The difference between federal and local tax
Unfortunately, foreign taxes can seem extremely complex to an outsider, so you should make sure you do your research before you make the move. Once you become a resident of France, you will still be expected to pay income tax in France on your global income. Taxes in France generally come in three forms:
- French income tax
- Social security contributions
- VAT (included in the sale price of goods and services)
If you own your home, you will also face property tax in France, and if that property is especially expensive, then capital gains tax may also apply. These all generally fall under the remit of federal taxes (which can also cover investments, business income and general wealth) but local taxes also apply.
Local taxes work a little like council tax, but as of the 2021 French tax year, only apply to second homes as a property tax in France. So, if your property in France is your primary residence, you will be spared this tax. If you own multiple properties in France, you will have to pay the tax on those.
How does the tax system work for expats living in France?
There are no exemptions for expats in France when it comes to tax, so long as you are a resident. Simply put, if you call France home, you have to pay taxes there. If you don’t call France your permanent home you may potentially escape the duties of being a tax resident, but be sure to check. You will need to pay taxes in France if:
- Your main place of residence is in France, and it’s where you spend most of your time
- You live in France for more than 183 days a year — this does not necessarily mean all in one go
- Your job is based in France (even if you work remotely from elsewhere)
- You have significant wealth, property, investments or business in France
Potentially, you will have to also pay tax if your spouse/children live in France, even if you work elsewhere.
Tax in France for non-residents may only require you to pay tax on any income you make while employed by a French company. For UK citizens, a tax treaty is currently in place which means dual taxation won’t occur on any income you make i.e. for income tax, France and UK tax rates won’t both be charged. This treaty system is also in place for dozens of other countries, including:
- US
- Finland
- Japan
- Spain
- Qatar
- Ghana
- Belgium
- Hong Kong
- China
Income tax rates in France
Tax rates in France for residents
The France tax rate for residents will depend on your income amount, based on your global income, assets, pensions and property, as well as investments, dividends and bank interest. Here is a rough guide to help you calculate income tax in France:
- Up to €10,084: 0%
- €10,085–25,710: 11%
- €25,711–73,516: 30%
- €73,517–158,222: 41%
- €158,223+: 45%
Tax rates in France for non-residents
Income tax in France for expats who are not residents will be based on your French income only. You will have to pay 20% on any income up to €27,519 and 30% on anything over this. However, there is still property tax in France for non-residents if you own more than one home.
How to calculate income tax in France?
If you are particularly unsure of your tax obligations or which France tax brackets you fall into, then it’s always advisable to get a local professional to help. This can be especially useful if you have a lot of high-value assets or multiple homes facing property tax in France. You can also use online French tax calculators to help you figure out what income tax in France you owe.
Wealth & French property taxes
As mentioned, if you only own one home, you will not have to pay property tax, resident or not, but property tax in France for non-residents is the same as it is for everyone else if you have secondary homes. If you rent out a property, your property tax will be based on rental value.
Wealth taxes in France are charged on a property based on its worth. France tax brackets for this depend on overall value:
- €800,000-1.3 million: 0.50%
- €1.3 million-2.57 million: 0.70%
- €2.57 million-5 million: 1%
- €5 million-10 million: 1.25%
- €10 million+: 1.5%
As a resident of France, the wealth tax will apply to your global assets and is capped at 75% of your total income.
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