4.3.1. Tax Forms
Pershaps not surprisingly the paperwork associated with the submission of a tax return in France is rather complicated.
In practice, most people only need to fill out a handful of the boxes on the forms, but there are numerous boxes and different forms to use for different types of income. Trying to establish which ones to complete is by no means self-evident.
There is no single tax return in the same way as is the case in the UK.
There is the main Form 2042 but also various supplementary forms for different types of income and you will find that the same income will often be recorded on the main summary tax form and on the supplementary forms.
The forms for personal income tax are:
Form 2042 – Declaration des Revenus
This is the main form, which has several annexes, as we describe below.
If you have previously made a tax declaration much of it will have been pre-completed (préremplie) by the tax authority. It includes on it all family and other personal information. The information on family circumstances will determine how you are taxed. Accordingly, if your family circumstances have changed (child, death, divorce, marriage) these changes need to be recorded on this form.
Form 2042C – Revenu complémentaire
This is a rather complicated and diverse form that is mainly for taxpayers who have received dividend or similar investment income, and for those who have realised capital gains on share sales.
In addition, it is for those who have made tax-exempt real estate investments eg, Pinel, Duflot, Scellier, Malraux. It is also used to record capital gains on the sale of your main home (although exempt from income tax).
If you receive a foreign salary or pension that is exempt from taxation in France, but used to obtain the tax rate on other income, then it also needs to be entered here.
Form 2042C Pro – Revenu Complementaire – Professions Non-Salariées.
This for is for those who run a business, taxed either as BIC (Bénéfices Industriels et Commerciaux) or BNC (Bénéfice Non Commercial), and those who run an agricultural business.
In addition, those who have income from furnished lettings (including a chambre d'hote), even if not business registered, are required to complete this form (classed as BIC income).
It also includes micro-entrepreneurs.
Those business owners who have adopted the régime réel are also obliged to report separately, and earlier, their results by the use of Form 2031 for BIC earnings and Form 2035 for BNC earnings.
Form 2042 RICS - Réductions d'impôt /Crédits d'impôt
The form is used if you have an entitlement to a reduction in tax, or a tax credit.
This might apply if you have made a charitable donation, children at school or in further or higher education, child-care, home-help, energy conservation, and elderly adaptations in the home.
Needless to say, there are various conditions that apply to these entitlements.
Form 2044 - Déclaration des revenus fonciers
The form is used for the declaration of income from unfurnished accommodation, but only if you have adopted the régime réel form of taxation.
The income includes that from investments in property funds, such as SPCI and FPI.
Form 2047 - Revenus encaissés à l'étranger
Used to declare income that was banked abroad by a resident of France. It includes all types of income, even though it may not be taxable in France. Strictly speaking, there is also a requirement to declare on this form income originating abroad, even if banked directly in France, but unless the income is substantial the tax offices seem less concerned that it is declared on the form, eg pension income.
Form 3916 - Déclaration par un résident d'un compte ouvert hors de France
If you hold bank accounts outside of France you are obliged to declare them, even though they may be inactive.
Form 2042 NR - Départ à l'étranger ou retour en France
You must submit this form if you left France in 2020 and received, after your departure, income from French sources.
Similarly, you need to submit it if you relocated to France in 2020 and received, before your arrived, income from French sources.
Capital gains on the sale of real estate are declared at the time of sale in the notaires office, although you also need to report the gain on your income tax return, as well as capital gains on shares and other property. Capital gains on real estate are declared on Form 2048 and those on other capital gains on Form 2042.
Some steps are being made to make the process easier, notably by the introduction of a simplified form for those whose who have a single source of income, e.g. salary or pension.
In addition, the authorities send out pre-completed returns (déclarations préremplies) to the majority of taxpayers resident in France.
Although it sounds rather scary the information on the forms is derived from the routine data supplied by your bank, French employer or other French state body, e.g. pensions authority, unemployment agency.
Clearly, these forms will not apply to most retired expats, who are only likely to be be in receipt of pension and other earnings from their home country which cannot be included. Neither do they apply to those who run a business.
However, if you are salaried in France, or you are in receipt of French social security benefits, then it will be relevant to you.
If you have not completed a French tax return you would be well advised to seek assistance from an accountant first time around, particularly if you have a diverse range of earnings from France and abroad.
We regularly hear of expatriates in France who have been poorly advised by their accountant, many of whom simply to do not understand international taxation, so we would strongly advise you do some due diligence on the accountant before you engage them.
If you seek advice or assistance with the completion of your income tax return you can contact our English language speaking tax partners Cabinet Budiz who offer tax and accounting services at competitive rates.
You also need to be careful about guides that are published each year which provide advice on completion of the forms. The tax forms are never the same from one year to the next, and the guides are normally published before the new forms are released! In one popular English language guide we have read, the guidance is based on the forms from the previous year and many elements of the forms are not adequately explained for self-completion. No guide can adequately explain how you need to complete an income tax declaration.
