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A guide to French income and wealth tax

The time for French income tax returns has arrived! The closing date for paper-based declarations is 18th May 2016 and for online tax declarations, the date depends always on the department where your live :  Tuesday 24th May 2016 for residents living in the French departments 01 to 19, Tuesday 31st May 2016 for residents living in the French departments 20 to 49 and Tuesday 7th June 2016 for residents living in the French departments 50 to 974/976 and for non-residents whatever the country.

New residents must do their first declaration using the paper form. However, if existing residents’ income in 2014 was above 40,000 euros, they are now obliged to declare their 2015 income online - the paper form is no longer possible.

According to the Loi de Finances 2016, the revised bands are :

Up to 9,700 euros: 0%

9,701 to 26,791 euros: 14%

26.792 to 71.826 euros: 30%

71.827 to 152.108 euros: 41%

From 152.108 euros: 45%

French residents must declare their worldwide income and non-residents must only declare income and gains from French property.

Incomes to be declared include salary, professional and personal company income, pensions, dividends, interests, property or financial capital gains, and property rental income (there are two kinds of taxation: whether the rental income is furnished or unfurnished). 

Concerning your household, you can include your children (up to 25 years of age if in education, 21 years of age otherwise) and dependent relatives under certain conditions. Do not forget to indicate any change in your family circumstances too. Costs for domestic help (in the case of a nanny, gardener or cleaner, for example, you must keep all invoices) as well as costs for a child’s education or maintenance and alimony payments all allow tax deductions. Professional and rental losses can be deducted from the global income too. 

Some property investments (‘Pinel’ scheme) or investments in companies (‘Madelin’ scheme) provide tax reductions too, but the overall limit for tax deductions for 2015 is 10,000 euros.

You do not have to send invoices or payment certificates with your income tax return (online or paper declarations), but you must keep them until 31st December 2018 in case of a tax control.

Taxes may be paid in three installments: on 15th February and 15th May each year, based on your tax liability for the previous year, and the third payment will be due in September. You can also choose to pay on a monthly basis by direct debit.

 

French wealth tax: ISF

Residents and non-residents with net assets of at least 1,300,000 euros (evaluated on 1st January 2016) will be subject to wealth tax on assets above 800,000 euros.

For 2016, tax bands are the following:

Up to 800,000 euros: 0%

800,000 - 1,300,000 euros: 0.5%

1,300,000 - 2,570,000 euros: 0.7%

2,570,000 - 5,000,000 euros: 1%

5,000,000 - 10,000,000 euros: 1.25%

Over 10,000,000 euros: 1.5%

Assets include buildings, land, financial investments, furniture, cars, jewellery… You can deduct 30 % for your principal residence (French residents) and up to 20 % for each rental unfurnished property. If you have used a mortgage to purchase real estate, the debt will be then subtracted from the property value. 

For resident taxpayers, the wealth tax return must be filled in before 15th June 2016 for assets above 2,570,000 €. Under this limit, the assets will be declared with their income tax return (18th May for paper forms and between 24th May and 7th June for online declarations). 

Non-residents (European and non-European) are only liable for wealth tax on assets physically situated in France and they must declare and pay this tax before 15th July 2016. If they have income taxable in France, they must declare and pay their ISF at the same time as their income (also 18th May for paper form and 7th June for online declaration).

Jean-Philippe GIOANNI

Expert-Comptable – Commissaire aux Comptes

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