5. Calculating Your French Income Tax Liability

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

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5.3. French Income Tax Allowances

There are a number of tax breaks you may be able to use to reduce your liability to income tax.

It may take the form of either tax relief (réduction d’impôt), or a tax credit (crédit d’impôt).

Accordingly, if are eligible to receive a greater sum than you actually pay in tax, then the taxman will send you a cheque for the balance.

A tax credit will, therefore, be important to you, even though you may pay little or no income tax in France.

The main tax allowances available are as follows. We consider tax credits in the next page.

1. 5.3.1. Salaries and Pensions
2. 5.3.2. Child's Education
3. 5.3.3. Domestic Help
4. 5.3.4. Nursing/Residential Care
5. 5.3.5. Ailimony Payments
6. 5.3.6. Charitable Donations
7. 5.3.7. Investments in France

5.3.1. Salaries and Pensions

There is a general abatement of 10% for professional costs in relation to salaries up to a ceiling salary figure of €13,501.

Salaried employees can elect to deduct actual professional costs, within limits, including costs of travel to work, meals, tools and clothing. Social security contributions are also deductible.

If your pension is taxed in France, then there is also a general 10% abatement, to a maximum sum of €3446 per fiscal household.

In addition, for those aged over 65 years, a fixed sum is deducted from their income before they become liable to income tax.

With total net income of less than €13,550 the deduction is €2202 per person; between €13,50 and €21,860 the deduction is €1101 person.

These same reductions also apply to someone who suffers from a high level of disability, irrespective of age.

5.3.3. Child’s Education

A reduction in income tax towards the costs of a child’s education, called les frais de scolarité .

The reduction is €61 for a child at collège, €153 for a child at lycée and €183 for child at university.

5.3.3 Domestic Help

An allowance of 50%, against the costs of employing someone to assist with domestic duties at your home, called l’emploi d’un salarie a domicile.

The allowance is only available to couples who work full-time, and who are, therefore, unable to look after their child during the day.

The concession operates through a system of payment called Chèque emploi service universel .

The duties can include cleaning, gardening, driving, child care, health care, cooking etc.

An ‘au pair’ is not eligible and there are other exclusions and limitations

There is a basic cost ceiling of €12,000, giving a maximum allowance is €6000.

This cost ceiling is increased up to €15,000 where you are over 65 years old or you have a dependant child, and to €20,000 in the case of those who have a serious incapacity.

5.3.4. Long Term Nursing/Residential Care

The costs of those receiving long term nursing or residential care are eligible for a tax allowance of 25% against maximum eligible costs of €10,000 ie €2500.

5.3.5. Alimony Payments

Payments to a former spouse, in cash or kind, within the first twelve months of the divorce settlement open access to an allowance of 25%, against a maximum eligible payment of €30,500.

5.3.6. Charitable Donations

An allowance of 75% up to a maximum of €479.

Larger donations can be rolled over into later years.

5.3.7. Investments in France

There are a variety of tax concessions for those prepared to invest in innovative companies, woodland, tourism properties, special property letting schemes and in dependant colonies. You will need to discuss with your financial advisors.

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