If your income is modest, or circumstances straightforward, and you can speak a little French, a cheaper alternative would be for you to visit your local tax office and ask them for their assistance to help you fill out the forms.
If you are proposing to do so prepare a spreadsheet statement of income before you go, and have available with you supporting documentation.
It is important to distinguish the origin of your income as different types of income are taxed on a different basis, e.g. salary, pension, business, rent, shares, interest. You can find information on how different income is taxed on other pages in our tax guide.
Do, however, be a little careful, as even local tax officials do not always understand the rules, in particular those relating to exempt pension income (see below).
If you have a good relationship with your local French bank you may well find that they will also be prepared to assist you in the completion of your tax return (probably without having to pay a fee), although this service is less available than was the case in the past.
Once you have completed the forms in your first year your declaration will always be available on-line so you can use the declaration as a guide to completion of the declaration the following year, although be careful of changes made in the design of the forms.
A single tax return is required for the whole fiscal household (foyer fiscal). It is possible for adults in the household to make their own tax declaration, an option we considered in the section Your Fiscal Household.
If you got married, or entered a French civil partnership, in the year you have the choice of submitting either a single joint tax declaration, or two declarations, one for each of you.
If you separated, divorced or ended a civil partnership in the year, then you each need to complete your own tax declaration in relation to your own income.
If your spouse or civil partner dies in the year you have two tax declarations to complete, but your tax liability will normally be assessed on the basis of your circumstances on 1st January in the year, so that you benefit from the higher allowance for a couple.
In relation to income from abroad you will need to convert the sums into their euro equivalent. Strictly speaking, you should use rate of exchange at the time the you received the income, using the currency exchange note you receive from your bank or broker. Nevertheless, if you receive regular amounts over the year, simply take the average of the rate at the beginning of the year and the rate at the end of the year, as this will be accepted by your tax office. Interest earned should be declared gross, and if you have already paid income tax on it in the UK you need to reclaim it from HM Revenues.
If you are in receipt of a government service pension you need to ensure that you declare it in a manner that enables you to obtain the tax credit, as the pension is taxed in the UK. Such income is 'Pension/revenus de source étrangère, ouvrant droit à un crédit d’impôt égal à l’impôt français'. If it is not paid directly into your French bank account, but into your UK account, then it will also needs to be declared on Form 2047 as 'revenus encaissés à l'étranger ' in the section 'ouvrant droit à un crédit d’impôt égal à l’impôt'.
If you are exempt from the payment of health contributions into the French health system because you have an 'E/S' form (notably S1) you should ensure this information is stated on the tax declaration (there is a box for you to add information relating to your circumstances) as you will then not be liable for the social charges CSG/CRDS on your pension income. The 'E/S' form status of expats is often not picked up by the local French tax offices, resulting in overpayment of these charges.
Generally speaking, if you have an interest earning French bank account the interest earned will normally be already on the tax return you receive, as the information is sent to the tax authority by your bank. If it is not included you are required to submit with your tax declaration the annual notice of interest earned that all French banks are required to supply their customers at the beginning of each year. The notice is called imprimé fiscal unique (IFU).
If you earn rental income from the UK then it will be taxed in the UK, but you need to declare it on your French tax return (F2047) for which you will be granted a tax credit, equivalent to the tax payable in France.
In relation to rental income from France, the manner in which you declare the income will depend on whether the property is furnished or unfurnished, and whether you have opted for a standard fixed cost allowance or the use of real costs and income (régime réel).
The same will apply to business income from France, which will need to be declared on the basis of the nature of the activity and the tax status you have adopted, provided you have not opted for company taxation, which is declared separately from personal income tax. Micro-entrepreneurs need to ensure they do not get taxed twice on their income if you have elected for the 'micro-fiscal'. If you have elected to be taxed during the year on this basis you need to declare under 'Micro-entrepreneur ayant opte pour le versement de liberatoire de l'impot'. Otherwise it is declared as 'regime micro-entreprise'. Both on F2042C.
If you are seeking an income tax relief for eligible works carried out to your property you will need to ensure you keep the invoices available although it is not necessary to include them with the declaration. The tax form lists those items for which you can make a claim.
If you have bank accounts abroad you are also formally obliged to declare the details (although not the amounts) of these bank accounts. There are substantial fines against those holding an undeclared bank accounts. While you may think you can keep such an account from the prying eyes of the French tax authorities the level of co-operation between tax authorities across the world is increasing at a fast pace. Many local offices consider that provided you have declared the accounts at least once, there is no need do so again, unless they have changed.
If you obtained capital gains on property in the year, whilst you will have already paid tax on the gain at the time of the sale, this income must also be recorded on the tax return F2048. Other capital gains must also be recorded, eg shares. Although you will not pay income tax on the capital gain, it will be reflected in your revenu fiscal de référence, which is used to determine access to certain benefits and tax exemptions etc.
You are also obliged to declare life insurance policies held abroad.
We published an article in our Newsletter about the 2021 tax return, covering some elements in this guide, but also some particularities for 2021, which you can find at French Tax Return 2021.
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