Taxation In France With Methods, its Application


Taxation In France: France is one of the most developed nations globally and known for the application of liberalism in all its domains and sectors. It is among the top 7 GDPs of the world and which erects it tall. The primary reason for its unprecedented growing economy in Europe lies in its taxation regime and system. As per the latest data, its gross domestic product is $2.78 trillion, while its purchasing power parity (PPP) goes as high as $2.96 trillion.

Like any other nation, it keeps on adjusting types of taxations and their execution on various products and varieties of income slabs of people. Tax in France

Determination of Taxation in France

The yearly budget vote in the parliament of France determines taxation in the country. It ensures the types of taxes to be exempted and levied on people.

The government of France levies the taxes, and administrations are deployed to collect them from citizens. Three distinguishing institutions form these administrations.

  • Local Governments: Agencies with limited jurisdiction comes under its purview. It includes chambers of commerce, local public establishments, local authorities, and all such bodies (quasi-public) financed by local authorities or government.
  • ASSO (Social Security Association): Such associations, along with private organisations, stand for public service. Their budget comprises of mandatory social security funds of all kinds (complementary retirement funds, unemployment insurance schemes, special employee schemes, general scheme, welfare benefit funds, agricultural funds, and liberals profession funds). Some of the taxes are collected for the sole purpose of social welfare.
  • The National Government: It is the central government which has a separate budget allocation (special budgets, treasury, general budget and accounts). Hence, it collects a significant amount of taxes.

Classification of Taxes in France

Based on types of institutions, advantages harvested out of them, and citizens paying them, taxes in France can be listed in the following ways.

Taxation is a levy laid on people based on their capacities to make an additional payment on any product or their income. There are an array of tax slabs determined to figure out how much monetary interest has to be imposed on an individual. The collection is for the purpose to meet the social and public welfare targets of expenditure chalked out by the government.

Besides, there are tariffs which are different from taxes due to their economic aspects and to protect the domestic market. However, there are some charges applied by the customs department count for taxes. There are value-added taxes (applied on goods), levied on the non-members of the EU, taxes on petroleum products (applying regardless of the origination)

There are some other taxes based on the income of people. However, the taxpayers don’t get to benefit from them.

Production and Importation Taxes in France

Institutions of the European Union collect these taxes imposed on the services and goods, consumption and production of various products. These taxes beyond the factors of profitability and paid by everyone who buys or sells them. The production tax covers payment transfer, the professional tax and tax land. It all applies to the user of the land, labours, building and any asset or asset used in making of a product. Notably, these are local taxes. Hence, not collected by the central government. Earlier, there were indirect duties imposed on traditional consumption.

The excise duty applied to specific products like energy, liquor and tobacco products. But after the imposition of the value-added tax (VAT), the scope for those taxes evaded or reduced considerably. However, that tax on petroleum products is still relevant.

Wealth Tax in France

Any wealth is subject to taxation if it falls under the criteria while transmitting for free or gifting it to someone. In such cases, gift tax or inheritance may be payable in the country of France. Additionally, there is an annual process of wealth tax through ISF. Taxes on real-estate are applicable through local property tax law. When assets get disposed, then one has to pay capital gains. The tax is applicable only on profits.

The residents of France have to pay taxes on their worldwide property or assets, whereas, individuals who have a property in the nation but are not citizens, then as per the French law, they have to pay taxes on assets owned by them.

Each household has a set tax amount. It includes cohabiting partners, married couples with or without kids. The application of tax is put on values and rights constituting a taxpayer’s wealth, all properties (buildings, businesses, farms, automobiles, aircraft, movable and immovable assets, financial instruments etc.)

However, there are a few assets which are in the category of exemptions. Rural property, individual companies, objects and antiques, collectables, rights on literary and artistic work held by an author, and many more do not get taxed.

For the wealth tax purposes, Individual residents in France may grab up to 30 per cent of deductions against the valuation of their primary or main home.

Petroleum Tax in France

As per taxes fixed by the legislation, in Metropolitan France, it is applied on all biofuels and petroleum products. However, there is a special consumption tax applied to diesel and premium unleaded in overseas territories. Coal, natural gas, coke, petrol, gasoline, electricity, heating and motor fuels fall under the compartment. It superseded the TIPP which was applicable only petroleum products.

Income Tax in France

There are three types of income taxes in France. Income tax, corporate tax and taxes for social purposes that includes CRDS and CSG paid by households. Interestingly, the French government does not consider the taxes paid by employers on wages as an income tax.

A single scale of taxation is applied after deducing the net income by deducting all expenses and other factors. According to the principle of progressivity, the scale gets characterised by the application of rates through slices of income.

Corporate Tax in France

It is a principle annual tax in the country that impacts all the revenues and profits procured by businesses entities and corporations. It takes under its purview almost one-third of the total conglomerates. The standard rate gauges to 33.3 per cent for all their activities. The taxable income is equivalent to the difference arising from deductible expenses, costs and gross profits.

The distinction between costs and sales is gross operating profit. Additionally, all other profits accumulated through sources are taxable too. However, a reduced rate applies to limited long term capital gains.

Professional Tax in France

The tax is applied annually on people who are self-employed in France. They undergo several exemptions including activities performed by local authorities, business and agricultural organisations etc. The constitution of the tax base happens through the rental value assets available to taxpayers. It is subject to rebates and various discounts. Local communities and organisations set the limit within limits channelised by national legislation.

Land Tax in France

The properties built on lands in France are liable for taxes and fall in the bracket of land tax. The taxable property assets account for permanent constructions like houses, blocks, warehouses, workshops and many more. The base of the tax is fifty per cent of the notional rent value of the land or building set by the tax administration.

Residence Tax In France

The tax gets imposed on sufficiently furnished buildings and their dependencies which make them luxurious like private car parking, gardens, garages etc. It is payable by any person or individual who has a home at his/her disposal (occupant, owner or renter).