I often get asked this question, as well as how much French income tax will I pay? This is a tricky question to answer, as there are many variables relating to your personal situation. This article explains how the French income tax system works and gives you a list of the income tax scale rate according to your income.
Should you be paying income tax in France?
You will have to pay French income tax if you are considered a French resident by Impots, i.e. the French inland revenue. You are a French resident if:
- Your main home called residence principale is in France. If you work abroad, but your spouse and children spend their time in France (living, attending school or working), you are a French resident.
- You spend most of your time in France, i.e. more than 183 days per year.
- You work or are self employed in France, i.e. French registered business.
- Most of your asset or investments are in France, i.e. most of your income is drawn from French asset.
How does the French income tax work?
French residents declare and pay their income tax one year after earning their income. For instance our 2010 income will be declared in may 2011 and paid by the end of 2011. The only income tax being paid at source is for auto-entrepreneurs having opted for regime micro social, also called impot liberatoire. You therefore need to put money aside so as not to have any bad surprises.
The French inland revenue impots looks at the overall household income and applies shares called quotient familial or parts according to the number of person within the family. You will only be considered as a household by Impots if you are married or have a civil union called PACS in French. Each spouse represents one share and half a share is added per child still living with you. For instance a married couple with two children under 18, would have three shares trois parts. Here is an interesting article (in French) to assess your quotient familial.
Your overall household income is taxed at a progressive tax scale rate ranging from 0% to 45%. How does it work?
- Your overall income is divided by your number of shares or quotient familial.
- A progressive tax rate is applied per bandwidth of income (see rates below).
- This tax amount is timed by your number of shares.
How much French income tax will I pay?
The progressive tax scale rate for French income tax
- Up to 5,963 euros of income : 0%
- From 5,964 euros to 11,896 euros : 5.5% or 326 euros
- From 11,897 euros to 26,420 euros : 14% or 2,033 euros
- From 26,421 euros to 70,830 euros : 30% or 13,322 euros
- Above 70,830 euros to 150,000 euros : 41%
- Over 150,000 euros : 45%
This calculation does not take into account tax credit or reduction you may benefit from by using CESU, creche and childcare or services a la personnes’, e.g. services at the customers’ home such as IT support, cleaner, gardener etc.
If you have other sources of income such as pension, dividends, property rental, etc. it is best to book an appointment with your accountant or Impot to help you fill in your declarations.