Top Tax Tips for France

France is one of the most highly taxed countries in the world. In fact, France achieved the title of the highest taxed county in the European Union in 2017 and 2018. Denmark later took over France’s status, although the latter remained among the countries with the heaviest taxation.

France is a welfare state, so naturally, it needs funds (to offer amenities and benefits) that are paid by the taxes of its French residents.

For people new to the country, understanding the French taxation system can be challenging. However, they can learn to navigate the system with a bit of guidance. Keeping that in mind, the following will highlight some quick and easy-to-follow tax tips.

Taxes in France

France primarily charges three types of taxes

  • Income tax
  • Social security contributions
  • Tax on goods and services

Property owners and people with wealth (individuals with a net worth of €1,300,000) have to pay real estate and wealth tax, respectively.

The PAYE System

France has implemented a new taxation structure established in 2019, the PAYE, or Pay-As-You-Earn system.

Unlike the standard and commonly employed taxation system in which taxpayers have to file their taxes at the end of the year, the PAYE system deducts taxes on income as it is earned/received. That is, people are taxed on monthly payments throughout the year rather than annually.

In France, everyone who earns an income has to pay taxes; however, the rate can vary based on the amount of one’s earning. Due to this, high-income earners are heavily taxed, yet they do not get any special treatment from the government. They get all the benefits that low-income earners get.

Paying Taxes in France

As already mentioned, all people earning in France have to pay taxes. However, there are scenarios in which a person gets a reduction in their tax bill.

  • If they get childcare outside of the home for kids under the age of six.
  • If they have children enrolled in school.
  • If they install energy-conserving technology in their home.
  • If they hire domestic help.
  • If they are divorced and have to look after their child alone.
  • If they give money to charitable organizations.
  • If they have savings in banks governed by the state.
  • If they take part in a mutual fund’s unit for innovation.
  • If they get a property and rent it out to tourists. That is, if you buy a home and offer it to travelers, you get a tax allowance.
  • If they have to support dependents in their home.
  • If they put their money into French departments overseas.
  • If they finance or contribute to the capital for small businesses.
  • If they rent out a house in an area where rental demand is high at a reasonable price. However, in this case, the property has to be the tenant’s primary residence.
  • If they renovate old run-down rental properties.

Ending Note

While taxes are high in France, there are significant allowances for specific scenarios (as mentioned above). It could be possible to put one of these tax allowances to use to one’s advantage. (See also: The Tax System in France)

 

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