Income Tax in France

Income Tax in France is an integral part of the French tax system. In French it is referred to as “impots sur le revenue. In France one is liable to pay income tax if he fulfills any or all of the following conditions:

• If he is a permanent resident
• If one possesses a residence permit
• If one resides in France for more than 183 consecutive days
• If the main source of income lies in France
• If the wealth of a person is accumulated in France.

Calculation and Payment of Income Tax in France

A resident of France must declare his income since the time of his arrival in France. Income tax is calculated based on the information one provides about his taxable income which is known as “la declaration des revenues”. Sometimes the declaration is done by the government on behalf of the employee after receiving information about the income of the employee from the employer.

When a resident begins to earn he becomes liable to pay income tax. The person receives the tax form automatically from the local tax office which he needs to fill up and send back. As soon as the person enrolls his name as an income tax payer the declaration is sent to him by the local tax office. If the person somehow misses his opportunity of income declaration, it is his own responsibility to file the income. In the present times online filing facility is also available. The taxable income of an individual is calculated after the deduction of allowances from the total income.

Taxes are levied on the non residents also. In case a person resides outside France but his source of income is in France he is liable to pay income tax. For instance, if an owner has rented his house to the tenants then the owner has to pay tax on his income in the form of rent.

Mode of Payment

Tax could be payed on a monthly basis. The government provides certain financial incentives for people paying taxes on a monthly basis. The other option to pay taxes is in the way of installment through the year and this is by far the most popular choice. There are separate dates on which the installments must be submitted by the tax payer. The dates are:

• 15th February
• 15th September
• 16th May

The first two installments are the estimates of the payable tax and the third is the final tax that is payed by the tax payer. The final installment compensates between the actual tax and the estimated tax. The tax office must inform the payers about the dues to the payers.

In case a person is self-employed he has to pay income tax along with a host of other taxes pertaining to social security related matters. There are tax concessions offered to different payers according to tax categories.

Tax Deductions

Tax deductions are offered on certain issues. The common deductions are:

• under the child-care program deduction is offered on the fess for children under seven years of age
• people who work from their homes
• donations to charitable organizations
• on buying a new car that runs on GPL or any other fuel
• deduction on the hospitalization charge of a bread earner of a family

Tax Slab

 

Income(I) Level in EURO Income(I) Level in EURO Tax Rate in Percentage 0<5614 0 5615<11198 5.5 11199<24872 14 24873<66679 30 I>66679 40

Corporate Income Tax

The corporate tax in France has been simplified of late. The corporate income tax rate in 2003 was fixed at 33.33% along with a surcharge of 3%. the surcharge has been 10% and 6% respectively through 5 decades from 1995-2000. In 2000 it decreased and was fixed at 3.3% which had an impact on the tax and the rate was fixed at 35.43%. This was applicable to the large companies. On the other hand for small companies whose annual turn over was less than EUR7630000 the tax rate was fixed at 15% in 2002. The capital gains on long-term basis were taxed at 19%. The effective rates were 19.57%, 20.20% in 2002. The business tax is the main form of local tax. The taxes are fixed at 84% on the amount of rent paid by the tenant, 16% tax is imposed on the value of the fixed assets and finally 18% tax is imposed on the amount which is paid to the employees as their remuneration by the corporate house.

French tax system is quite beneficial for large families and the lower income group. However, concealing the correct income is an offensive action on the part of the tax payer.