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French Taxation

French Income Tax Reduction 2016

Wednesday 06 January 2016

The government have increased the income tax rebate that is granted to households who are likely to face marginal imposition in 2016.

For those who are liable to only a small amount of income tax in France the tax authority operates a rebate (décote fiscal) of the amount ordinarily payable.

The purpose of this rebate is ensure that the transition into paying income tax is kept to a moderate and thereby manageable level.

The level of the rebate is generally revised each year in line with inflation, but this year the government have undertaken a more significant reform to increase the number who will benefit, and to a more generous level.

Broadly speaking, the rebate is one that is automatically granted to all households whose notional tax imposition in the year is within certain limits.

These limits are:

  • Single Person - €1,553
  • Couple - €2,570

This is a significant increase over 2015, when the limits were €1,1355 and €1,870 respectively.

These are levels of tax that apply before other tax reductions and tax credits to which the household may be entitled.

So if you are likely to pay up to either €1,553 or €2,570 income tax next year on your 2015 income you will be granted an automatic rebate.

The formula for the reduction is characteristically complex, being the difference between 75% of the tax limit threshold, and 75% of your notional tax charge.

The effect of the changes is a average reduction in income tax of €252 per household, although the amount varies by type of household and level of income.

Those with an income between €30K and €38K will be the main beneficiaries, gaining on average €343.

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