The French tax system
TheMinistry of Economy and FinanceoverseesFrance’s tax system. The country’s tax year runs in line with the calendar year, from 1 January to 31 December.As a taxpayer in France, you may be liable for a range of federal taxes. These include income tax, as well as tax on investments, inheritance, property, and wealth.
Companies operating in France must pay corporate tax on their income and VAT (TVA).
France has recently adopted a pay-as-you-earn (PAYE) tax system. The country introduced the system in 2019, meaning most employees pay income tax at source as part of their monthly pay rather than needing to file an annual tax return. France’s highest income tax bracket is 45%, but this only applies to earnings over €177,107.
What is new about French taxes in 2024?
In December 2023, the French Parliament approved the 2024 Finance Bill. As part of the Bill, the government increased the standard income tax brackets andsocial security ceiling(the maximum income that taxpayers make social contributions on) by 5.4%. This means that workers in France should now face a lower tax bill than before.
Types of tax in France
Income tax
Income tax in Franceis payable on earnings from employment and self-employment. Residents are taxed progressively at rates ranging from 11% to 45%. The exact amount you’ll pay will depend on whether you’re single or married and if you have children. You can also offset certain deductions and credits against your bill.
France’s lowest rate of 11% only kicks in at €11,294, so anyone earning below this doesn’t pay income tax. The top rate of 45% is payable on earnings over €177,107.
Non-residents pay tax on French-sourced income at a flat rate of 20% for income up to €27,478 and 30% for income above this threshold. Savings, investments, and bank interest are also subject to income tax at a flat rate of 30%.
Income tax returns are due in May or June each year, depending on where you live in France. If you need to complete a tax return and have previously submitted one, you shouldbe automatically senta completed form to check, amend, and return, if necessary.
You are responsible for completing and submitting your French tax return, even if you think you will fall below the income threshold to pay tax.
Income tax for self-employed workers
Self-employed workers (such as sole traders and freelancers) pay income tax at the same rates as employees. Some self-employed workers can benefit from specific tax regimes that may reduce and simplify their overall bill. These include the micro-entrepreneur scheme for sole traders.
Corporate tax
Companies in France must paycorporate tax(Impôts sur les Societiés, IS). Corporate tax rates in France have been gradually falling, with most companies now paying 25%, regardless of their profits. Small companies can benefit from a reduced rate of 15% on their first €38,120 of profits. Corporate tax is payable quarterly in March, June, September, and December.
Companies that spend money on research and development (for example, training staff in scientific, medical, or engineering professions) can benefit from a credit of up to 30% on eligible expenses.
VAT in France
In France, VAT is known as taxe sur la valeur ajoutée(TVA), and is a tax on certain goods and services. The standard TVA rate in France is 20%. However, reduced rates are available for some goods.
| Rate | Percent TVA/VAT | Qualifying purchases |
| Intermediate | 10% | Some food, construction, farming, forestry, and passenger transport |
| Reduced | 5.5% | Some food, non-alcoholic beverages, books, cinema, theater, and concert tickets |
| Special | 2.1% | TV licenses and newspapers, plus some medicine |
Can you get a refund on VAT?
If you’re not an EU resident, you can apply for a VAT refund. The process can be tedious, but you’ll need receipts of items purchased (totaling at least €100.01 or more). You must have bought all items on the same day from the same store.
Be sure to ask for thedetaxeform specific tothe country you’re inbefore you leave the store and ask if they have a tax refund desk where you can get the VAT refund on the spot.If not, take thedetaxeand your receipts to the VAT desk at the airport; you can complete the process before you check your bags and enter security.
VAT for businesses
The threshold to register for TVA is €34,400 for service-based businesses and €85,800 for commercial activities, bars, restaurants, and accommodations. You will be allocated a French TVA number (numéro de TVA intracommunautaire) upon registering for VAT.
Municipal property tax
There are two property taxes in France. First, local residence tax (taxe d’habitation) is an annual communal tax levied on homeowners. It no longer applies to primary residences, so you’ll only need to pay it if you own additional properties. Bills are sent out in November, and payments are due in December.
A second property tax,taxe foncière, is levied on primary residences annually. How much you’ll pay is based on your property’s estimated annual rental value, set against a multiplier determined by your local commune. Both taxes are subject to changes each year in line with inflation.Taxe foncièrestatements are usually sent out in September, and payments are due in October.
Municipal waste tax
TheTaxe d’Enlèvement des Ordures Ménagères (TEOM) is usually charged alongside taxe foncière. This is how a locality charges for waste collection services. Some localities decide to fund this service through their general budget, but many choose to tax residents instead.
Inheritance tax
The inheritance tax in France is notoriously complex. All worldwide assets are subject to French inheritance tax for deceased residents of France, and all French-based estates are subject to tax even if the beneficiary isn’t a resident of France.
For non-residents, many bilateral tax treaties with France provide exemptions for paying French tax on worldwide assets. Inheritance tax rates in France vary from 5% to 45% for close relatives, though various deductions and allowances are available.
Capital gains tax
Capital gainstax(impôt sur les plus values) is payable in France on the sale of buildings, land, and shares.
A flat tax rate of 30% applies to savings and investment income. This rate comprises income tax at 12.8%andsocial charges at 17.2%.
Capital gains tax on property comprises19% income tax plus 17.2% social charges, for a total of 36.2%. Main residences are exempt.
Wealth tax
In 2018, France abolished wealth tax on financial assets and replaced it with IFI (Impôt sur la Fortune Immobilière), which applies only to real estate assets with a total value exceeding €1.3 million.
If you exceed the €1.3 million threshold, you owe tax calculatedon the total value of the assets above €800,000. The following are the tiers of wealth tax in France:
- €800,000 – 1.3 million:0.50%
- €1.3 – 2.57 million:0.70%
- €2.57 – 5 million:1%
- €5 – 10 million:1.25%
- €10 million and above:1.5%
As a reminder, non-residents are only taxed on French assets, while residents are taxed on their assets worldwide. A wealth tax cap applies for French residents, meaning the total taxes shouldn’t exceed 75% of income.
Charity donations
In France, you can claim charitable donations as a tax reduction of up to 66% of the amount donated. Donations made to organizations providing food to people in need qualify for a credit of 75% (up to a maximum contribution of €1,000)
