6.1. Payment Methods
There are various methods to pay your income tax, which will be detailed on your income tax notice - on-line single payment, by direct debit, or by cheque.
From 2019 France introduces 'deduction at source', (prélèvement à la source) and the implications of this change on expatriates is set out in our Newsletter article at Taxation of Income in 2019. We will update this page in due course.
In 2018 you can either pay in one lump sum, by monthly direct debit, or in three instalments.
i. Single Payment
When your tax notice is sent out in October/November (earlier in some cases) of each year you will be required to pay your tax bill by the date stated on the notice.
However, in subsequent years, if you estimate your tax bill is likely to be higher than €345 you can elect to pay either by monthly direct debit or in three instalments.
Only if the bill is under €345 is the single payment method obligatory.
ii. Payment by Instalments
The instalment method is called prélèvement à l'échéance or paiement par tiers provisionnel.
If you have previously paid income tax in France this is the default method for collection used by the tax authorities.
You are sent two provisional payment demands in February and May, prior to your tax liability for the year being determined and a final balancing payment being made in October/November.
As the name implies, the level of the provisional payments are equivalent to two-thirds of the income tax you paid in the previous year.
So if the previous year you paid €1500 in income tax, the following year you will receive two provisional payment notices of €500, with the final payment only made when you receive your tax demand.
In the event that your tax liability turns out to be lower than the sum you have already paid you will be given a refund of any over payment.
If you assess that your liability to tax in the tax year will be higher or lower than the previous year it is possible to alter the amount of the provisional payments you make each year, either up or down.
Some care is needed with this approach as you only have a margin of error of 10%, or face a penalty of 10% on the amount of the underpaid tax.
If you consider your tax bill will be lower than €345 you can also request that you should not be subject to provisional payment in the current year.
iii. Payment by Direct Debit
Instead of the instalment method you can also pay by monthly direct debit (prélèvement mensuel) over 10 months between January and October each year. The final balancing payment is made at the end of the year following receipt of your tax demand.
The amount of the direct debit each month is one-tenth of the tax you paid the previous year.
Following the ten direct debit payments if you have further tax to pay these must be paid in November and December.
If you have overpaid tax by the tenth payment you will receive a tax refund after your tax notice has been sent out.
You can elect to pay by direct debit at any point during the year, but the start date from which payments by direct debit will be accepted will depend on when you made your application.
For applications made after 1st July the direct debit will not commence until January the following year.
As with payment by instalment you can reduce (or even terminate) the direct debit if you consider your tax bill will be lower in the current year, although you must do so by 30th June each year. You have a margin of error of 20% or face a 10% penalty.
Making the Application
It is possible to make an application for payment by instalments or direct debit on-line, or go along to your local tax office or trésor public for advice and assistance.
6.2. Payment Difficulties
If you find yourself in financial difficulty in paying your tax bill it is possible to negotiate a delay in payment with the tax office.
Likewise, if you have incurred a penalty charge due to non-payment you can also seek relief from the penalty.
You will need to make application to the local tax office with proof of your current circumstances.
If your current income has declined by at least 30% over the proceeding three months you are entitled, as of right, to more time to make the payment.You need to make application.
Less than 30% then the decision is discretionary, and application needs to be made to the local tax office.
Where your circumstances have changed dramatically for the worse since the previous year, then you can also ask for an exoneration from the payment of provisional sums.
If you do not pay your tax bill by the due dates then your liability is increased by 10%, as well as an interest charge of 0.40% per month (4.80% per year) on the outstanding sum.
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