4. Your French Income Tax Return

1. 4.1. Obligatory Declaration in France
2. 4.2. French Tax Dates
3. 4.3. Completing Your French Tax Return

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4.1. Obligatory Declaration in France

Everyone who is resident in France is obliged to submit a tax return. You are also obliged to submit a return if you are non-resident, but have earnings from France.

This rule applies even though you may be below the income threshold for liability to income tax.

If you have not previously made a tax declaration in France, (called, declaration des revenues) then you may well not be sent a tax return for your first submission.

You should contact your local tax office, or your local mairie, and ask for the paperwork.

You could also download the form from the French tax authority website by visiting Income Tax Return .

In your first year, those relocating to France from the UK should complete the HM Revenue Form 85 , which advises the UK tax authority that you are moving abroad, and will enable you to reclaim any overpaid tax.

When you complete your first French tax return you should also complete the form FD5 , which the French tax authority then use to confirm to the UK authority that you are French tax resident.

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4.2. French Tax Dates

Income tax in France is collected in arrears, so your tax declaration for 2008 will cover your earnings for the calendar year ending 2007.

There is no PAYE system for employees, in the same way as occurs in the UK.

The Government have announced its intention to introduce PAYE, with a view to it being operational in 2009.

The Government sets a closing date each year by which the the declaration are to be returned to them.

If you submit via the internet, then residents only are given some additional weeks.

It is imperative you comply with the return date or face an additional 10% tax charge.

The return should be sent in to your local tax office whose address will be on the tax papers. If you have changed address in the year it should be sent to the tax office of your former address.

In order to avoid the risk of a penalty many French people send in their tax return by recorded delivery, (recommandé avec accusé de réception) or hand it in personally to the tax office.

If you have left France and now live abroad then you should send the declaration to your last tax office.

If you have always lived outside of France you should submit to Centre des impôts des Non-Résidents, 10, rue du centre, Noisy-le-Grand (93).

If you got married or entered a French civil partnership in the year you must send three tax declarations to the Centre des Impôts du Domicile Conjugal, whose contact details you can obtain from your local tax office.

The tax notice is called l’avis des impots sur le revenu.

If you have tax to pay the notice is called un avis d’imposition; if the tax authority adjudge you have no income tax to pay, you will receive un avis de non imposition.

You will find this document is necessary for access to and determination of contributions to some public services and benefits.

If you lose it you can either access it through the tax authority internet site if you are a registered user, or you can obtain a copy from your local tax collection office, the Tresor Public, which undertakes the treasury function of the Minister of Finance.

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4.3. Completing Your French Tax Return

Sadly, the paperwork associated with the submission of a tax return in France is rather complicated.

In practice, most people only need to fill out a handful of the boxes on the forms, but there are numerous boxes and different forms to use for different types of income. Trying to establish which ones to complete can be a nightmare!

There is no single tax return in the same way as is the case in the UK. There are various supplementary forms for different types of income. The information on these supplementary forms needs to be consolidated on the main (F2042) form.

The main forms for personal income tax are:

• Form 2042 - Main form
• Form 2044 - Property rental income
• Form 2047 - Income from abroad
• Form 3916 - Accounts held abroad

Capital gains on the sale of real estate are declared at the time of sale in the notaires office, although capital gains on shares and other property are declared on Form 2074.

Some steps are being made to make the process easier, notably by the introduction of a simplified form for those whose who have a single source of income, e.g. salary or pension.

In addition, since 2006, the authorities now send out pre-completed returns, (called déclarations préremplies) to the majority of taxpayers resident in France!

Although it sounds rather scary, the information on the forms is derived from the routine data supplied by your French employer or other French state body, e.g. pensions authority, unemployment agency.

Clearly, these forms will not apply to most retired expats, who are only likely to be be in receipt of pension and other earnings from their home country. Neither do they apply to those who run a business. However, if you are salaried in France, or you are in receipt of French social security benefits, then it will be relevant to you.

If you have not completed a French tax return, then you would be well advised to seek assistance from an accountant first time around, particularly if you have a diverse range of earnings.

If you have a good relationship with your local French bank, then you may well find that they will also be prepared to assist you in the completion of your tax return, and probably without having to pay a fee.

Ensure the duplicate returns you will have received are also filled for your own records, which you can then use to complete your tax return yourself the following year.

In either case, prepare a statement of earnings before you go, and have available with you supporting documentation.

It is important to distinguish the origin of your earnings as different types of earnings are taxed on a different basis, e.g. salary, pension, rent, shares, capital gains, interest.

If you are in receipt of a public sector pension that is taxed in the UK, you will need to declare it on Form 2047 as revenus exonérés, information which should also be copied onto the main Form 2042. You will not be taxed on this income, but it will be taken into account in determining the rate of tax on your French earned income.

If you are exempt from the payment of health contributions into the French health system because you have an 'E' form (notably E106 or E121), then you need to ensure this information is stated on the Form 2047, as you will then not be liable for the social welfare levy (CSG/CRDS) on your pension. This information is often incorrectly omitted by expats, resulting in overpayment of taxes.

If you have an interest earning French bank account then you are required to submit with your tax declaration the annual notice of interest earned that all French banks are required to supply their customers at the beginning of each year. The notice is called imprimé fiscal unique (IFU).

In relation to earnings or income from abroad you will need to convert the sums into their euro equivalent, using either the official exchange rate as advised by the tax authority, or the rate of exchange at the time the you received the income. In the case of the latter, the currency exchange note you receive from your bank or broker should be used.

If you earn rental income from the UK, then it will be taxed in the UK, but you need to declare it on your French tax return (F2047) for the purposes of calculating the tax rate for your French income.

If you have bank accounts abroad, then you are also formally obliged to declare the details (although not the amounts) of these bank accounts. You are also obliged to declare life insurance policies held abroad. The accounts and policies only need to be declared once.

The rule on the declaration of bank accounts/insurance policies abroad seems to be variously enforced, and it is unlikely you will be fined for not doing so, provided you declare income received on the accounts.

If you are seeking an income tax relief for eligible works carried out to your property, then you will need to enclose the invoice(s).

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Next: Calculating Your Income Tax Liability in France