Different Taxes In France, How To Calculate Income Taxes?

Taxes In France

Income Taxes in France: Any citizen of France pays direct or indirect taxes in different forms and ways. Income or no income, there are taxes applicable to several types of products. Besides, the standard taxation regime, there are several peripheral taxes that go unnoticed by the general public of the country with the capital of Paris.

The non-residents of France also fall in the category to pay taxes as they utilize the land for expanding their businesses. Even tourists per se are liable to fetch something out of their pocket for paying to the government.

Taxation on People Leaving France

Any person who has earned a penny from the country has to pay taxes before departing. Besides, any French earning that comes under the taxable slab in France in the international tax treaties would be payable prior to the departure. If someone owns a home, property, or a piece of land, then they have to pay land, property, and residence tax. If as of January 1, an individual has a property to his/her name, then they have to pay residential tax.

Gift Taxes in France

This type of tax applies to both gifts and inheritances. Here is more about it:

  • If the donor is a resident of France at the time of donating the gift.
  • The product is an asset of France.
  • The recipient is a citizen or resident of France and has been so for more than years. In that case, the gifts and inheritance received during the tenure would be taxable.

However, through a treaty, these provisions can be overridden. The tax is payable on the amount of gift received by the recipient from the donor. Also, the relationship with the donor will matter. However, the passing of assets during the death between PACS partners and spouses is seeing tax exemption. Thanks to the French government.

Meanwhile, for wealth tax, the valuation of a home can be downgraded by almost 30 percent for the succession tax. But only if the surviving couple has occupied the land as a primary home or at least by one child of spouses. Notably, even PACS partners can seek the benefit of the scheme.

Taxation Bands In France

Here are the taxation bands and rates applied on the taxable income earned in 2019 and payable in 2020.

Tax Rate                          Income Share

Above €157,807 45 percent

€74,518 – €157,806 41 percent

€27,795 – €74,517 30 percent

€10,065 – €27,794 14 percent

Up to €10,064 0 percent

PS:- There is a 1 percent increase in 2019 compared to the year 2018. Likewise, in 2021, for the income of 2020, the changes in the percentage of tax pays are likely to alter.

Here’s the approximate tax one has to pay. The following table gives sight into the specifics. (Tax to be paid in 2020 for 2019 income).

This is the slab for the tax payable by a single person.

Tax Payable         Income

€9,144                  €50,000

€7,644                 €45,000

€6,444                 €41,000

€4,644                 €35,000

€3,744                 €32,000

€2,231                 €26,000

€1,078                 €20,000

The tax payable by a couple can be understood by the following table:

Tax Payable         Income

€18,288                    €100,000

€15,288                    €90,000

€12,288                    €80,000

€9,288                      €70,000

€8,088                     €66,000

€6,288                     €60,000

€5,088                     €56,000

€4,182                      €50,000

€3,622                      €46,000

€2,447                      €40,000

€1,322                      €35,000

€342                         €30,000

Stamp Acts

The act applies precisely to the registration of vehicles, gifts, and inheritance, sale of buildings, assignments of businesses, etc.

Calculation of income tax in France

A progressive income tax gauge or scale is utilized that factors in splitting. Any income earned post departure gets taxed at a 20 percent rate. Similarly, the tax on the income of government employees sees no distinction.

Social Charges

Besides the income tax, fortunate few who earn €250,000 and more per annum are imposed with special taxes. Up to the revenue of up to €500,000, one has to pay 3 percent of the total income. Beyond that, it surges to 4 percent.

However, those living-in or married couples are exempted until €500,000. Crossing the limit, they have to pay 3% of the total income until € 1 million and 4 percent after surpassing the limit.

Words of Wisdom

Like any other nation, the taxation system in France is also subject to reformation and changes depending on the economic situation of the nation. The ongoing Covid-19 virus has dampened its economy, but the liberal nation is trying to back itself by inducing different taxation. The financial market of the country is recovering too, and people are investing in Forex markets, cryptocurrencies, stock markets, indices, metals, and other bazaars. Furthermore, the CFDs market is also gaining momentum here.