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French Income Tax and Social Charges Thresholds 2015

Tuesday 03 March 2015

The income thresholds that apply before you become liable for income tax in France in 2015, and the new rules that apply to social charges on pension income.

Income tax in France in structured around six income bands, with rates that apply to the fractional income within each band.

This year the government have revised the income thresholds that apply, by abolishing the lowest 5.5% rate band.

The tax bands and rates for 2015 (for 2014 income) are as follows:

Tax Band
Up to €9,690 0 %
€9,691 to €26,76414 %
€26,765 to €71,75430 %
€71,755 to €151,95641 %
From €151,95645 %

These figures do not mean that if your income is, say, €25,000, it will all be charged at the rate of 14%. The rates apply to each fractional slice of income for each 'part' of the household, using a method called the 'quotient familial'. An adult is normally one part, and a child half-part.

Example: Assume a household of two adults on a joint net taxable income of €30,000. In the first place their income is divided into two parts of €15,000. Each part is then be taxed on a fractional basis using the tax bands. The first €9,690 of each part is zero rated, and the remaining €5,310 of each part then charged at 14%. The tax payable by each adult is then multiplied by two to give the total tax payable. Clearly, there may be particular allowances available to the household that might also affect the actual amount payable.

Accordingly, the following table shows the taxable income threshold (after basic allowances) that applies before you pay income tax in France.

It shows, for example, that a couple with a taxable income below €26,277 would not pay income tax. A couple with two children would not be liable for tax if their joint taxable income was less than €35,967.

The figures take account of the fact that if your tax due is less than €61 no tax is collected as well as a discount that is applied when low levels of income tax are payable.

Number of Parts

Social Charges on Pension Income

The government have modified the method by which pension income is liable for the social charge Contribution Sociale Généralisée (CSG).

In the past, those who paid little or no income tax were liable for the lower rate of 3.8% CSG on their pension income, as opposed to the standard pension rate of 6.6%.

In either case the social charge called Contribution pour le remboursement de la dette sociale (CRDS) has also been payable at the rate of 0.5%. The Cotisation de solidarité pour l’autonomie (CASA) is charged at 0.3%. This gives a total in social charges of either 4.3% or 7.4%, depending on your income.

However, as the rate payable was determined by the amount of tax paid, this meant that several hundred thousand households benefited from the reduced rate of social charges simply by virtue of tax credits to which they may have been entitled (eg, domestic help, investment property), despite the fact that they would otherwise be obliged to pay at the standard rate.

Accordingly, to end this advantage entitlement to the lower rate will now be calculated on income prior to the deduction of the tax credits, using the revenu fiscal de référence as the basis for the assessment, not the amount of income tax paid.

This means that a single person would be entirely exempt from social charges on their pension income in 2015 if their revenu fiscal de référence in 2013 was less than €10,633. For a couple the threshold is €16,311.

The reduced rate of 3.8% (+0.5% CRDS) will apply where the revenu fiscal de référence in 2013 for a single person was between €10,633 and €13,900, or between €16, 311 and €21,322 for a couple. Higher allowances apply if there are dependents in the household.

Above these amounts the pension income will be taxed at the CSG rate of 6.6% (+0.5% CRDS).

Those who are covered for health in France by a S1 certificate of entitlement are unaffected by these changes. They remain exempt from social charges on their pension income, and government service pensions also remain exempt.

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