4. Your French Income Tax Return

1. 4.1. Tax Return is Obligatory
   4.2. Tax Calendar
   4.3. Completing Your French Tax Return

---

4.3. Completing Your French Income 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 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 or other foreign income taxable in France.

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 would be wise to ensure this information is stated on the Form 2047 (or accompanying letter) as you will then not be liable for the social charges CSG/CRDS on your pension. The 'E' form status of expats is often not picked up by the local French tax offices, resulting in overpayment of these charges.

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). This process is increasingly being automated, so you may well find that your tax return is received with the relevant amounts already inserted on the return.

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. Interest earned should be declared gross, and if you have already paid income tax on it in the UK, then you need to reclaim it from HM Revenues.

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, although they only need be declared once. In 2008, the French Government substantially increased fines against those holding an undeclared 'offshore' bank account in a tax haven. While you may think you can keep such an account from the prying eyes of the French tax authorities, the level of cooperation between tax authorities across the world is increasing at a fast pace.

You are also obliged to declare life insurance policies held abroad.

It is unlikely you would be fined for not formally declaring a bank account, 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).

---

Next: Calculating Your Income Tax Liability

Back: Tax Calendar