4. Taxation of Property Rental Income in France

  1. Non-Residents
  2. Summary of Tax Regimes
  3. Furnished Lettings
  4. Unfurnished Lettings
  5. Lodgings

4.1. French Rental Income - Non-Residents

i. Income Tax

You are liable to French income tax on French rental earnings, whether or not you are resident in France.

This follows the general principle that applies between most countries, that rental income is liable to tax in the country where the property is situated.

Accordingly, even though you may be non-resident you will need to submit a tax return to the French authorities of your rental income in France (together with any other French sourced income).

In addition, you will need to declare the income to the tax authority in your own home country.

France has double taxation agreements with many countries, so in most cases you are unlikely to face being taxed twice on the same income.

UK residents benefit from a double taxation treaty, which grants partial relief against liability to tax in the UK. This means you need to declare the rental income to both the French and UK tax authorities.

Where your UK tax is greater than the tax payable in France the difference is paid in the UK. However, if the UK tax is less there is no repayment of the French tax in the UK.

In France, as from 2019 (2018 income) there is a basic rate of 30% of tax on the net rental income of non-residents.

If you are able to justify a lower rate based on your worldwide income, you need to indicate this option on the tax return and include your tax return and tax notice from your home country. If these are not available at the time you need to submit a letter sur l'honneur (strictly speaking EEA nationals only allowed this concession), pending receipt of the relevant paperwork.This information will need to be included on the tax return F2042C.

In addition, if you are liable to no more than €305 in income tax, it is not imposed.

ii. Social Charges

Non-residents are also liable for 17.2% (2018) social charges arising on net rental income from lettings.

Under European law imposition of the tax on non-residents remains a contentious legal issue.

Non-residents may well contest the imposition of social charges on their French sourced income and capital gains, but what implications does it have on their own domestic tax liability?

The good news is that as a general principle French tax regulations state that social charges should be considered part of the income tax system, stating:

"Pour l'application de ses conventions fiscales, la France considère que ces contributions sont assimilées à l'impôt sur le revenu."

That principle is in line with a decision of the Constitutional Council in 1990, which stated that the social charges were "impositions de toute nature."

However, this principle could only be adopted where there was otherwise no express provision to the contrary in a double taxation treaty.

So the answer to the question depends on the terms of the tax treaty between your home country and France.

In the case of the UK, Article 24 of the 2008 Double Tax Convention with France lists the French taxes that would be used to eliminate double taxation, to the specific exclusion of CSG (Contributions Sociales Généralisées) and CRDS (Contributions pour le Remboursement de la Dette Sociale).

As a result, the regulations state that :

"La convention fiscale du 19 juin 2008 liant la France et le Royaume-Uni écarte quant à elle expressément la possibilité d'imputer la CSG et la CRDS sur l'impôt prélevé au Royaume-Uni......."

Accordingly, non-residents from the UK are unable to offset the social charges they pay on their French rental income against liability to UK taxation.

In addition, there are some countries that contest the definition of social charges as income tax for the purposes of double taxation, which is particularly the case for the USA, where there is no specific mention of the social charges in the treaty.

There are changes in social charges for 2019, which you can read at Reform of Social Charges. We shall be updating this page in due course.

Next: Summary of Tax Regimes

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