Guide to French Income Tax

5. Calculating Your French Income Tax Liability

  1. Composition of Your Household
  2. French Income Tax Rates
  3. French Tax Allowances
  4. French Tax Credits

5.4. French Tax Credits

5.4.1 Definitions

The standard tax breaks in France take the form of either tax relief (réduction d’impôt), or a tax credit (crédit d’impôt).

A réduction d’impôt is an allowance against the amount of income tax payable, whilst a crédit d’impôt is a payment to you by the tax authority.

A tax credit will, therefore, be paid to you, even though you may pay little or no income tax in France.

The following is a not a comprehensive list, but those likely to be of greatest interest to readers.

5.4.2. Home Energy Conservation

Since 2019 tax credits have been phased out in favour of a grant regime.

You can read more information at Home Energy Conservation in France.

5.4.3. Home Adaptations

An allowance of 25% against the cost of specific works to give greater mobility or safety to elderly or disabled persons in the home.

The allowance is called Crédit d’impôt pour certaines dépenses d’équipements de l’habitation principale en faveur de l’aide aux personnes.

You can read a full guide, including information about grants, at Home Adaptation Grants in France for Elderly and Disabled.

5.4.4. Child Care

An allowance of 50% on expenditure up to a maximum of €3,500 (2023) per child under 7 years of age towards the costs of child care outside of the home, called les frais de garde d’enfants. That equates to a maximum tax credit of €1,750.

Only those costs actually incurred by you are eligible, so if you receive assistance from your employer, or the social security system, the allowance is only available on costs net of this assistance.

No allowance is payable where the child is attending a maternity school.

We published an article about this tax credit in our September 2020 Newsletter, which you can read at Childcare for Employees and Business Owners. We shall update the article in 2024 for some minor changes that have take place.

5.4.5. Domestic Help

A tax allowance of 50% against the costs of assistance with domestic services at your home, called Crédit d’impôt accordé au titre de dépenses pour l’emploi d’un salarié à domicile.

Despite the name given to this tax concession, you are entitled to either employ someone direct or use an accredited home services organisation.

No condition of age, health, income or employment status is stipulated. It can also be in connection with your main residence, or a second home in France, but you must be tax resident.

The duties can include cleaning, gardening, driving, child care, health care, cooking etc. The person engaged cannot be a member of the household.

There are ceiling limits on any particular type of work. Gardening costs are only eligible up to a maximum of €5,000, whilst minor building work is only eligible up to €500 and computer assistance €3,000.

There is also a basic cost ceiling against which the tax credit will be granted of €15,000, in the first year if you use an employee, up to €12,000 in subsequent years. It is €12,000 if you use an external organisation.

The limit is increased to €20,000 in the case of those who have a serious incapacity.

Minor increases on the limit if dependants in the household, but the cost ceiling cannot be greater than €15,000.

Thus, a married couple with three children incur costs of €18,000 for a domestic employee. The basic tax credit is €12,000. There is an increase of €1,500 per child for the tax credit, giving a total of €4,500. The theoretical credit is therefore €16,500 (€12,000 + €4,500). However, the maximum amount of the costs eligible for the tax credit is €15,000. That grants a 50% tax credit equal to €7,500.

You can read more about the tax credit in a substantive review we published in French Tax Break for Domestic Help.

5.4.6. Property Restoration

Under the Loi Malraux, a tax reduction is available for the restoration of residential (and commercial) property located in designated conservation areas.

The amount of the reduction is either 22% or 30% of the costs of the works, depending on the conservation status of the area.

The maximum cost of the works is €400,000 over a period of 4 consecutive years.

As a condition of receiving the tax relief, the owner is obliged to rent the property unfurnished for a period of at least 9 years, to a tenant(s) who must occupy the property as their principal residence.

In a major court case in 2023 a non-resident was able to win a case for a tax reduction under Malraux, which you can read about at Non-Resident Tax Relief for Property Renovation.

Information on another more general scheme, called 'Denormandie', which offers a tax reduction against works carried out on an older property in designated regeneration areas can be seen at Investing in Older Housing in France.

5.4.7. Electric Vehicle Charging Station

A tax credit is available for the installation of a charging station for an electric vehicle, which you can read about at Grants for Electric Vehicles.

5.4.8. Investments in France

There are a variety of tax concessions (both tax reductions and tax credits) for those prepared to invest in businesses, woodland, tourism properties, certain property investment schemes, and in the overseas departments. You will need to discuss with your financial advisors.

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