If you own a property in France the local property rates payable comprises two different taxes, called the taxe d’habitation and the taxe foncière. There is also a waste collection tax.
Local authorities also charge rates on business premises, called the Contribution Economique Territoriale (CET). Even if you run the business from your from home you will still be liable for these rates, although there are certain exemptions and other concessions. Our guide to French business rates can be found at Contribution Economique Territoriale (CET).
9.1. Taxe d’Habitation - French Residence Tax
9.1.1. Tax Liability
Since Jan 2018 this tax has been in the process being abolished for most households, on a phased basis, and will be abolished completely in 2023 for main residences, as we describe below.
The tax is an annual residence tax imposed on the occupier of a property in which they were resident on 1st January of each year.
If the property is your second home, even though you may not physically be resident on 1st January, the tax is still payable, provided the property is capable of occupation.
Thus, the law assumes that if you have the right of occupation of the property and it is furnished and habitable the tax is payable. Liability to the tax has nothing to do with the amount of time you occupy the property.
Nevertheless, where you only use the property for a few weeks a year, and it is otherwise let out as a furnished letting, then you can be exempted from the tax, although you would then become liable for business rates.
The law and practice on this issue is a little complex because landlords who let on a seasonable basis could potentially be liable for both the taxe d'habitation and business rates (cotisation foncière des entreprises).
To avoid this double imposition, Article 1407 of the tax code states: ne sont pas imposables à la taxe [d’habitation] : 1° Les locaux passibles de la cotisation foncière des entreprises lorsqu'ils ne font pas partie de l'habitation personnelle des contribuables.
In addition, Article 1459 provides for an exemption from business rates where the property constitutes the principal residence of the owner.
Accordingly, a property owner who lets out the property uniquely for seasonal tourist accommodation pays only business rates, even if the property is not let throughout the year.
Conversely, the owner of a seasonal letting property who uses the property between letting periods is required to pay only the taxe d'habitation.
Despite this general rule, local councils do have the power to impose both taxes, which some councils do, although with the abolition of the taxe d'habitation this will cease.
If you let a property on an annual basis the tax is payable by the tenant. That is because, although tenants of holiday lettings do not pay the tax, any tenant occupying the property on 1st Jan on a permanent or extended basis is liable for the tax. The rule applies whether the property is furnished or unfurnished.
Landlords of French property can read more detailed information about local property taxes in our guide to Taxation of Rental Property in France.
9.1.2. Calculation of the Tax
The determination of the tax rate is made by the local council (commune), but the calculation and collection of the tax is carried out by the central government tax authority.
The formula for the calculation is ponderously complex but, broadly speaking, it is based on the notional rent that the property might be expected to achieve in the open market, having regard to the condition, size and location of the property. It is called the valeur locative cadastrale of the property.
Each year the government will adjust the local value upwards, called the coefficient de revalorisation.
Nevertheless, the local rental value may not bear any relation to any actual rent that may be being paid on the property and, indeed, the notional rental values have not been updated since 1970, so are now desperately out of date.
However, this is gradually changing, as each year several tens of thousands of properties are been revalued, sometimes resulting in very substantial tax increase for the owner.
The valeur locative brute of the property should be stated on the rear of the tax demand, and if you wish to query it you will need to visit your local Centre des Impôts Fonciers, whose contact details are also given on the tax notice.
A formula is then applied to this notional rent based on the income the authorities need to raise to give a percentage rate of tax, the taux d'imposition
Accordingly, the amount of tax will vary depending on the decisions of each commune and the size and condition of each property.
As might be expected the level of the tax is generally higher in towns than in rural areas. The amount payable varies so much between local tax authorities and different types of property that it would be meaningless to state an average.
Where you have children, then relief of 10% to 15% for each dependant is granted, an allowance that is not means tested. This concession only applies if the property is your principal residence.
Local authorities also have discretion to grant a rebate up to 15% to those on modest incomes, provided the applicant meets the income limits above, and that the rateable value of their home is not greater than 130% of the average for the area. Once again, this only applies if the property is your principal residence.
In addition, the rate of tax varies marginally according to whether the property is the main home or a second home, for in the case of the latter the rate for management costs is higher (3% rather than 1%).
Up until 2020, homes with a high rateable value also have an additional levy applied against them called prélèvements pour base élevée. However, since 2021 this additional charge has been abolished.
Since 2014, holiday homes in areas of housing shortage with a population greater than 50,000 are potentially liable to a surcharge on their taxe d'habitation, a measure that has been further strengthened in 2022.
The change grants local councils the discretion to apply a surcharge on such homes by between 5% to 60%. Many councils do not apply it, may other councils apply a 20% rate, but some have adopted the maximum rate of 60%.
The measure introduced by the government applies in around 28 urban agglomerations in France, known as zones tendues, where a tax on vacant homes is already in force.
