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Short Guide on Income Tax Thresholds in France in 2016

Written by: Bridgewest

How-is-the-income-tax-levied-in-FranceThe French tax authorities have recently launched a guide providing for the income tax exemption thresholds and the taxation of non-residents owning properties in France. The new guide offers also an insight on how to file the tax returns before becoming liable for taxation. Our French lawyers can offer more information on the taxation system in this country.

What are the thresholds for tax exemptions in France?

The income tax in France is applied progressively depending on the earnings of a resident or citizen. There are five income bands, one can be integrated into:

  • -          the first band is for residents with an income of up to 9,700 euros;
  • -          the second band for residents with incomes ranging between 9,700 euros and 26,791 euros;
  • -           the third band for residents with incomes ranging from 26,791 euros to 71,826 euros;
  • -          the fourth band for residents with incomes ranging from 71,826 euros to 152,108 euros;
  • -          the fifth band for those with incomes above 152,108 euros.

These thresholds are calculated on the yearly income. The rates applicable to these incomes start from 0% for the first band, and continues with 14% for the second one, 30% for the third band, 41% for the fourth band and 45% for the last band. However, it is important to know that these rates apply fractionally for each of the participants to a household.

 To better understand, it means that the whole income is divided to the number of family members, where adults are a part and a child is half a part. The whole income is calculated and then divided into parts according to the number of family members. Then, each part is taxed based on the fraction they represent, meaning the first fraction of 9,700 euros will be applied the 0%, while the rest of the fraction will be taxed at the applicable rate of the band they are part of.

Taxation of non-residents in France

Starting 2016, foreign citizens with incomes generated in France will be levied a lower tax on these earnings. Income from rentals of properties located in France will be paid at the local tax authorities and will be taxed on the net profit. The same obligations are available for other incomes, such as dividend and interest payments. The rate applicable was established at 20%. However, if the foreign citizen files evidence that the tax rate applicable for the same income is lower in their home country, they will be entitled to pay the French tax at a lower rate. The lower rates can be 14% or 0%.

For complete information on the taxation of foreign citizens, please contact our French law firm.



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