Your French Income Tax Return 2009
Friday 01 May 2009
With French income tax returns sent out to all households last month, we take you through the basic rules concerning income tax in France.
If you are resident in France, you are liable to French income tax on the basis of your worldwide income.
Second home owners who earn rental income in France are liable to French income tax and thereby obliged to complete a French income tax return.
Cross border workers who have a family home in France, but who work in the UK, are normally liable for income tax and social security contributions in the UK.
You need to declare the income of everyone in your household, although there are particular rules concerning children over 18 years of age and unmarried couples. Students and apprentices do get substantial relief on their income tax liability.
Even though you may be taxed on some of your income in the UK or elsewhere, if you are resident in France, you need to declare all of your worldwide income on your French tax return. This is done to establish the rate you will pay on any income earned in France.
Those with pensions from the UK are taxed in France, although 'government service pensions' are always taxed in the UK, but need to be declared on the French tax return.
Accordingly, your French tax return is obligatory, even though you may not actually pay any French income tax.
This year, your return needs to be submitted by 29th May, although if you are non-resident from Europe or the USA you have until 30th June.
The timescales for submission of the return are different for those who run a limited company in France, although if you operate a business as a ‘micro-entreprise’, your business earnings should be submitted with your personal income tax return.
There is no single tax return to complete, as there are different forms for various types of income, all of which is largely consolidated onto a Form 2042.
Whilst the process may be a little bureaucratic and complicated, in practice you are likely to pay little or no income tax in France. A couple on an early retirement pension would need a net income of around €18,000 a year before they paid any tax at all.
This is because of the comparatively low rates of French income tax, and the tax allowances that are also available. Of particular interest are the tax credits for home energy conservation.
However, whilst you may pay little or no income tax, you will be liable for payment of the social charges CSG/CRDS/PS, although certain pension income is exempt – those on ‘E’ forms, and early retirees on government service pensions. Even though your pension income may be exempt, you will pay the charges on investment and rental income.
You will receive a demand for the payment of these social charges in November, so do not think that it is all over when you have received your income tax bill in or around September! Business owners pay the charges throughout the year, although they will also pay in November on their other earnings eg early retirement pension, investment or rental income.
If you need advice on completion of your tax return, or you seek other tax advice, you can visit www.pkfguernsey.com, or send your query direct to Virginie Deflassieux at french.tax@pkfguernsey.com. Virginie comments: 'Given the approaching deadline, and time pressures during the French tax season, advice prior to the deadline cannot be guaranteed. It is, nevertheless, sometimes possible to obtain a extension from the French tax office'.
You can read more in our comprehensive guide to French Income Tax.
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