10 most common French tax questions

As frequent visitors to France, our readers may also like to know about investing in French property or even moving to France. Here are some of the burning questions you may want to know about taxes…

Born in France and raised in the UK, Peter Johnson has lived in France for 25 years, working in accountancy, teaching, real estate and tourism. Now he specialises in helping English-speaking people living in (or regularly visiting) France handle their tax and administration affairs. His no-nonsense manner has helped numerous people successfully navigate what can be a complex system that can prove tricky even for native French speakers.

Here Peter answers the Top 10 most asked tax questions.

1. What income will be taxed in France?

Any income you generate in France such as self-employment or rental income will be taxed in France. Sometimes there can be a confusion with ‘social tax’ (prélèvements sociaux) and social security contributions. 

To keep it simple, personal taxation is made up of ‘income tax’ and ‘social tax’. Social security are contributions made to the French welfare state for healthcare and benefits such as unemployment and a pension.

Your personal taxation will depend on the type of income and, if foreign, the country of origin. Personal tax will be applied according to rules of the various Double Taxation Treaties and your age. The element of ‘social tax’ will also depend on the country origin, your age and situation.

2. How much will I be taxed in France?

This will be linked to your French Fiscal Reference (RFR).

The main factors affecting your French Tax Rate are: your overall global income, the number of people living in your household (foyer) and your age. These factors will create a personal tax rate. The rate is progressive, so it could be for example 5.5% or 12.3%

One example is if you are single with no children and on a standard self-employment regime and earn €40K gross income then you will pay approx. 26% in tax and social security increasing to 28% over the next two years.

However, if you are not self-employed, you have other income, even from abroad and/or you are married and/or have children then the tax calculation is more complicated.

3. Can I work in France?

You need to consider two SEPARATE factors when considering moving to France:

• Do I have right to LIVE in France?

• Do I have right to WORK in France? 

EU Citizens have the right to live and work in France.

Some other countries have short term special refugee status agreements for their citizens to come and live and work in France. 

Everyone else needs to apply for either a Tourist Visa to come and live in France OR a Work Visa to have the right to work on French soil – a Work Visa is more complicated.

There are other options and complications.

4. How do I get a Carte Vitale? 

A Carte Vitale is final confirmation you have entered the French healthcare system. The key point is that your Carte Vitale has to have a ‘funding base or route’. Generally, this can be by having a salary, a French pension, French self-employment, a UK or EU pension, a Migrant Worker Status or you have a special agreement as you work for an international NGO.

There is another route which requires evidence you have lived in France for three months of more. 

Depending on the route of funding – the appropriate application needs to be submitted. Further, if a Carte Vitale is granted due to a pension, this will change if you start working in France.

CPAM and URSSAF, who between them fund and operate the healthcare system, can be complicated, inconsistent and slow to process applications.

5. What do I do with my foreign investments?

A daunting question as it will depend on the investment and the country of origin as the Double Taxation Treaty will affect the options.

Generally, countries do not respect the tax friendly advantages of another country’s ‘investment vehicles’. Therefore, you are better moving your investments to your country where you are tax resident.

If you are an American, then it is more complicated and we partner with a US CPA and US Wealth Management expert to assist in tax and investment planning.

6. How can I set myself up to work in France? 

There are options for creating a work status in France. For example, self-employment or creating a French company. You will have to register your activity in the correct category and be assigned a business registration number. 

Planning which category, fiscal regime and structure you need will depend on your type of activity, level of turnover, level of expenses and your own personal income requirements.

A comprehensive review of the type of business activity along with your personal objectives and needs is vital before making a decision on how you set up your ‘working status’. Once up and running an annual review is essential to ensure you remain on the right status.

7. Can I still collect self-employment income or a salary from a foreign country whilst working in France?

Yes, but you need evidence that you have travelled to that country to do the work. The general rule is that if you sit and do the work in France then you should pay tax and social security on that work. Where your clients are based is largely irrelevant. Some cases have been contested and won where there are ‘special circumstances’.

8. I want to rent holiday accommodation in France – what do I need to do?

Anyone wanting to rent furnished holiday accommodation will need to set up under a rental status and a fiscal regime and be assigned a business registration number. Then a number of rules apply depending on your gross annual income and your other sources of personal income.

9. Do I need to make a tax declaration even if I am a non-resident?

If you generate any sort of income in France, even if you are a permanent tax resident in another country, then you MUST make a French Tax Declaration. The common example is rental income derived from a holiday villa.

The tax rules are relatively simple. No declaration is required if you do not generate any income, though it is a good idea to get an online tax account to manage your property affairs in France.

10. I’ve heard of Assurance Vie but not sure it’s the right choice for me?

We assist and manage the investments of many clients.

An Assurance Vie is an investment with specific French tax benefits. To determine whether an Assurance Vie is suitable, a review of your current circumstances is vital. Some companies and institutions will sell you an Assurance Vie without much thought about how it affects your tax, life plans and other investments.

Your own feeling towards ‘investing’, your plans for staying in France and what you may do in the future – children, marriage, retirement and inheritance – are just as important as the return on any investment.

So rather than being pushed into an Assurance Vie, your life and the financial calculations need to be considered carefully.

[email protected] 

https://www.peterjohnsonsarl.com/