2022 Declaration des Revenus for the tax year 2021

The annual tax filing system for the French income tax returns (Declaration des Revenus) is due to open on 7th April.

Both residents of France, and non-residents with French income such as from property rental, are obliged to submit an annual income tax return.

The French tax year is equal to the calendar year. The presentation deadlines this year are as follows:

Non-residents

Manual returns: 19th May

Returns filed by internet: 24th May

For furnished properties: The full disclosure tax regime (Regime Réel) is generally favourable and economically viable to register if you have significant rental income, and your rental expenditure is more than 75% of your rental income. Registration for this regime is not simple or straightforward- processing times by the Tax Office are currently around 3 months or more. Also unfortunately it is quite common that online filing passwords sent to the taxpayer by the Tax Office do not arrive, which causes complications.

For the more simplified Micro Regime, in order to benefit from the increased tax allowance available, yourfurnished property should be registered as a tourist rental (Meublée de Tourisme) at the local Town Hall (Mairie).

For assistance with preparing and filing your annual French tax declaration, please visit our website or contact us.

Residents

For manual returns, the deadline is 19th May.

For returns filed by internet;

24th May: Départements 01 to 19;

31st May: Départements 20 to 54; 8th June: Départements 55 to 976.

Returns can be submitted from the following dates:

Online filing: 7th April

Manual filing: The manual returns are normally released by the first week of May.

After we file your Tax Return, the Tax Office will calculate the tax due and send you a payment notice, avis d’imposition. The date of issue is by late September.

In France there are monthly payments on account of income tax which are based on the income tax bill in the previous year. Any balance of tax due is paid in August / September in your final tax assessment, and this will also be debited directly to your French bank account.

Wealth Tax (Impôt de solidarité sur la fortune)

Residents of France are subject to Wealth Tax on their worldwide net assets, although there are now exemptions available for the first five years of residence, please contact us for details.

Non-residents only pay Wealth Tax on their French net assets.

Eligible assets include property; cash in deposit accounts and other financial investments. Business assets are generally exempt.

You need to declare if the net value of your owned real estate is over € 1,300,000. The deadlines are the same as for the income tax returns.

Wealth Tax is now declared as part of the income tax declaration (2042C).

The new EU VAT E-Commerce Package- big changes are on the way !

Originally meant to be introduced in 1st January of this year, the implementation of these big changes in VAT in the European Union has been put back to 1st July due to COVID-19 and may be delayed even further because of concerns raised by influential countries such as Germany and the Netherlands on whether they can implement the changes on time.

The new law is very complex and you can find full links to the EU legislation on the EU website .

However here is a brief summary of the changes:

For goods imported from outside the EU or sold by non-EU traders, E-Commerce internet marketplaces will be, in certain cases, for VAT purposes deemed to be the supplier of goods to customers in the EU.

Let’s see how this work out in the case of an Amazon trader. So in these cases the Amazon trader will no longer need to collect the VAT on each sale and pay it over to the tax authorities where the customer is based ! Amazon will be required to do all of this on the trader’s behalf!

As a consequence, the trader will no longer be required to file VAT returns, or even maintain VAT registration, in the EU countries where there customers are based and they hold no stock. They will be required to keep their VAT registration in countries whey they are physically holding stock e.g. in the Amazon fulfilment warehouse, and to raise a VAT exempt invoice to Amazon for each sale that is made to customers. We assume that this will need to be reported quarterly to the Tax Authority for that country as a VAT exempt Intracommunity supply.

So in which cases is this big change going to apply ?

  1. Goods imported and sold to EU customers by non-EU traders, to a maximum of 150 Euros.
  2. Goods that are already in the EU (whether by origin or having been imported and cleared EU customs) that are sold by non-EU traders.

These changes are going to have a very big effect because much of what is being sold online in the EU is either imported or being sold by non-EU companies.

It is important to note that, for these rules to apply, the internet marketplace must be seen to be “facilitating the sale”, which means that it must control the terms and condition of the sale, payment between customer and supplier and arrange the delivery of the goods- which would be the case in the full package offered under Fulfilment by Amazon (FBA).

Extension of the EU VAT One Stop Shop to all traders and all services/goods

This change will make life a lot easier for many EU traders. They will now be able to declare and pay VAT on their sale to customers in other EU countries in one unified VAT return in their own country.

So if a Dutch Amazon trader has customers in Spain and France then they will be able to include these sales in their Dutch One Stop EU VAT return. VAT on the French sales will be at 20% and on the Spanish sales at 21% and the Dutch tax authorities will pay the amounts due to their Spanish counterparts. As you can see, these are massive changes to make to the tax declaration systems in EU countries, and it no surprise that some Member States are requesting a further delay to give them time for implementation.

One important note is that, under this scheme, traders will still be required to maintain VAT registration in the countries where they hold stock. So if the trader is using the Fulfilment by Amazon (FBA) program, it remains to be seen how this will work out in practice. I.e. if a Portuguese trader holds stock in an Amazon FBA centre in Spain, and makes sales to Portuguese customers (there is no Amazon distribution centre in Portugal), then will they still need to declare these sales in Spain or could they do it via the One Stop Shop of the Portuguese Tax Authorities ?

Amazon itself is being very quiet on this matter and we can find no reference on their websites to the upcoming changes in EU VAT law, which is unexpected because the changes are imminent !

Tax on Rental Income: Non-Residents in France

Non-residents are taxable on their French source income only. As a non-resident owner of property in France, you will be liable to pay income tax on your rental earnings. There is no lower threshold, therefore you would be obliged to file a Déclaration des Revenus to report any rental income on an annual basis- returns are filed in April/May of the following year.

Continue reading “Tax on Rental Income: Non-Residents in France”

French VAT registration for foreign companies

French VAT is called ‘Taxe sur la Valeur Ajoutée’, or ‘TVA’, and foreign companies providing taxable supplies of goods or services in France are required to obtain a French VAT number.  If your company is registered in the EU and needs to register for VAT in France, including obtaining an EU Intracommunity number, the process is reasonably straightforward.

Continue reading “French VAT registration for foreign companies”