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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5.4. French Income Tax Credits

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 credits are:

1. 5.4.1. Home Energy Conservation
2. 5.4.2. Home Adaptations
3. 5.4.3. Energy Efficient Vehicles
4. 5.4.4. Child Care
5. 5.4.5. Rainwater Recuperation

5.4.1. Home Energy Conservation

An allowance ranging from 15% to 50% for the installation of certain energy conservation work in the family home. It may be an existing property, or one to be constructed.

The allowance is called crédit d’impôt development durable.

The property must be your principal home, and is only available against the equipment and materials, not the costs of labour.

Similarly, it is only available if the work is carried out by a professional tradesman, so DIY schemes are not eligible.

The measures include low temperature boilers (15%) condensing boilers (25%), insulation and double glazing (25%), rainwater harvesting systems (25%), heat pumps (50%), solar energy (50%), and wood burning stoves (50%).

The maximum eligible costs are €8000 per person, or €16,000 for a couple.

5.4.2. Home Adaptations

An allowance of between 15% and 25% against the cost of specific works to give greater mobility or safety to elderly or disabled persons in the home.

The allowance is called crédit d’impôt l’aide à la personnel.

As with home energy conservation works, labour costs are not eligible. The maximum eligible costs are €5000 for a single person, which is doubled for a couple.

5.4.3. Energy Efficient Vehicles

An allowance of €2000 against the purchase costs of a non-polluting vehicle or conversion of an existing vehicle under three years old, called l’achat d’un véhicule non polluant.

There are tough environmental tests (vehicle must push out less than 160 g/km of CO2, reducing to 140 g/km in 2008) and few new cars currently meet the criteria!

5.4.4. Child Care

An allowance of 50% up to a maximum of €2300 per child under 7 years of age towards the costs of child care outside of the home, called les frais de garde d’enfants.

Only those costs actually incurred by you are eligible, so if you receive assistance from your employer, or the social security system, the allowance is only available on costs net of this assistance.

No allowance is payable where the child is attending a maternity school.

5.5.5. Rainwater Recuperation

A tax credit of 25% against the cost of installation of a rainwater recuperation system from a roof of the principal home.

To be eligible the equipment must be supplied and installed by a registered tradesman.

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