First things first – the French tax year runs from 1 January to 31 December, much simpler than the UK’s 6 April to 5 April! Here is a rundown of the main tax considerations and taxes payable in France.
Tax residency
To ensure that your tax affairs are in order, the first thing you need establish is whether your tax residence will transfer to France, and it isn’t as easy as looking at the country that you are working and paying income tax in. Even if you will eventually become a tax resident in France, if you’re an employee transferring to France ahead of your family – perhaps because your children need to finish the school year – this can make determining tax status more complex as you may be a tax resident in both countries for a defined period of time. If in doubt, it’s best to seek advice from the experts.
The good news is that the UK and France have signed a tax treaty to avoid residency conflict and double taxation. You may, however, have tax reporting obligations in both locations even if no tax is due.
Income tax
In 2019, France introduced a system of ‘prélèvement à la source’, what we know in the UK as PAYE (pay as you earn). This means that employment income, plus some other types of income such as retirement and rental income, are now taxed at source in France. Whilst this may have made things easier, it’s important to realise that due to the complex nature of international taxation, this doesn’t mean that your tax obligations are dealt with just because you’re being taxed on your French income at source.
Local taxes in France
Local residence tax: Taxe d’habitation
A local residence tax, like council tax in the UK, which is payable by anyone occupying a property in France on 1 January of each year. If you’re moving to France or repatriating back to the UK at this time of year, take note of this important date. Try to start a new lease on 2 January or end it on 31 December; it could be of huge benefit financially as the fee is not prorated. Note that this tax is being phased out in France
TV licence tax: Redevance Audiovisuelle
A television/ broadcasting tax (€138 in 2022), much like the TV licence in the UK. Again, this tax is payable by anyone resident in France on 1 January of each year, so it’s important to consider the date in terms of rental lease contracts as the payment is not prorated.
French property tax: Taxe Foncière
An annual property ownership tax, payable by homeowners and landlords in France, payable to the municipal council.
Impôt sur la fortune Immobilière (IFI)
An annual property wealth tax, payable in France when the total value of real estate assets is greater than €1.3 million.
Let AGS take the headache out of taxation for you!
With careful planning and support from a tax expert, filing your taxes in France need not be too much like hard work. If you’re relocating to France and you’d like help managing your tax affairs, get in touch with AGS Movers UK today!