3. Home Energy Conservation in France
- Tax Credit
- Grant for Boiler Replacement
- Roof Insulation
- Interest Free 'Eco' Loan
- 'Eco' Mortgages/Loans
- Rate Relief/Local Council Assistance
3.1. Tax Credit
i. What is a 'Tax Credit'?
Tax credits are available for heating and energy saving works to your French home.
A 'tax credit' needs to be distinguished from 'tax relief'.
While the latter offers only a reduction in the amount of income tax payable, a tax credit entitles you to a payment by the tax authority, even if you pay no income tax.
If you are entitled to receive a greater sum than you actually pay in tax, the tax authority will send you a cheque for the balance.
The tax credit for home energy conservation is called crédit d’impôt pour la transition énergétique (CITE).
ii. Eligible Persons
It is only available to those who own a property in France as their principal home, so second home owners are not eligible.
No means testing is carried out, so eligibility is not subject to the level of your income.
Landlords are not eligible.
iii. Eligible Properties
The tax credit is not available for new properties under 2 years old.
iv. Eligible Works
There is a lot of small print in the regulations, not all of which we can go into here.
In particular, the cost of some ancillary items relating to the these works is not always an eligible cost, so you may not be able to charge the full cost of the installation, materials or equipment to the tax credit.
In most cases the tax credit is not available for labour costs, except in relation roof, floor and wall insulation, and heat pumps for geothermal heating, where the tax credit can cover the same percentage of the labour cost.
The list of eligible works has also reduced in recent years.
You need to take advice on the detail, but, broadly speaking, the works for which a tax credit is payable include:
- Double glazing/doors
- Wall and floor insulation
- Central heating controls
- Heat pumps and boilers using renewal energy
- Wood or biomass equipment for space heating and/or hot water
- Combined heat and power
- Solar based hot water heating systems
The installation must meet specified performance standards so it important to discuss these standards with your installer to make sure the works comply with the regulations.
The installation of thermal insulation in an attic space in order to create new living space does not create eligibility to the tax credit.
v. Level of Tax Credit
The level of the tax credit is 30% for most eligible works,
However, for the labour cost for removal of an oil tank it is 50%, but subject to means-testing.
In addition, the tax credit for double-glazed windows, insulating shutters and doors and was reduced to 15% from 1st January 2018 (unless estimate accepted and deposit paid) and from 1st Jan 2019 the maximum cost price can be no greater than €670 per window for which there is a 15% tax credit.
Similarly, for replacing an oil-fired boiler with a more sustainable form of boiler (which cannot use oil) the maximum cost price is €3,350, giving maximum tax credit of €1,005.
There are maximum limits on the level of expenditure that can be used to obtain a tax credit. The maximum expenditure for one person is €8,000 and €16,000 for a couple, which is increased by €400 for each additional person in the household.
This means that the maximum tax credit is circa €2,500 for a single person and €5,000 for a couple.
The works and the allowance can be used over a five year period.
It is also possible to obtain an interest free loan l’éco-prêt à taux zéro alongside the tax credit. See below.
vi. Registered Builder
The project must be undertaken in its entirety by a registered builder.
These companies must also have the qualification label RGE - Reconnu Garant de l’Environnement. This is most important.
In no case would you be eligible for the tax credit if you purchased the materials yourself, or you undertook the installation works.
vii. Application Procedure
In order to claim the tax credit you need to complete F2042-RICS (dépenses pour la transition énergétique dans l'habitation principale) as part of your annual tax return.
Accordingly, you may not receive your tax credit for a year or more after you carried out the works.
viii. Further Information
There are regular changes to the level of the tax credit, the work and equipment that is eligible and the relevant minimum standards, so you need to be sure of your ground.
You would be best advised to contact your local public and free renovation advisory service, FAIRE.
3.2. Boiler Replacement
Separately, on a means-tested basis it is possible to obtain 100% financial assistance for the replacement of an oil or gas-fired boiler for a sustainable form of heating, such as heat pump or a condensing boiler, wood burner or solar heating. The assistance includes the labour cost.
The assistance has been available under a programme called Coup de pouce économies d'énergie, launched in 2017, and which is now known as prime à la conversion chaudière.
The initiative is run in partnership with several private sector partners, eg, EDF, Engie, Energie Solidarité and Total, through the use of certificats d’économies d’énergie.
As with all energy conservation works, be careful about approaches over the telephone or on-line from companies who appear to offer the works for a negligible sum, particularly through the use of certificats d’économies d’énergie.
To be eligible for the maximum support, the income thresholds depend on the size of the household. In the Ile-de-France the maximum limit to quality is €35,510 for a couple and €26,923 in the provinces. Above these levels a support is this available, up to €2,500, less for a wood burner.
