French tax summary 2021.
The information on this page is for guidance purposes only and should not be used as a substitute for proper professional advice.
- Tax residence
- .01 Determination of residence
- .02 Consequences of being tax resident in France
- Income Tax
- .03 Personal income tax rates
- .04 Deductions and allowances
- .05 Filing deadlines and tax administration
- Company Tax
- .06 Company tax rates
- VAT (TVA)
- .07 VAT rates in France
- Property Related Tax
- .08 Capital gains tax on the sale of French property
- .09 Taxe d'Habitation and Taxe Foncière
- .10 Wealth tax rates
- Tax on capital income
- .11 Income tax on capital gains on sale of investments, interest and dividends received
Determination of residence
The taxpayer is deemed to be tax resident in France if any one
of the following tests is satisfied:
- They spend 183 days or more each year in France;
- Their principal business activity in France;
- Their habitual residence is in France;
- Their "centre of economic interests" is in France. This would be the case if the taxpayer has their principal investments in France, manages their business from France or the majority of their income is from French sources.
If the taxpayer is also resident in another country, their residence is decided in reference to the relevant Double Tax Treaty, if one exists between the two countries.
Consequences of being tax resident in France
As a French tax resident, the taxpayer is liable to:
- French income tax on their worldwide income and capital gains. Where the taxpayer is also taxed in another country on this income, double tax relief is taken;
- French Wealth Tax on their worldwide net assets;
- French Inheritance Tax on assets that they bequeath on death or gift during their lifetime. Where the taxpayer is also domiciled in another country for the purposes of this tax, double tax relief is taken.
Personal income tax rates in France
Impôt sur le Revenu des Personnes Physique. Tax Year 2020
(income to be declared in 2021).
|Taxable income (Euros)||Tax Rate %|
|Up to 10,084||0|
|10,084 to 25,710||11.0|
|25,710 to 73,516||30.0|
|73,516 to 158,122||41.0|
Income tax is calculated according to the total income of the
household, which is deemed as being equally distributed between
each member of the household (called a part). The total income
is divided by the number of parts before applying the above
rates. The resulting figure is then multiplied by the number of
parts to give the total tax due.
Each child counts as half a part. The tax advantage obtained for each child is limited to 1,570 Euros (known as plafonnement).
Filing deadlines for French income tax returns
The French tax year is equal to the calendar year. Filing
dates for the annual income tax return, for both residents and
non-residents, can be found in our 2020/21 tax information sheet.
From 1st January 2019, monthly payments on account of tax (Prélèvements a la source) were introduced. The tax payable is calculated in reference to the last issue tax assessment (Avis d´Impôt) for the taxpayer.
French company tax rates: Impôt sur les sociétés.
2021 rates: tax on 2020 profits.
The company tax rate is 28% for profits up to 500k Euros, and 33.33% above this.
For qualifying small-medium companies (turnover less than 7.63 million), there is a reduced tax of 15% on the first 38,120 Euros of profit. In order to qualify, the share capital of the company should be fully paid up and at least 75% of this share capital should belong to physical persons.
French company tax is payable on account with payments due on a quarterly basis:
- First payment: 15th March;
- Second payment: 15th June;
- Third payment: 15th September;
- Fourth payment: 15th December;
VAT (TVA- Taxe sur la Valeur Ajoutée)
The current standard rate of VAT in France is 20%. This is the
general rate applying to the supply of goods and services.
There are reduced rates of 5.5% or 10% which applies to certain goods and services, including:
- Food products;
- Gas and electricity;
- Passenger transport;
- Hotels, pensions, gîtes ruraux;
- Cultural activities e.g books, cinema, theatre;
- Certain works carried out in the main residence;
Finally, there is a special rate of 2.1%, which applies to a limited scope of goods and services such as socialised medication and television licenses.
Capital Gains Tax on the sale of French property (plus-values immobilières) in 2021
The sale of a resident's main residence is exempt from Capital
In other cases, the deductible cost is calculated as follows:
- Purchase cost plus;
- Agency, notary costs etc. on purchase. If these are not calculated, a fixed percentage of 7.5% of the purchase cost is allowed;
- Improvement / renovation costs, in the case where invoices can be produced. If not, 15% of the purchase cost is allowed if the sale takes place at least five years after acquisition.
The taxable gain (plus-value brute) is reduced according to the period that the property has been owned, and reaches zero after 22 years of ownership. This is for income tax purposes; Social Charges are reduced to zero after 30 years of ownership.
There are also surcharges for capital gains over 50,000 Euros on the sale of property, as follows:
|Capital gain €||Additional tax €|
|50.000 - 60.000||2% less marginal deduction|
|60.000 - 100.000||2%|
|100.000 - 110.000||3% less marginal deduction|
|110.000 - 150.000||3%|
|150.000 - 160.000||4% less marginal deduction|
|160.000 - 200.000||4%|
|200.000 - 210.000||5% less marginal deduction|
|210.000 - 250.000||5%|
|250.000 - 260.000||6% less marginal deduction|
For residents of France, there is currently 19% tax on the
resulting gain; and Social Charges which are currently 17.2%.
For non-residents, since 2015 the tax and Social Security payable on the sale of the property has been the same as for residents.
Taxe d'Habitation and Taxe Foncière
These are French local property taxes.
The Taxe d'Habitation is payable by the occupier of the property, and the Taxe Foncière is payable by the owner. Both taxes are payable on an annual basis.
Owner / occupiers of property pay both of these taxes.
Wealth Tax in France (Impôt de solidarité sur la fortune). Taxation of taxpayer's net wealth as at 1st January 2021.
|Net wealth of taxpayer (million Euros)||Tax rate %|
|0.8 - 1.30||0.50|
|1.30 - 2.57||0.70|
|2.57 - 5.00||1.00|
|5.00 - 10.00||1.25|
A Wealth Tax return need only be filed if the taxpayer has net assets of greater than 1.3 million Euros.
A marginal reduction is given when the taxpayer´s net wealth is
between 1.3 and 1.4 million Euros, calculated as follows:
17,500 € - 1.25% x net wealth
Basis of taxation:
- Non-residents are taxable on their French fixed assets (i.e. property) only;
- French residents are taxable on their worldwide net wealth.
The filing deadlines are the same as for the income tax returns.
Income tax on capital income - interest, dividends and capital gains on investments.
In general, capital income is declared in the annual tax return and taxable according to the normal income tax scale, with a deduction for any tax withheld at source.
Dividends can be taxed either at a fixed rate, currently 12.8%, or according to the general tax scale after a deduction of 40% to compensate for the company tax already paid on the profits being distributed.
Capital income is also subject to Social Contributions (Contributions Sociales), which are currently 17.2%.