3. Liability to French Income Tax

1. 3.1 Basic Rules on Liability to Income Tax
2. 3.2 Are you Resident or Non-Resident?
3. 3.3 What is your Fiscal Household?
4. 3.4 What Income is Taxable in France?

3.3. What is Your 'Fiscal Household'?

Broadly speaking, if you are resident French income tax is levied on the total income of the whole household.

In order to determin the tax payable, the income of the fiscal household is divided by the number of 'parts' (or shares) that comprise the household. The notional income of each 'part' is then assessed for tax using the rates applicable.

A couple would constitute two 'parts', while a couple with a dependant child would equate to 2.5. parts.

In France, your 'taxable household' is called your foyer fiscal, a term you will come across regularly in relation to your tax affairs.

Although a household need submit only one tax return, there are options available to children who may be 18 years, as well as those under 18 earning an income.

If your children earn a income there may be a tax advantage in them making their own tax declaration, outside of the foyer fiscal. If you later find out you did not make the best choice, you can ask the tax authority to do a recalculation.

However, a wage received by a pupil, or student under 26 years of age 25, is exempt from income tax, up to €3963 (2008 income). An apprentice is also exempt from income tax up to €15,852 per year (2008 income).

Unmarried couples are treated the same as married couples, provided they have entered into a French civil partnership, called Pacte Civile de Solidarité (PACS). This which gives them much of the status, and many of the rights and obligations, of married couples.

If you live as an unmarried couple without a French civil partnership, then you are each required to complete a tax return.

If, during the year, you become married or separated then no less than three tax declarations need to be made – one by the married couple and one for each of the separated persons!

In the event of the death of one person in a marriage, two tax declarations need to be made covering the periods before and after death.