Taxation in France: Guide to your tax system

HomeTaxationTaxation in France: Guide to your tax system
The French tax system is complex, with tax rules that differ depending on your profession and location. The French tax code is also expensive, with taxes accounting for more than 20 % of average household income in France. Taxes are levied by both the national government and local governments. The national government levies taxes on a person's income and wealth. Local governments levy property taxes, as well as taxes on goods and services sold within their jurisdiction. Many French citizens view the tax system with suspicion, which is not surprising given its complexity.
However, this complexity does not mean that the French are unaware of the challenges facing the tax system. In fact, the 2017 development of the new tax law included many efforts to simplify the tax system and bring it into the 21st century. This guide explains the most important aspects of the French tax system.

What is the French tax system?

The French tax system is a combination of taxes at the national level, taxes at the local government level and consumption taxes. In general, the national tax system consists of two taxes: - Income tax - which applies to both employers and employees. - Wealth tax - which applies to the accumulation of wealth.

Who pays taxes in France?

Most people in France are required to pay taxes. The only exceptions are certain categories of people, including the unemployed, pensioners, children under the age of 18, and recipients of social benefits. People with low incomes (less than 6,908 euros per year, or less than 5,836 euros if they are single) are exempt from paying taxes, but are not eligible for a tax credit. An important exception to the general rule that everyone must pay tax is the wealth tax, which applies only to wealthy individuals. The wealth tax applies to assets held in any form, including cash, stocks, bonds, real estate and art.

How to pay your taxes in France?

Generally, income taxes are paid quarterly. First quarter taxes are due on April 15, second quarter on October 15, third quarter again on April 15, and fourth quarter again on October 15. This pattern is sometimes broken - for example, in 2017, the government expanded the "My Payslip" digital payment system to include the fourth quarter. However, it is important to keep in mind that, in practice, people often pay their taxes at the beginning of the quarter, as well as at the beginning and end of the year.

French income tax

Income tax in France is a progressive tax that increases with income. This means that, all other things being equal, people with higher incomes will pay a higher tax rate than people with lower incomes. Income tax in France is levied on the income a person earns from all sources. However, certain expenses, such as transportation, meals and housing, are excluded from the tax calculation. Income tax in France consists of two parts: - A daily income tax which is levied on a person's net income. - A monthly wealth tax which is levied on a person's net worth.

The French wealth tax

The French wealth tax is a tax on the accumulation of wealth. The ISF is calculated as a percentage of the value of assets you own that exceed €1,360,000 (or €1,160,000 if the owner of the assets is a corporation). The wealth tax applies to both business and personal assets. It also applies to inherited assets. Wealth tax does not apply to the value of a house, nor to investments made with your own money.

Excise and customs duties

Excise and customs duties are taxes on the production and sale of goods and services. They are levied by national and local governments.

Final remarks

The French tax system is complex, with tax rules that differ depending on your profession and location. The French tax code is also expensive, with taxes accounting for more than 20 % of average household income in France. Taxes are levied by both the national government and local governments. The national government levies taxes on a person's income and wealth.
Local governments levy property taxes, as well as taxes on goods and services sold within their jurisdiction. Many French citizens view the tax system with suspicion, which is not surprising given its complexity.
However, this complexity does not mean that the French are unaware of the challenges facing the tax system. In fact, the 2017 development of the new tax law included many efforts to simplify the tax system and bring it into the 21st century. This guide explains the most important aspects of the French tax system.
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