One of the most consistently challenging aspects of contracting in France is complying with the country’s tax system. As well as paying tax in France, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
There is currently no PAYE (pay-as-you-earn) withholding system in France for resident taxpayers. Non-residents are subject to a withholding tax. However the French government is preparing to implement a pay-as-you-go withholding system in 2018. This means that your employer can calculate and process your taxes in France for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in France, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in France through PAYE is left with the prospect doing everything themselves.
Do you know much about French Tax Law? Does France have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in France can range from 0 to 45 percent, and you need to be sure you are placed in the correct tax brackets.
If you are a contractor and want a calculation on your tax and net retention in France, we can supply it to you free of charge.
Step 1: If you have paid French taxes before, you can expect to receive Form 2042 in the mail. If not, you can obtain the form at your local tax office or online(link is external). Form 2042 will include pre-printed information. If it is incorrect, you should cross out the erroneous figures and write the correct ones.
Step 2: File your tax return online here(link is external). Exact deadlines vary according to location. Late submissions incur a fine amounting to 10% of your tax bill. You do not need to pay any amount when you do this.
Married couples are required to file their income jointly. Single, divorced, and widowed taxpayers are also required to file jointly with their dependent children (under 21 years of age or less than 25 years of age and are students).
Non-residents need to file an income tax return if their employment income reaches the 20% tax bracket.
Step 3: Once the French tax authorities have received your declaration, they will calculate your tax and send you a bill (avis d’imposition), usually around mid-late August. You may even receive the bill during November or December if it is your first time filing taxes.
Step 4: Make payments here, through a SEPA bank account.
Once you are in the system, the French tax authorities will use the previous year’s income as a basis to calculate the following year’s taxes. If 2016 was the first year you filed, you will be paying your 2017 French tax liability on the basis of your 2016 income.
Tax is generally paid in 3 instalments on 15 February, 15 May, and 15 September, but you can also put in place a monthly withholding tax arrangement via an express request at your local tax office or by going online.
You may also opt, before October, to make 10 equal monthly payments by bank transfer, beginning in January of the follow year, totalling the full amount of previous year’s income tax liability, and any additional tax is payable when assessed. Any excess payment is automatically refunded.
France has a joint taxation regime for married couples and individuals who have contracted a civil union (Pacte Civil de Solidarité, or PACs). Income tax is assessed on the combined income of the household members (including dependents). There is no option to file separately.
Income brackets are determined by dividing taxable income by the number of allowances.
|Each additional dependent child||1|
Nonresidents are subject to a withholding tax on French-source remuneration.
|Annual Taxable Income (EUR)||Withholding Rate (%)|
You become a tax resident in France if:
- France is your home or main place of residence;
- You are resident in France for more than 183 days in a calendar year (not necessarily consecutively);
- Your occupation is in France; or
- Your most substantial assets are in France.
Yes, subject to treaty exemptions.