“In this world, nothing can be said to be certain, except death and taxes” – Benjamin Franklin.
The above saying by Benjamin Franklin was in a letter written by him to a French scientist by the name of Jean-Baptiste Leroy in 1789. This is true even to this day although there are some countries that do not have any taxes. To name a few – Brunei, United Arab Emirates, Bahrain, Oman and Saudi Arabia. Although these countries don’t have income taxes, there are other avenues of taxes that is collected.
The taxation system in France is governed by two separate boards –
- The General Directorate of Public Finances which is in charge of tax valuation and collection some of the taxes. These taxes are Value Added Tax, income tax and corporate tax.
- The General Directorate of Customs and Indirect Taxes for customs duties and taxes on petrol, fuel, alcohol and tobacco.
Types of taxes in France
These are some of the different types of taxes in France –
- Value Added Tax (VAT) – This tax is charged on the supply of goods and services in France, irrespective of whether the customer is an individual or a business entity. The standard rate for this tax is 20% and the reduced rate is 2.1%, 5.5% and 10% depending on the type of goods and services.
- Personal Income Tax – All individual residents of France that are working in France are generally taxed. They are also taxed on their incomes and capital gains from outside of France.
- Corporate Tax – Companies that operate in France are subject to this type of tax. There is no tax charged for French companies that operate outside of France.
- Inheritance and Gift Tax –This tax is paid by the beneficiary or recipient of the inheritance upon death of the donor provided that the donor is a resident of France at the time of death. This tax is also applicable even if the beneficiary is not a resident of France.
- Wealth Tax –Wealth tax is similar to income tax where the assessment is done on the income of the whole family which is the husband, wife and working children. It’s also applicable to those couples that are not married but living together. This tax covers movable and immovable properties. Wealth tax is charged on total assets that are more than EUR1.3 million and at different rates.
- Local Business Tax –This tax has 2 components – the corporate property tax and the contribution of the added value from the business. The corporate property tax takes into account the rental value of the business premise.
- Residence Tax – The local authorities in France also charges a residence or dwelling tax on the occupant of a property
- Immovable Properties Tax – Local authorities also charge a property tax on the owner of an immovable property irrespective of whether it has been developed or not.
- Registration Duties – This is a duty paid by a purchaser of an immovable property.
When to file your income tax returns
As with most countries around the world, the taxation in France is based on the calendar year. You will pay taxes on your previous year’s income in the current year. For example, you will have to pay taxes on income that you received in 2016 in the year 2017.Generally you would need to submit your tax returns to the authorities by the middle of May each year. You can also do an online submission of your tax returns.
Tax rates in France
The personal income tax rate is on a tiered basis as follows –
|Up to EUR9,710||0 percent|
|EUR9,710 – EUR26,818||14 percent|
|EUR26,819 – EUR71,898||30 percent|
|EUR71,899 – EUR152,260||41 percent|
|More than EUR152,261||45 percent|
For corporate tax ratesin France, currently it stands at a rate of 33.33%. However France has recently amended the rate which will be progressively reduced to 28% by the year 2020. Details of the corporate tax rate are as follows –
- For small companies where their tax year begins on or after January 1, 2017, the taxable rate of 28% is charged on taxable income of up to EUR75,000 and a rate of 33.33% is charged for taxable income in excess of EUR75,000.
- For companies with tax years beginning on or after January 1, 2018, a tax rate of 28% is charged on taxable income of up to EUR500,000 while a tax rate of 33.33% is charged on income exceeding that amount.
- For large companies where the turnover of the company is less than or equal to EUR 1 billion and where their tax year starts on or after January 1, 2019, the tax rate of 28% is levied.
- For larger companies whose turnover exceeds EUR 1 billion, the tax rate is 28% for taxable income up to EUR500,000 and 33.33% on taxable income exceeding EUR500,000.
- A standard tax rate of 28% will be charged for companies with tax years beginning on or after January 1, 2020. Thereafter the standard corporate tax rate will remain at 28%.
Payment of the taxes
Now that you know the income tax return in France, you would need to know how and where to pay. Payments can be made by installments on 15th February, 15th May and 15th September every year or you can opt to pay online via direct debit on the 15th of every month.