This assistance is available with other forms of support, which can be illustrated below:
A couple having an annual income of €26,000 decide to replace their oil-fired boiler for a heat pump, costing €12,000, of which €2,000 is labour.
They would be eligible for €4,000 under the programme prime à la conversion des chaudières, as well as nearly €4,000 from the housing renewal agency Anah under the programme Habiter Mieux, and around €1,200 tax credit under CITE, above.
That leaves the couple with around €2,800 to fund themselves, but they can obtain an interest free loan to meet the cost.
Administration of the programme will be undertaken by the partners, who are all effectively competing for your business. So it is possible to consider several offers from different suppliers, although all offers will not be available in all areas.
Under the Coup de pouce programme it is also possible to obtain support for insulation of the roof-space and floor insulation, on a means-tested basis.
The process is complicated and advice from FAIRE is recommended.
3.3. Roof Insulation
There is also assistance under the Coup de pouce économies d'énergie programme referred to above for assistance with roof insulation, with the same maximum income thresholds that apply.
Assistance is at the rate per m2, depending upon income.
Once again, you should approach FAIRE
The same caution about telephone and on-line offers using the certificats d’économies d’énergie noted above for boilers equally apply to roof insulation.
An interest free loan (l’éco-prêt à taux zéro) for the cost of works of home energy conservation and the installation of a septic tank is available.
There is no test of resources in determining eligibility for the loan.
Both owner-occupiers and landlords are eligible, although the property must be occupied as a principal residence. If the property has not been used as a principal residence, this condition must be fulfilled within six months of completion of the works.
The duration of the loan is normally 10 years, but can be up to 15 years where at least three elements of work are undertaken.
Eligible works include loft insulation and other types of work as listed above for tax credits, as well as renewal of a septic tank system.
In order to obtain the loan, one of three conditions must be fulfilled, depending on the type and age of property.
You must either:
- Achieve a minimum level of energy performance standard, called a performance énergétique globale ; or
- Undertake the installation of a septic tank system; or
- Realise the works in connection within an area based housing renovation programme.
Since 1st March 2019, it is no longer is it necessary to undertake at least two elements of work, which was called a bouquet de travaux.
The amount of the loan is up to €20,000 for two elements of energy conservation and up to €30,000 for three or more. It is up to €10,000 for a septic tank alone, but this sum must be included within the maximum of €30,000.
Eligible properties are those constructed before 1st January 1990.
If the property was constructed after 1948 you will be required to have a energy performance study of your property undertaken.
You should approach FAIRE, or alternatively direct to your bank, who administer the loans.
You will be required to use a registered builder, so DIY projects are not eligible. The builder must also have the qualification label RGE - Reconnu Garant de l’Environnement.
You have three years to complete the works, following consent to the loan.
It is possible to be granted a tax credit for the works, as well as take advantage of the tax free loan.
There are mortgages or unsecured loans available through the high street banks for works of home energy conservation.
The generic term used for the loans is l'éco prêt, although the banks also have their own particular terms.
This finance is not subject to any test of resources, although the bank will wish to be satisfied that you are creditworthy.
You will also normally required to hold a particular form of savings account, called a Livret Développement Durable - LDD, which should then enable you to borrow at a reasonably attractive rate of interest.
You would need to make enquiries to your French bank but you can read more generally about the mortgages in our Guide to French Mortgages.
i. New Homes
There is partial (50%) or full exemption from the taxe foncière for up to 5 years, for those new homes constructed since 1st January 2009 to an energy efficiency standard that is higher than the regulations currently in force.
This exemption is at the discretion of the local authorities, although it is widely adopted.
The exemption is also cumulative with the general exemption from the taxe foncière for two years granted to owners of all new homes, provided completion is notified to the tax authority within 90 days of completion. This would mean you would be exempt from the tax for seven years!
You would need need to produce bills and details of the works, as well as a report indicating the level of energy performance achieved by the property.
ii. Older Homes
Local authorities are also permitted to exempt from the taxe foncière those older homes that have had important energy conservation works carried out to them.
This exemption applies to those dwellings built before 1989, whether your main home or any property you may let out.
It is also on condition that the expenditure in the previous year on such works exceeds €10,000, or 15,000 over the previous three years. The cost of labour is excluded from this calculation, although it does include VAT.
The exemption is at the rate of 50% to 100% for a period of up to five years.
Once again you would need to discuss with your local tax office.
iii. Loans and Grants
There are also a surprising number of local, departmental, or regional councils who offer grants or loans towards energy saving equipment, notably towards the installation of solar panels.
Check with your local mairie in the first instance, or the web site of your Conseil Régional.
Be aware that some other assistance you may receive, such as a national grant, may be offset against the assistance you receive from the local council, although not in all cases, notably with rate relief.
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