The tax rates and bands for 2017 (for 2016 income) are set out below.
There are five tax rates and bands on net taxable income, as follows:
|Income Share||Tax Rate|
|Up to €9,710||0%|
|Between €9,711 - €26,818||14%|
|Between €26,819 - €71,898||30%|
|Between €71,899 - €152,260||41%|
The rates are applied on a sliced basis so that each household 'part’ of the income is charged on a progressive basis, as we outlined in the previous section. Thus, if a couple have net income of €30,000 in the year there are two 'parts' of €15,000, with each part taxed using the scale rates.
Example: Assume a household of two adults on a joint net taxable income of €30,000. In the first place their income is divided into two parts of €15,000. Each part is then taxed on a fractional basis using the tax bands. The first €9,710 of each part is zero rated, and the remainder for each part then charged at 14%. The tax payable by each is then multiplied by two to give the total tax payable.
Only if you were a single person household would you be charged as one 'part' on your income. Thus, a single person with taxable income of €25,000 would be charged at the rate of 14% on €15,300 (€25,000 - €9,710), which gives an actual rate on total taxable income of around 8.5%.
There are then a number of corrections made to your tax liability.
First, as we stated in the previous page, there is a cap on the tax benefit that is granted for dependants arising out of the division of the household into 'parts'.
The level of ceiling depends on the size and composition of the household, but as a general rule it is €1,512 (2017 for 2016 income) for each part. So for two children the maximum reduction is €3,024.
Second, a discount mechanism (décote fiscal) operates for those who pay little by way of income tax. This discount operates to ease in the imposition of income tax on a household that becomes liable.
So for 2017 (for income earned in 2016) if you are nominally liable to pay tax of less than €1,553 (single person) or €2,560 (couple), a reduction in income tax is granted to you on a formula basis that lowers the actual amount you would be required to pay.
The formula for the reduction is characteristically complex, being the difference between 75% of the tax limit threshold above, and 75% of your notional tax charge. The reduction normally works out at a few hundred euros.
Third, a further reduction of 20% in tax liability applies to those households where the net taxable income is no greater than €20,500 for single person (one part) and €41,000 for a couple. The levels are increased by €3,700 for each half-part. The reduction is on a digressive basis with income greater than €18,500 (single person) and €37,000 (couple), with higher thresholds with dependants.
Finally, if the tax due is no greater than €61 (2017), it is not charged.
In practice, less than 50% of inhabitants in France pay any income tax at all; only around 14% pay at the rate of 30%, and less than 1% pay at the rate of 45%.
The following table, supplied to us by the French tax authority, shows the maximum net taxable income below which a couple living on their own, and with a varying number of dependants in the household, would not be taxed. These figures are for 2017 (2016 income).
Concurrently with the tables, it is important you read the article in our Newsletter Income Tax Relief 2017.
As can be seen, a couple with no dependants would not pay any income tax in 2017 if their net taxable income in 2016 was no greater than €27,559. The remaining figures have been rounded.
|Number of Parts||Nil Imposition|
The following table shows the same analysis for a single person, who would pay no income tax living on their own with an income no greater than €14,770. The table also shows their nil imposition threshold with dependants in the household.
|Number of Parts||Nil Imposition|
For those above these thresholds who will pay income tax, you need to refer to an article in our Newsletter French Income Tax Payable in 2017, which gives a summary of the actual tax payable at different levels of net income for a single person and a married couple/civil partners with no dependants.
You can also do your own calculation, as follows:
For a couple taxed jointly with a taxable income between €19,420 and €53,636 the formula for the calculation in 2017 is: Income x 0.14 - €2,718,80.
For a couple taxed jointly with two children and a taxable income between €38,840 and €74,446 the formula for the calculation is: Income x 0.14 - €5,437,60.
For a single person with a taxable income between €9,710 and €26,818 the formula is: Income x 0.14 - €1,359,40.
If you have a serious disability or you are over 65 years of age, then your tax position is slightly more generous.
In the case of a married couple, where one of the spouses is under 65 years of age, but the other at least 65 years, then the couple are treated for tax purposes as though they were both 65+. The same principle applies where one of the spouses has a serious disability.
You can read more on both these concessions in our section on Income Tax Allowances.
As well as your liability to income tax you also need to consider your liability to the income tax by another name, that of the social charges, which you can read about at Social Charges.
In addition to the basic rates of income tax those fortunate few with a taxable income of upwards of €250,000 pa are liable for a special tax called contribution exceptionnelle sur les hauts revenus.
This tax is at the rate of 3% on income up to €500,000, and at the rate of 4% on income above €500,000.
Married couples and those in a civil partnership are exempt up to €500,000, when they then become liable at the rate of 3% to €1m, and 4% above this figure.
The tax is imposed on net income, after determination of the tax liability under the standard scale rates.
Next: French Tax Allowances
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