For the latest in-depth analysis, subscribe to our news service at France Insider.
2. French Tax Top Tips
- Even though you may below the income threshold at which the tax becomes payable, if you are resident in France you are obliged to submit an income tax return. If you are not sent a tax return to complete, you need to obtain one.
- Even if you are non-resident, if you earn income in France you are required to make a French income tax declaration.
- If you have any doubts about your residency status, and you do not wish to become resident in France, you can minimise the risk by continuing to own a property in your home country, and spend at least 183 days a year there.
- It would be a mistake to assume that France is necessarily a high tax country. Those who retire to France are likely to be pleasantly surprised at just how little in taxes they will pay.
- If you are relocating permanently to France and you are a UK national in receipt of a private sector pension, annuity, interest or royalties from the UK, then you can apply to HM Revenue & Customs to obtain relief at source from UK taxation.
- Interest on foreign bank accounts within the EEA and certain other countries is now reported to the French tax authorities, and France, like many other in the world, is determined to crack down on bank secrecy.
- Be careful about using professional advisors who are not business registered in France, due to the risk that you will have difficulties of recourse against them in the event of their negligence or professional misconduct. Indeed, beware of charlatans, of which there are many!
- Despite the fearsome reputation of the French tax authorities you would do well to get to know your local tax office and use them as a free source of assistance and advice. Remember, however, that they can also get it wrong, sometimes to your advantage, but not always.
- Care in needed over the application of social charges on income, as the local tax offices often wrongly apply this charge.
- Similar caution is needed over the rules on the taxation of savings and investment income.
- Undertake energy conservation works in your home and get a grant as well as access to an interest free loan.
- Place some of your savings in government regulated bank savings accounts to receive exemption from tax and social security contributions on the interest.
- If you have a large lump-sum to invest, consider taking out an assurance vie investment policy, particularly for inheritance planning, which has some important tax advantages.
- If you are on a low income get relief from the local property taxes although one will be abolished in 2023.
- Rent out unfurnished accommodation and get a tax break of 30% against rental income, or charge actual costs (including mortgage interest) against rental income.
- Alternatively, rent out classed furnished accommodation and get an allowance of 71%, or charge actual costs (including mortgage interest), against rental income.
- In addition to income tax there are important social security contributions and social charges that are payable by all residents, although State aged retired EU expatriates escape payment of these charges on their pensions.
- Make gifts of cash and property to your family as part of an inheritance planning strategy, although you need to be young enough for them to benefit.
- In particular, consider the gift of the reversionary interest in a property you own, while you continue to enjoy a life interest.
Next: Liability to Income Tax
For the latest in-depth analysis, and access to a Helpline, subscribe to our news service at France Insider.
The Guides to France are published for general information only.
Please visit our Disclaimer for full details.