What taxes do foreign nationals have to pay in France?
Taxes payable in France by a foreign national, whether European or of another nationality, depend on certain specific situations. Here is an overview of the main applicable taxes: income tax, council tax , property tax and property wealth tax.
Income tax
What income is concerned?
Certain incomes are considered as French-source incomes if it is generated by an activity carried out in France. The following types of income fall into this category:
– Salaries
– Daily social security benefits (sickness, maternity, etc.)
– Unemployment benefit
– Income from self-employed activities (traders, self-employed professionals, etc.)
The following incomes are also concerned:
– Pensions paid by a public/private entity located in France;
– Income from savings or investments (interest, dividends, etc.) paid by a body located in France
– Income from a property located in France (rental income or capital gains in the event of sale).
Who is affected?
The above-mentioned rules apply if you are considered as a resident in France for tax purposes. If you are a couple, you may be considered to be resident in France for tax purposes, while your spouse may be considered to be a non-resident.
Whether you are French or not, the tax authorities consider you to be resident in France for tax purposes if you meet one of the following criteria:
– Your home is in France (or you spend at least 183 days on French soil)
– You work in France (as an employee or as a self-employed)
– The center of your economic interests is in France
If you are not resident in France for tax purposes, you are subject to income tax in France only on your French-source incomes.
Is there a risk of double taxation of income ?
The question of double taxation depends on your particular situation:
– If you are resident in France for tax purposes: To determine your tax situation, you need to check whether France has signed a bilateral tax treaty with your home country or with the country from where you earn the income. If there is no treaty, all your income is taxable in France, even if it has already been taxed in your home country or the country from where you earn the income.
– If you are not resident in France for tax purposes: To determine your tax situation, you need to check whether France has signed a bilateral tax treaty with your home country. If there is no treaty, you are taxable in France only on your French-source income.
What about frontier workers?
If you work in France and live in a border country (e.g. Germany or Belgium), specific rules apply depending on your situation. To find out your tax situation, you should check whether France has signed a bilateral tax treaty with your country of origin.
How do you have to declare your incomes?
If you are resident in France for tax purposes, you must declare all your incomes in France, whether it comes from French or foreign sources. It is important to check whether a specific tax treaty applies. You must file your tax return online if your main residence has Internet access and you are able to do so. We recommend that you keep the supporting documents for 3 years in case they are requested by the tax authorities.
If you are not resident in France for tax purposes, you must declare in France any income of French origin that is taxable in France. It is also advisable to check whether there is a specific tax treaty. Filing your tax return online is compulsory if your main residence is equipped with internet access and you can file your tax return online.
Local taxes
Council tax on second homes:
You are liable for council tax if you live in a second home in France. The following rules apply depending on your situation:
– If you are resident in France for tax purposes: You must pay council tax on any second home you personally own in France on January 1st, whether you are the owner, tenant, or occupant free of charge.
– you are not resident in France for tax purposes, but you own a home in France, it is considered to be a secondary residence and you must pay the corresponding council tax.
Property tax:
Whether you live in France or abroad, you must pay property tax if you own a property in France on January 1st of the current year. If you own several properties, you must pay the corresponding property tax for each of them.
Impôt sur la fortune immobilière (IFI) (Property wealth tax) :
The amount of your IFI tax liability depends on your situation with the French tax authorities. Here are the rules that apply depending on your tax residence:
– If you are resident in France, your taxable assets include your property assets located in France or abroad. You are liable to pay tax on real estate wealth (impôt sur la fortune immobilière – IFI) if the net value of your real estate assets exceeds €1.3 million.
– If you are not a French tax resident, your taxable assets include only your French located assets (NB : If the event you have not been a French resident for the past 5 years and you decide to come to France, then the property wealth tax shall apply only on your French real estate assets for a 5 years period).
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MFL lawyers remain at your entire disposal to answer your queries on such a topic. They wil provide you with their best lawyer to handle the issue you face and provide you with accurate advices to determine your tax obligations in France.