DECLARING YOUR INCOME

Income taxes in France (impôts sur le revenu) are calculated annually based on your earnings from January 1 to December 31.
Employers in France are not responsible making income tax deductions; there is a self-declaratory system.

If you are liable for French income tax you will be required to complete a tax return (déclaration de revenus) each year stating your income for the previous year. From this, the amount of tax that you will have to pay is calculated. Married couples must file a joint tax return and not individual ones.

Taxable income is divided into shares reflecting the taxpayer's family status (married, single or widowed) and number of dependants.

If you have been living in France for the entire tax year and are a salaried employee, your local tax office, the centre des impôts, should automatically send a tax return to your current address in February or March. This will be filled in on your behalf with information supplied by your employer. You will be required to check that the information is correct and return it by the end of May. Note that if you move, it is your responsibility to send your next tax return to your new local tax office.

If you move to France part way through the tax year, you still have to complete a tax return. You will be required to declare everything you that have earned from your arrival in France until the end of the current tax year.

You will be required to declare all forms of income earned during the tax year, even if that income arises from a country other than France. To avoid paying tax in both countries you should find out whether France has a "double taxation"agreement with the other country.

If you are self-employed, you will be subject to income tax in addition to a range of social security fees normally split between an employer and employee. These charges are withheld from the employee’s gross salary each month.

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OTHER PERSONAL TAXES

All individuals who are subject to French income tax may also be liable for:

• Capital Gains Tax: This represents profits on the sale of assets (e.g. property or equities). Certain items are exempt from this tax. If you sell your home in France for example, assuming it is your principal residence, you do not need to pay any tax on the profit.
• Wealth Tax: If your net assets exceed a certain level (€720,000 as of 2008), you are liable to pay an annual wealth tax. If you have less than this amount of net assets, you do not need to pay this tax.
• Withholding tax: Dividends and interest on some bank accounts are subject to this flat tax. Note that it is now possible to choose which regime is used for taxation on interest payments made to accounts held with a bank located anywhere in the European Economic Area.
• Inheritance Tax: The threshold for inheritance tax is very low in France, so even a small inheritance can be subject to this tax.

Note that if you fail to submit your tax return by the deadline you will be subject to an additional penalty payment of 10% of that year’s tax bill.

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