taxation agreements’ or ‘treaties’ with many countries to avoid residents paying tax twice on the same income. For instance, if your income is already taxed at source in the country of payment, you will not pay that tax again in France.
If your tax situation is complicated, it is definitely worth finding a good accountant with knowledge of your country’s tax treaty. Renestance can recommend English-speaking accountants.
When do I need to file?
Tax season officially opened on April 20th and the online filing deadlines differ according to which department you are living in.
2020 Deadline Date (by 23:59/11:59 pm)
|01 to 19||Thursday, 4 June|
|20 to 54||Monday, 8 June|
|55 to 974/976||Thursday, 11 June|
How do I file my declaration?
Currently you declare on the PREVIOUS CALENDAR YEAR’S revenue and expenses. So this year (2020) you will be declaring according to your situation between 1 January – 31 December 2019. Unmarried couples should complete separate tax returns. If you are PACSed (similar to a civil union) you can choose whether to make joint or separate tax declarations.
If you have declared previously, you should have already received your online link to complete for this year, with some of the fields pre-filled for you. If your situation has changed in any way, you need to ensure that your tax declaration reflects this; whether you have moved and your address is different, or your financial situation has altered.
If you changed none of the pre-filled fields in last year’s declaration, and nothing changes again for this one, your declaration can be automatically filed this year – you have nothing to do!
Here is the link to the Government tax site for declaring taxes: https://www.impots.gouv.fr/portail/.
If you are filing for the first time, you’ll need to ask your local tax office for a paper form to complete. The deadline for paper declarations is Friday, 12th of June, 2020.
You should receive your tax statement – Avis d’impôts – in August/September, unless you are a first time declarer, in which case it may be a month or so later.
How can I reduce my income tax bill?
You may be able to benefit from tax credits (crédit impôts), allowances and other concessions. For example:
- La Prime d’Activité – You may be eligible to receive this if you are working and your income is below a certain level;
- If you implement energy conservation features in your home;
- If you invest money in an assurance vie investment policy (This is a certain type of savings investment account with tax benefits and not term life insurance that pays out on your death);
- If you contribute to certain pension plans;
- If you give to charity;
- Other tax credits are available for employing domestic help, child-carers (for children under 6), school fees for collège and lycée;
- If you declare rental income and expenses;
- Property purchase schemes (défiscalisation) that have attractive tax breaks, such as the Loi Pinel.
What’s changing from last year?
A major change to the French tax system is the Pay As You Earn (Prélèvement à la Source) that took effect in 2019. Instead of paying your income tax in three installments, it is now deducted automatically on a monthly basis. The tax declaration will lead to a true-up between the amount deducted over 2019 and the true amount owed. This amount will either result in a refund or a tax bill and will adjust the amount of the automatic monthly deduction for next year.
Why should I do a French tax declaration if I won’t owe any tax?
First of all, if you are a resident or earn income in France, you have a legal obligation to file an income tax declaration. Ignorance is not an acceptable excuse, and you could face penalties for not filing! Secondly, the tax notice (avis d’impôts) that you receive a few months after the declaration is what we call ‘administrative gold’. It proves your residency, that you are paying taxes (and therefore abiding by the law!), and can be used as proof of financial resources. It facilitates almost every administrative task in France, including renting or buying a home. Also, if you want to apply for permanent residency or French nationality, you’ll need to show at least five avis d’impots. There are also many tax advantages in France that you can only access once you have a tax ID.
Where can I find help?
If you are looking at your ‘Déclaration d’impôts sur le revenu’ form and scratching your head, you may want an accountant to help you. But you need to do this quickly, as you won’t be the only one looking for an accountant right now, and English-speaking ones are rather rare. Send us an email at firstname.lastname@example.org for a recommendation. Alternatively, if you speak French, you can ask your local Centre des Impôts for help.
Good luck and remember, Renestance is always here to help with your French administrative questions!
Dennelle is the President of Renestance and a bilingual American who’s lived in France since 2000. She loves so many things about France, its language, culture, geography, quality of life... that she started a business to help others realize their dreams of living in this incredible place.
All articles by: Dennelle Taylor Nizoux