These areas are: Ajaccio, Annecy, Arles, Bastia, Bayonne, Beauvais, Bordeaux, Draguignan, Fréjus, Genève–Annemasse, Grenoble, La Rochelle, La Teste-de-Buch–Arcachon, Lille, Lyon, Marseille–Aix-en-Provence, Meaux, Menton–Monaco, Montpellier, Nantes, Nice, Paris, Saint-Nazaire, Sète, Strasbourg, Thonon-les-Bains, Toulon, and Toulouse.
From 1st Jan 2023, around 4,000 other councils in classified areas of housing stress (zones tendues), with a population below 50,000, mainly coastal and mountain areas, will be entitled to impose the surtax. We published an article on this change at Taxe d’Habitation on Second Homes.
Those who hold a second home for business or professional reasons are exempt, as are landlords who ordinarily let out a property on an annual basis, as the principal residence of the tenant, as it is not then a second home.
In an increasing number of communes the council imposes another supplementary element to the tax called GEMAPI - Gestion des milieux aquatiques et prévention des inondations - which, as it states, is levied in those areas where the council considers it necessary to undertake flood control measures. The tax is generally controlled by the local inter-communal council. The tax cannot be higher than €40 per household.
If you move into the property mid-way through the year, then the former occupier is legally responsible for the tax for the whole of that year, subject to any private agreement that may be made.
If you carry out major works to your property you are required to advise the tax authority (Form IL 6704), who will then undertake a revaluation of the property. The revaluation will be necessary if the works increase by at least 10% the rateable value of the property.
9.1.3. Exempted Properties
By definition, the tax is not payable if the property is unoccupied.
However, the definition of 'occupation' used by the tax authority includes those properties capable of occupation. Ordinarily, this would imply that there would need to be furniture in the property, and that utility services were also available. So properties in the course of renovation that you do not occupy, and which are not furnished, would be exempt from tax.
In addition, under Article L227 of the Livre des procédures fiscales, it is possible to obtain exemption if the property is otherwise incapable of occupation due to poor condition stating: Des remises totales ou partielles d'impôts directs régulièrement établis lorsque le contribuable est dans l'impossibilité de payer par suite de gêne ou d'indigence.
The term gene also provides for an application to be made following an exceptional change in circumstances - loss of employment, death of a relative, divorce, accident etc.
In order to obtain such an exemption the tax authorities normally require that you obtain a statement from the local council confirming the status of the property, although it is also possible to make direct application, providing other suitable evidence.
In certain towns and cities with a population over 50,000 the taxe sur les logements vacants (TLV) is payable on a property that has been empty for at least a year from the date of imposition of the tax on 1st January.
Other local authorities also have the discretionary power to levy a similar tax, although in their case the property must empty for five consecutive years, commencing 1st January.
The level of the tax is calculated at the rate of 12.5% of the rateable value of the property, which increases to 25% from the second year.
However, the tax is not applied where the property is involuntarily vacant. These cases are:
- Where the property is considered uninhabitable and the costs of the works exceed by 25% the value of the property.
- If the property is for sale (and empty) and has not been sold despite the best efforts of the owner.
- If you are landlord of a property you have tried without success to let you will not be obliged to pay the tax. You will need to demonstrate evidence of your efforts to try and let the property, and to have done so at a local market rent.
The rule means that, in the above circumstances, you can claim exemption from the taxe d'habitation.
Local authorities have discretion to exempt chambres d'hôtes and classified gîtes located in rural development areas (Zones de Revitalisation Rurale (ZRR) from the tax, but only for that part let out for occupation by guests.
9.1.3. Exempted Persons
As we stated above, this tax is facing extinction, although probably not for everyone.
The process started in 2018 and is be undertaken on a phased basis over three years, with complete abolition for everyone, apart from holiday homes, in 2023.
The first-year reduction of 30% occurred in 2018, to those with a maximum income threshold:
- Single persons whose net taxable income did not exceed €27K;
- Couples whose taxable income was no higher than €43K;
- In both cases increased by €6K for each additional dependant in the household. Those whose incomes marginally exceed these thresholds also benefited from a smaller reduction.
The income levels to obtain exemption have since been increased each year and in 2022 around 80% of the population are completely exempt.
In 2022, complete exemption applies to households whose net taxable income (revenu fiscal de référence) in 2021 was no greater than €28,150 for a single person, which is increased by €8,340 for each of the first two half 'shares' (quodient) of the household and €6,255 for subsequent half shares.
In other words, a married couple would not pay the tax this year if their taxable income in 2021 was no greater than €44,830. If you are married with 2 dependent children, you will not pay the tax this year if your 2021 taxable income did not exceed €57,340. If you live alone with 1 dependent child, you will also not pay any if your taxable income last year did not exceed €44,830.
