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 can be a nightmare!
There is no single tax return in the same way as is the case in the UK.
There are various supplementary forms for different types of income. The information on these supplementary forms needs to be consolidated on the main 'F2042' form.
The main forms for personal income tax are:
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 (called 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. 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 not infrequently hear of expatriates in France who have been poorly advised by their accountant, so we would strongly advise you do some due diligence on the accountant before you engage them.
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 (Centre d’impôts) and ask them for their assistance to help you fill out the forms.
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.
For paper based returns ensure the duplicate returns you will have received are also filled for your own records, which you can then use to complete your tax return yourself the following year!
If you are proposing to visit the tax office to make your declaration then prepare a 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.
In relation to income from abroad you will need to convert the sums into their euro equivalent, using either the official exchange rate as advised by the tax authority, or the rate of exchange at the time the you received the income. In the case of the latter the currency exchange note you receive from your bank or broker should be used. 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 that is taxed in the UK you will need to declare it on Form 2047 as revenus exonérés, information which should also be copied onto the main Form 2042.
If you are exempt from the payment of health contributions into the French health system because you have an 'E/S' form (notably S1), then you would be wise to ensure this information is stated on the Form 2047 (or accompanying letter) as you will then not be liable for the social charges CSG/CRDS on your pension. The 'E/S' form status of expats is often not picked up by the local French tax offices, resulting in overpayment of these charges.
You can read more on this issue at Social Charges on Foreign Income.
If you have an interest earning French bank account then 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). This process is increasingly being automated, so you may well find that your tax return is received with the relevant amounts already inserted on the return.
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.
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.
If you are seeking an income tax relief for eligible works carried out to your property you will need to enclose the invoice(s).
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.
If you obtained capital gains on property in the year, although you will have already paid tax on the gain at the time of the sale, this income must also be recorded on the income tax return, although you will not pay income tax on the gain. Other capital gains must also be recorded, eg shares.
You are also obliged to declare life insurance policies held abroad.
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, then 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.
If you would like to receive regular information on French taxes, buying French property and living in France, then why not register to receive free of charge each month our popular Newsletter.
Back: Tax Calendar