Taxation in France

Taxation in France is regulated by the French Parliament after the yearly budget is declared. The residents of France have to pay various kinds of taxes like local taxes, tax de habitation, tax fonciere, capital gains tax, income tax and inheritance tax. One is liable to pay tax if he lives for a period of 183 days in France, if his permanent residence is in France or the principal source of sustenance is in France.

 

Taxation in France is regulated by the French Parliament after the yearly budget is declared. The residents of France have to pay various kinds of taxes like local taxes, tax de habitation, tax fonciere, capital gains tax, income tax and inheritance tax. One is liable to pay tax if he lives for a period of 183 days in France, if his permanent residence is in France or the principal source of sustenance is in France.

 

• VAT in France
• Income Tax in     France
• Property Tax in     France
• Sales Tax in France

  Types of Taxes in France

  French residents have to pay a number of taxes to be able to reside in France. The taxes are as follows:

  • Local Taxes- The French residents have to pay two types of local taxes which are decided in line with inflation. These taxes are based on the rental value of the property. The rates of these differ since the governments of the various regions decide on the imposition of those taxes.
     
  • Tax Fonciere- This is a land tax which is payable in a large amount at the beginning of a year that is on January 1st. A contract is prepared which contains the terms for land allotment. The tax is basically paid for the total land including the portion on which construction is being done and the portion that is free from any construction work. There are tax exemptions for agricultural land. There is a special provision for the new landowner in the form of tax exemption for two years.
     
  • Tax de Habitation- As the name suggests this is a lodging tax which people have to pay when they have rented a house in France or they own it. This tax is calculated in the same way as local community tax, on a yearly basis starting from the 1st of January when a person begins to dwell in the house. This might alter in case one is renting a house for a short period of time. For short-term habitation one should discuss the matter with the owner of the house and also if the tenant would move in or out of the house during a period which is close to the commencement of the year. The tax is paid at the end of the year. This system is both advantageous and disadvantageous for the tenants. Under certain circumstances the present tenant might not have to pay the tax since it is already paid by the previous tenant or he might have to pay the tax for the next tenant.
     
  • Income Tax- The residents of France have to pay the income tax. As responsible citizens they should declare their taxable income to the tax inspector who then asks the person to pay the tax. French residents pay their tax in arrears. One should declare tax before 1st March from when another fiscal year starts. The tax amount is added to the public treasury of France. The declaration for the income tax could be received from the local tax office and the statement would be provided by the employer stating the employee’s taxable income. An employee is also entitled to tax reductions depending on the terms of tax and his profession.
     
  • Capital Gains Tax- This tax is paid by the French residents for their homes as well as for the land for which the owner has a capital gain.
     
  • Inheritance Tax- A descendant is liable to pay this tax for the right to use the property of his ancestors. The property could be passed on by will or by right. But the share of the property becomes less with the increase in the number of claimers. The owner can divide the property between the heirs. There is no right for a spouse except a special provision under which a spouse can leave some property for the other half. There are taxes like gift tax and succession tax on the property one receives as a gift from someone and on the property one inherits as a successor. The tax payment is fixed at 40% for children and parents, 35% for brothers and sisters and 5% for spouses. In case the property is a large one the tax percent could be 45% for brothers and sisters.
     
  • Redevance Audiovisuelle Tax- This tax is paid for television. This tax is also referred to as a media tax. The tax is fixed irrespective of how many viewers are there in a family.