Where the property is rented on an annual basis, it is the tenant who is liable for the tax, and it is their income that is used in the tax assessment.
Your revenu fiscal de référence 2021 will be given on your tax notice that you will receive in July or August.
In order to reduce the impact of this cut-off point, those whose income is slightly higher than the threshold will obtain a partial reduction in the tax. If your taxable income is between €28,150 and €28,192 for the first share of the family quodient (plus €8,861 for the next two first half shares and €6,255 for each additional half share), you will be entitled to a partial exemption in the tax, which varies according to the level of your income.
The formula for calculation of the reduction is complex, but, for example, if you are married and your 2021 income is €46,000, you will benefit from an exemption of 82.5% and you will only pay 17.5%.
If your 2021 (revenu fiscal de référence) exceeds the above limits, you will only be entitled to the 65% exemption, leaving you liable at the rate of 35%.
The rule applies only to those who are also exempt from the wealth tax.
These reductions are before any increase in rates agreed by the local councils, so in most cases the actual percentage reduction is likely to be less.
Second homes are excluded. So those with a holiday home in France remain liable for the tax. If the second home is tenanted on an annual basis the tenant is liable, depending on their income, with complete exemption from 2023.
If you remain liable for the tax in 2022, but your income in 2021 is lower than in 2020, provided you pay by monthly direct debit you can adjust the sum you pay, by going to your account in impots.gouv.fr and change the monthly sum. Go to 'Payer' and then 'Modifier mes prélèvements, moduler mes mensualités'.
You can read more about the phased abolition of this tax in our page Taxe d'Habitation 2019
The exemption is also conditional upon you not living with someone (eg son/daughter) who has an income above the eligible threshold.
If you are buying a property the tax payable may be shown on the property particulars. If not, ask the seller or agent for a copy of the most recent tax demand, called avis d’imposition de taxe d'habitation.
However, be careful how you interpret the net figure payable, as the gross amount may have been reduced due to the income or other circumstances of the current owner. You should check the rear of the tax notice to establish the gross figure before allègements, ie before any deduction.
If in doubt the Centre des Impôts Fonciers should be able to advise you of the gross amount, but the figure should be on the tax demand.
Normally, the above reductions and exemptions are granted automatically by the tax authority on the basis of information obtained from you annual income tax return. So you do not need to apply to receive entitlement.
If you have not received a reduction or an exemption to which you think you are entitled, then you need to make a réclamation to your local tax office.
Those in receipt of Revenu de Solidarité Active (RSA) also normally receive complete exoneration from the both the taxe d'habitation and la redevance audiovisuelle.
If you think you may be entitled to tax relief, which has not already been accorded to you by the tax authority, then you should visit your local Centre d’impôts and discuss your circumstances with them.
The tax demand is sent out in the third quarter of the year with a specified end date for payment, unless you elect to choose to pay on a monthly or annual basis by direct debit. You can also pay it via the internet, or by cheque.
It is well worth setting up a monthly direct debit with the tax office to spread the pain over the year. There is no additional tax charge.
The tax demand for the taxe foncière is sent out in September, whilst the demand for the taxe d'habitation in October.
The former is payable in October and the latter in November.
The dates for second home owners are normally offset by a month from those of principal home owners, although not in all cases.
It is well worth considering setting up a monthly payment (prélèvement mensuel). You can do so either on-line, or via the direct debit centre for your department.
i. On-Line - Setting up an account on the government tax website is easy and useful, although you cannot do so in your first tax year in France.
To do so you will need three elements:
- i. Numéro fiscal - A 13 figure number that you will find near the top of tax declaration form you will receive.
- ii. Numéro de déclarant en ligne - A 7 figure number that you will again find on the first page of your tax declaration.
- iii. Revenu fiscal de référence - This is found on the last page of your tax notice.
You will also need your bank account details.
When you have this information go to Mon Espace and set up an account, when you will need to choose a password and provide your e mail address. Once sorted, you then go to the relevant page for payments and set it up.
ii. Direct Debit Centre - If you are having difficulties in using the internet contact your Centre Prélèvement Service.
The direct debits will be paid in 10 monthly payments each year commencing January, although the January payment is collected in February, when you will be debited for two months
You will be advised of the direct debit dates.
Unless you cancel the direct debit it will apply for subsequent years.
iii. Tabac - You can also pay at an accredited 'tabac', but only up to €300 in cash or by bank card.
The list of accredited tabacs can be found at Paiement de proximité.
9.1.7. French TV Licence
If you also have a television then the TV licence has also been payable with the taxe d’habitation.
The licence fee is called the contribution à l’audiovisuel public but also known as la redevance audiovisuelle).
The annual cost of the licence was €138 (2021), which is subject to an annual index linked increase.
Since 2022, the licence fee has been abolished.
Next: Taxe Foncière in France
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