There are four basic ways of being resident in France for tax purposes:

  • Spending more time in France than in any other country;
  • Having your household based in France;
  • Working in France ;
  • Having your ‘centre of economic interests’ in France (this may apply for example if most of your income originates from France, even if you are not physically in the country)

Being resident in France usually means that all your income, wherever they originate in the world, will be subject to French income tax. However, French residence status and liability to French tax can in some cases be overridden by a double tax treaty. If you think you may be French resident but are unsure get in touch.

 

It is entirely possible to be resident under the tax laws of both the UK and France simultaneously. However, the countries have a double tax agreement in place which determines which of the two countries a taxpayer will be deemed to be resident. The double tax agreement therefore overrides one of them. If you are unsure about you are dual resident, get in touch.

 

The French tax year is the same as the calendar year. You would submit a return to the French tax authorities the year after you first start to receive income that is liable to French income tax. After the first tax return is submitted, you will be allocated a tax ID and receive future notifications to submit a tax return.

 

In France, generally, the household (two spouses/civil partners plus their dependants, normally children under 18) is taxed as a unit. The income of each member of the household is declared and combined to determine the total taxable income for the household. The French income tax rates and bands for a single person’s 2018 income are as follows:

  • 0% up to €9,964
  • 14% from €9,964 to €27,519
  • 30% from €27,519 to €73,779
  • 41% from €73,779 to €156,244
  • 45% above €156,244

The bands are widened for larger households by a multiple (‘quotient familial’) often referred to as ‘parts’. A single person has 1 part, a couple has 2 parts, a couple with one child has 2.5 parts. The system operates such that the larger the family, the lower the income tax liability for the same taxable income. The tax savings is capped though.

Separately France applies social charges of 17.2% to most investment income and gains.

There is an additional contribution for high earners (taxable income above €250,000 for a single person / €500,000 for a couple).

Income tax and social charges for non-French residents are different.

 

Non-French residents’ French income tax is determined in the same way as French residents but subject to a minimum (for 2018, 20% on taxable income up to €27,519 and 30% on income above that). In most cases, this minimum tax will apply. You may be able to claim a relief to be taxed at a lower rate if your hypothetical French tax on your total worldwide income is lower than the minimum tax. Tax on French salary and pension of non-French residents are calculated differently.

From 2018, for rental income and capital gains on sale of a property, France also applies social charges of 17.2%. The social charges are lowered to 7.5% for those who can show that they pay their social security / national insurance contributions in another country within the EEA/Switzerland; this includes the UK for as long as it remains in the EU and for a transitional period in the event of a Brexit deal.

 

French capital gains tax treatment of property (land and buildings) and financial investments (e.g. stocks and shares) differ.

Capital gains on financial investments are treated as simply another category of income which makes up total taxable income and are subject to the normal income tax rates (plus social charges).

Capital gains on disposal of property are subject a flat rate of 19%, an additional tax (up to 6%) where the taxable gain is above €50,000 and social charges (17.2% or a lower rate of 7.5% for those who pay social security / national insurance contributions in another country in the EEA/Switzerland). However, France also reduces the gain the longer the property is held, resulting in full tax exemption on all property after 22 years of ownership and social charges exemption after 30 years.

 

Generally you will need to declare the rent both in France and the UK. You can claim double tax relief in the UK to avoid being taxed twice.

 

Generally the rental income is declared in both countries. You can claim double tax relief in France to avoid being taxed twice.

 

UK state pension will be taxed only in France where you are resident.

Generally the treatment of the work pension will depend on whether it is for government service (e.g. civil servants who worked for the armed forces, police, NHS, state schools) or in the private sector. See HMRC’s guidance on whether a particular pension is treated as being government service or not. Non-government service pension (include normal private pensions) would be taxable only in France. UK government service pension is taxable in the UK; you would declare it also in France and claim French double tax relief to avoid being taxed twice.