If you need to provide financial support to a member of your family it may be tax deductible, irrespective of their place of residence.
The income tax system in France grants a deductible allowance to parents who provide direct financial or equivalent support to their adult children, or their own parents.
The name given to such support is a pension alimentaire, which may be provided either in cash or kind.
In the case of children who live with you who are aged under 21, or aged less than 25 years but pursuing their education, you can either:
- Opt to attach them to your fiscal household (rattachement), which means they are part of your 'quotient familial'. or;
- Charge the support you provide to them against your liability to income tax (pension alimentaire).
Just which is more beneficial to you would depend on your tax and family situation, but the income tax benefit of having the child as part of your fiscal household cannot exceed €1,547 (2017 income). Any income they earned would form part of the household income, although there are generous allowances for students and apprentices.
In the case of the pension alimentaire the deduction is available even if the child does not live with you, and irrespective of their age, activity, marital status or place of residence.
The amount of the maximum deduction in 2018 (for 2017 income) varies according to the circumstances of your child.
- For child who is single the amount the deduction cannot exceed €5,795 per child.
- Where they have a child, and are single, divorced or widowed, the maximum deduction increases to €11,590,
- Where they are married or in a civil partnership the maximum deduction is €11,590, although only provided they are not supported by both sets of parents.
Were you to provide the maximum sum of €5,795 to one of your children, and your marginal rate of income tax was 14% (the first band), your tax saving would be €811 (€5,795 x 14%), which rises to €1,738 if your marginal rate was the second band of 30%.
Where the child does not live with you, you may be required to
demonstrate to the tax office the payments or other forms of support you
have given with them.
It does not matter that the child may not live in France; provided you can demonstrate you are supporting them it is deductible.
Where they live with you the need for supporting documentation only
applies where the level of the support exceeds €3,445, a threshold that
is assumed to cover the normal costs of board and lodging.
However, it is only deductible on the understanding that such support is needed by your child.
Just what that means is not always clear, but if your circumstances were to be examined by the tax authority it can be safely assumed that if your child lives away from home and their income is below the French minimum wage (currently €17,760pa) it would be accepted.
Even if it does exceed this sum, if they have a family to support it is likely it will be accepted, within reasonable limits.
The pension alimentaire you declare will also need to be declared by your child if they are resident in France and similar rules apply in other countries.The same basic rules apply to support granted to parents, eg, a parent in a retirement home. However, where a parent over 75 years is living with you and you seek a tax reduction, it is conditional on their maximum income being no greater than €9,638.
Similarly, there are rules that govern the deduction of alimony payments made to a former spouse.