5. Calculating Your French Income Tax Liability

1. 5.1. Composition of Your Household
2. 5.2. French Income Tax Rates
3. 5.3. French Income Tax Allowances
4. 5.4. French Tax Credits

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In determining your tax liability the tax authority will first establish your gross earnings, called your revenu brut global.

They will then make certain allowances against this income to arrive at your net earnings, called your revenu net global.

Your tax liability will then be calculated on a progressive basis, having regard to the composition of your household and the allowances to which you may be entitled.

5.1. Composition of Your Household

In order to minimise the impact of higher rates of taxation on those with dependants, the size and circumstances of the household is taken into account in determining the total amount of income tax which should be payable.

The method used is to divide the household into ‘parts’ (or 'shares') corresponding to the size and circumstances of the household.

The total income of the household is then divided by the number of members in it.

A notional tax charge is created for a single ‘part’ on a progressive basis using the income tax bands.

The resulting figure is then multiplied by the number of ‘parts’ to give the tax liability for the household.

Thus, for a couple the number of houshold parts would be 2. Assuming a net income of €30,000, then the value of each part would be €15,000. The income tax payable on €15,000 would then be assessed, and the resultant figure multiplied by 2.

On this basis a single person would start paying at higher rates of tax than a three person household on the same income because, in the latter case, tax is calculated on the partial share of the income of each member of the household.

As might be expected there is a complicated set of rules for calculating the number in each household to take account of the varied circumstances of families.

Thus, in a household with two adults, the household income would be divided by two, whereas in a household with two parents and two children the household income would be divided by three.

The rules are slightly more generous for single parent households and those where there are disabled dependants or adults in the household.

Unmarried couples in a civil partnership are treated the same as married couples.

The following table summaries the position for most households.

Key: A = Married/Civil Partnership; B = Widowed Person; C = Single, Divorced, Free Union.

Household Parts

Dependants	A	B	C
0	2	1	1
1	2.5	2.5	1.5
2	3	3	2
3	4	4	3

Source: Code général des impôts / 2010

Disabled persons, or those with disabled dependants, are granted an additional half (.5) share in each case.

Singles, divorcees, seperated and widowed persons who are living alone, but who brought up alone at least one child for at least five years, are granted an additional half (.5) share. This means the income of such persons is divided by 1.5.

In order to ensure that those with large incomes do not benefit over generously from this system the amount of tax savings for dependants is also limited to a maximum sum where the income of the household exceeds certain limits, although these limits are fairly generous and should not be relevant to most expats.

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