A Change Of Tax

With the 2018 budget introducing a number of tax reforms in France, Rob Kay explains the changes due to come into effect and how they could impact your finances

- Rob Kay

If you are living in France or are moving there soon, you need to familiarise yourself with the French tax regime and understand how it impacts your personal situation. The 2018 budget has introduced some significant tax reforms, particularly for investment income, so it is important that you have up-to-date information.

This article summarises the key taxes that could affect your income and wealth. Note that at the time of writing the 2018 budget has not been finalised; changes are therefore possible but no major amendments are expected.

INCOME TAX

If you are resident in France for tax purposes, you are liable to French tax on your worldwide income. Taxes are declared and paid a year in arrears, so income earned in 2018 is declared on your tax return due by the end of May 2019.

The progressive rates of income tax apply to earnings, pensions and rental income. They also apply to investment income where the investment/ assurance-vie policy is less than €150,000 (per person).

Income tax rates are usually only set at the end of the tax year to which they relate. The rates for 2017 income, as included in the 2018 budget, are:Individuals with a taxable income of up to €18,500 (€37,000 for couples) could benefit from a 20% tax reduction, introduced at the beginning of 2017. There is also scaled relief available for individuals earning up to €20,500, and €41,000 for couples.

Higher earners (those with income over €250,000) have to pay surtaxes of 3% or 4%, depending on family circumstances and total income.