3. Liability to French Income Tax
Personal income tax in France is called Impôt sur le revenu.
You are liable to income tax if you are fiscally resident in France, on the income of the whole household, and on the basis of your worldwide income.
Even if you do not have a permanent home in France, you may be subject to French income tax, depending on the type of income you earn in France and the terms of any double taxation treaty (convention) between your home country and France.
These taxation treaties have been developed in order to avoid a situation where the same income is taxed twice, and to determine the rights of taxation between two countries.
The treaties form the basis upon which a decision is made as to which country you are fiscally resident, and the basis upon which you will be taxed.
In the following pages we summarise the potential tax liability in France of individuals. Business interests, and and certain other specialist employment groups affected by cross-border taxation policies are not considered in any detail.
- 3.1 Resident or Non-Resident of France?
- 3.2 Your Fiscal Household in France
- 3.3 Your Taxable Income in France
3.1. Resident or Non-Resident of France?
- 3.1.1. Residents of France
- 3.1.2. Non-Residents of France
3.1.1. Residents of France
To be ‘fiscally resident’ in France only one of the following three conditions need apply:
- It is considered you have your main home in France;
- You carry on a professional activity in France, either self-employed or as an employee;
- Your centre of ‘economic interests’ is in France, e.g. investments, business.
In order to assist with the determination of resident status the general rule that is applied is that, if you spend 183 days per calender year in France, then you are deemed to be resident.
But you would also be deemed to be resident if any one of the other conditions stated above applied.
If you arrive in France with an intent to becoming resident, then you become resident when you step onto French soil.
In some cases you can actually be resident in both countries, and the terms of the double taxation treaty between your home country and France would determine the rules that applies in these cases.
In particular, as cross-border working and living within Europe becomes more commonplace, it has become something of a game of chance for the various tax authorities to interprete the circumstances of all cases in a consistent manner.
Thus, there can be uncertainty about the status of families who relocate to France, but where the breadwinner countinues to work outside of the country.
In such circumstances the general rule is that, whilst you and your family will be considered to be tax resident, you will be taxed in the country where you are employed, and you will also pay social security contributions in the country of employment.
In other words, within the EU, your rights and obligations relate to where you undertake your professional activities.
This rule applies to employed and self-employed persons alike.
Even though you will pay tax in your country of employment, some local French tax offices insist that you complete a tax return. You will not be taxed twice on your income earned outside of France, but this income will be taken into consideration in calculating your liability to tax on any French earned income e.g. rental income.
Top Tip!
If you have any doubt about your status then, in order to minimise the risk of being considered fiscally resident in France, you should own a home in the country where you work and spend at least 183 days a year there.
If you do clearly become resident then you should visit or drop a line to the local tax office, (called Centre d’impôts) to advise them. If you do not they are likely to contact you anyway!
If you do finally relocate to France, in the year you become resident you will be taxed separately on the basis of your actual residence in each country.
We would be interested to hear your experiences, as we are aware there is varying practice up as between the different tax offices in France!
3.1.2. Non Residents of France
If you consider you are non-resident, but you earn revenues from France (e.g. rental income), your liability to taxation is going to depend on the terms of any double taxation treaty between France and your home country.
In general, under the terms of most double taxation treaties, rental income is liable to taxation in the country where it is earned.
However, depending on the terms of any double taxation treaty between your home country and France, you may well then be entitled to partial relief or exemption against potential tax liablity in your home country.
In the case of UK nationals, under the terms of the double taxation treaty, partial relief on rental income is granted against liability to UK income tax.
What this means is that, if the tax you pay in France is greater than that you would pay in the UK, then no further taxation is payable in the UK.
Conversely, if you pay less in tax than you would pay in the UK, then you will get a tax credit against income tax paid in France.
In order to declare your French earnings you need to contact the Centre des impôts des Non-Résidents (CINR), 10, rue du centre, Noisy-le-Grand (93).
The e mail address of the office for non-residents is cinr.paris@dgi.finances.gouv.
You can also download the tax declaration by visiting Déclaration De Revenu (non Résident) 
.
Next: Your Fiscal Household in France
Finance & Taxation