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Whilst there are a number of treaties in place between France and other countries to protect expatriates from double taxation, it is possible that you could be eligible for taxation here, even if you consider yourself a non-resident. If you are eligible to pay tax in more than one country, one of these treaties may be the factor that decides where you pay income tax.
As a rule, if you spend more than 183 days in France in a calendar year, or your permanent home is in France, or if your main business activity or financial interests are here, you are likely to be subject to French income tax.
There are 5 different tax bands (2010) in place in France:
|
Earnings (Euro) |
0 to 5963 |
5964 to 11896 |
11897 to 26420 |
26421 to 70830 |
70831 + |
|
Tax rate |
0% |
5.5% |
14% |
30% |
41% |
For those over the age of 65, there is an extra tax-free allowance of €2,311 if total income does not exceed €14,220 and of €1,156 if total income is between €14,220 and €22,930
The French system taxes on a household basis. Each household has a set number of family shares, or 'parts', depending on the marital status, number of dependants etc. A married couple is entitled to 2 parts, an extra half part is granted for the first two children, and a full part per child thereafter.
Before applying the above scale rates the total household's taxable income is divided by the number of family parts. The tax liability obtained after application of the scale rate is then multiplied by the number of parts to obtain the final liability of the household. In this way the more parts you have in your household, the more bites at the nil and lower tax rate bands you get.
Regulations prevent any taxpayer from being charged more than 50% of their gross income for combined income tax, tax on assets, and local taxes.
The tax year in France runs from January to December.
Taxes specific to buying and owning a property are covered under the article GUIDE2BuyingProperty, but there are some other taxes you need to be aware of. TVA (Taxe sur la Valleur Ajoutee) is the equivalent of VAT in other EU countries such as the United Kingdom. The current French rate is 19.6%, although there is a reduced rate of 5.5% payable on certain goods.
All businesses in France are required to pay Taxe Professionelle, and this is based on the annual rental value of tangible assets.
On the positive side, tax credits may be available for things such as childcare, children's education, hospitalisation fees for a dependant, donations to French charities or political parties, union fees or purchase of a car that runs on an alternative fuel.
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