France attracts ex-pats from different parts of the world. Being a nation that is famous for its rich art, culture, and heritage, the country has for a very long time been one of the top destinations on the list for ex-pats. There are many Americans and UK citizens that have set up permanent bases in France’s countryside, as well as along its numerous scenic beaches.
However, what many ex-pats lose sight of is the fact that the taxation regime in France works differently as compared to other parts of the world. The French system requires a deeper understanding of brackets, international treatises, and social security. In this guide, we are going to look at some important aspects of taxes in France for ex-pats.
If you are someone that is already living in France or is planning a move from any other country in the world, this article is going to help you with information and knowledge. Specifically, we are going to offer ex-pats with french tax advice so that they do not run into any problems.
The French Tax Structure: Who is liable to pay taxes?
According to leading financial and taxation experts, the following four categories of individuals should pay taxes in France-
According to the French taxation laws, if you are an ex-pat whose primary place of residence is in France (your spouse and children stay here), you will be considered a French resident and hence will have to pay taxes.
Residence for more than 183 Days–
According to the rules and laws mentioned in the tax codes, an individual that has stayed in France for more than 183 days, needs to pay taxes. These 183 days need not be consecutive and can be in one calendar year only.
Your Primary Job, Business, or Vocation is in France–
A professional from another country that is stationed in France, or an entrepreneur who is conducting business, has offices, or employs French nationals in work is required to pay taxes.
You own Property and Other Assets in France–
There are many that own and operate the property in different parts of France. While your primary place of residence is not taxed (it was abolished in 2021), the second and third homes that you have will incur taxes.
Property taxes in France on the second home are carried out after a formal assessment. This assessment takes into account the condition of the house, its size as well as the property rates in the neighborhood it exists in.
The Tax System in France: 4 Major Types of Personal Income Tax Expats need to pay
In this section, we are going to look at the four major types of personal income taxes ex-pats have to pay in France-
- The French Personal Income Tax
- Contributions with regard to Social Security
- VAT which is taxes on goods and services
- Occupier’s Taxes on Property
There are different categories when it comes to occupier’s taxes in France. For example, if you are selling a property whose valuation is more than 1.3 Million Euros, you will have to pay Capital Gains Tax on the same.
Expats need to pay attention to the changes that have come about in the taxation structure. Ever since 2019, you are no longer required to pay taxes for the prior year, as had always been the case. From 2019 onwards, the French government has introduced a system known as PAYE.
In the PAYE system, tax is deducted at the source every time you make an income. PAYE stands for ‘Pay As You Earn’ and has been done to make the entire process much more efficient and streamlined. Taxes work as monthly payments that are paid to the taxation authorities.
PAYE is not only taken for monthly income from salaries of business gains. It also includes everything from retirement income and pension, any international gains, rental bills, and income, as well as maternity leaves.
The Bottom Line
Navigating the maze of the French tax system can be confusing for any ex-pat. This is why almost all financial experts recommend that ex-pats should work with an expert and specialized accountant that can help them with all their taxation-related filings and paperwork. If you have any questions or would like us to assist you in any way, please let us know in the comments below. We would be more than happy to assist you with regard to your queries on French taxes.