Taxes

Personal taxation:

People resident in France for income tax purposes must file an annual income declaration, either online or by completing a paper copy of the form.

How is tax calculated?

Tax is calculated on the basis of the combined incomes of the household. Income to be declared may come from various sources (wages, salaries and allowances,  pension annuities, property income, etc.).

For further details, please visit the impots.gouv.fr and service-public.fr website.

A tax household is defined as the taxpayer, their spouse, and dependent children. The household’s total income is divided by the number of household units, as follows:

  • One unit for each adult.
  • One half-unit for each of the first two children.
  • One unit for each child thereafter.

The effective tax rate on total household income is thereby determined on the basis of the size of the household.

Progressive tax rates in 2017

2016 income bracket (by allowance unit) Tax rates in 2017
Income up to €9,710 inclusive 0%
From €9,711 to €26,818 inclusive14%
From €26,819 to €71,898 inclusive 30%
From €71,898 to €152,260 inclusive 41%
More than €152,261 45%

The Expatriate Scheme

A special exemption scheme for expatriates exists to help attract company directors and employees to France by providing partial income tax exemption and diminishing their liability for the ‘wealth tax’ (impôt de solidarité sur la fortune – ISF).

Conditions

The scheme is open to employees and company directors, regardless of nationality, coming to work full-time in France on condition that:

  •  They have not been a tax resident in France during the five years prior to the date they commenced their post.
  •  They are resident in France for tax purposes.

Advantages

The expatriate exemption scheme applies for up to eight years starting in the first full year after expatriates assume their new position.

For more information, click here

VAT 

Goods move freely within the European Union : Customs duty is only charged once when goods enter French territory. Goods entering France to be redispatched to another EU Member State are exempt from customs duty and VAT (as VAT is paid in the country where the goods are delivered to end users).

Imports and exports of goods between EU Member States and other countries require a customs declaration, which must be filed using the Single Administrative Document (SAD). The main items on the SAD are the name of the company, the type of declaration (depending on the source of the merchandise), and the type, origin and value of the goods, net of tax.

Tax simulator

An income tax simulator can be consulted online to determine whether or not you are a tax resident, and to estimate the amount of tax due.

Helpful tip: Income tax withholding (‘pay as you earn’) is due to begin on January 1, 2018. For more details, please visit the economie.gouv.fr website.